3 Reasons Why People Analytics Should Be a Priority for Every HR Team

August 27, 2019

We’ve run the numbers and the results suggest that it’s time for HR professionals to add data analytics to their tool belts, if they haven’t done so already.

One of the findings shared in LinkedIn’s The Rise of Analytics in HR: An Era of Talent Intelligence is that over the last five years there has been a threefold increase in North American HR professionals who list either analytics skills or analytics keywords on their profiles. And according to Deloitte’s 2017 Human Capital Trends report, 71% of companies see people analytics (also called talent analytics or workforce analytics) as a high priority, though only 9% believe they have a strong idea of which talent dimension drives performance in their organizations.

HR professionals are increasingly being asked to analyze data to find patterns and trends that will lead to budget and labor efficiencies, to better hiring outcomes, and to smarter decision-making across a range of strategic issues. Here are three reasons to embrace this development.

1. People analytics will improve your company’s performance

HR lags behind other areas — sales, marketing, finance, operations, IT — in the use of analytics. At the same time, there is growing research that shows the unmistakable value of analytics in driving businesses forward when adopted by the HR team.

Companies that use talent analytics to support business decisions see an 82% higher three-year average profit than their counterparts, according to an industry study by Bersin by Deloitte. That same research also showed that businesses with more developed talent analytics capabilities were able to “demonstrate a clear link between talent and leadership pipelines, cost reduction, and efficiency gains.” For the three years studied, these companies also had share prices that were 30% above the S&P average.

Our Global Recruiting Trends 2018 noted that the top HR uses of data are to increase retention, evaluate skills gaps, and build better offers. For example, if you’re concerned about attrition, you might study employee surveys, 360-degree reviews, comp history, and promotion history “to start triangulating an answer.”

––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––

Related: Getting People Analytics Right: Josh Bersin Shares the Best Approach and Tools

––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––

People analytics can also be used to attract talent. Intel, for example, needed software engineers for its office in Poland. When the company searched for people skilled in C and C++, LinkedIn’s data tool, Talent Insights, revealed wellsprings of software engineers in Warsaw and Krakow. The data also showed that the talent in Warsaw was spread across numerous companies whereas in Krakow the software engineers were concentrated in just a few companies. So, Intel ran a highly targeted billboard campaign in Krakow and hosted a recruitment event there and saw a 20% jump in visits to Intel’s career site.

“A critical component of any talent analytics work,” says The Rise of Analytics in HR, “is the ability to develop a functional hypothesis, convert data into actionable insights, communicate those insights articulately, and make data-driven recommendations for the business.”

2. Analytical skills will give you more opportunities for career growth

According to LinkedIn’s Global Recruiting Trends 2018, “Data is the new corporate superpower.” Which means it should be your superpower too. Some 64% of recruiters and hiring managers use data at least sometimes and 79% are at least somewhat likely to use data in the next two years.

Data, of course, is only a starting point. It’s what we do with it — how we crunch the numbers — that generates the real value.

Some 22% of companies in North America, according to our report, are currently using analytics in HR, and half of those have created full-time roles for talent analytics within their departments. Financial services and tech-software are the industries with the broadest adoption of talent analytics to date.

Research by Sierra-Cedar, a Georgia-based information technology and services provider, showed that 45% of large companies and 51% of midsize businesses expected to increase their spending on HR technology in the following year.

But analytics is not just a way to grab a bigger share of the budget. It can be a way to move up the corporate ladder.

Jenny Dearborn, co-author of The Data Driven Leader: A Powerful Approach to Delivering Measurable Business Impact Through People Analytics, notes that in 2016, for the first time ever, more than half of newly appointed chief human resources officers did not come from human resources. Instead, they were coming from marketing, sales, operations, finance, or, she says, “pretty much anywhere else.”

Dearborn’s explanation: “The No. 1 reason why is the lack of expertise in data and analytics.”

3. Analytical skills will get you a seat at the table when the most vital strategic issues are being discussed

According to the 2017 PwC CEO Survey, 77% of company heads believe that the biggest threat to their business is the availability of key skills. The definition of “key skills” varies widely and will depend on whether you’re designing autonomous cars, prosecuting tax cheats, or converting your retail business from brick-and-mortar to online. But regardless of what proficiency looks like in your business, you need to find it.

As Glen Cathey, the head of digital strategy for Randstad, discussed in his breakout session at Talent Connect 2018, recruiting teams historically have had little control over goals handed down by executives who may not understand what’s truly possible. “When we’re talking about setting hiring goals,” Glen says, “it has to be based on data.”

Which is exactly what Jennifer Kopatz, a senior recruiting manager for Autodesk, did when she collaborated with a hiring manager who was looking for a software engineering manager. Her colleague was looking for a manager with web development experience, a top-tier education, and 11 other must-haves. Using LinkedIn Talent Insights, Jennifer showed the hiring manager that the pool of candidates who met all his requirements was under 300 and most of those worked for high-paying companies that Autodesk wasn’t able to compete with.

Together, Jennifer and her colleague analyzed different possibilities for growing the candidate pool in real time. Ultimately, they agreed to expand their list of acceptable schools and reduce the list of must-haves. They made an offer to a candidate in two weeks.

Increasingly, CEOs will be looking to their HR teams to leverage data analytics to find solutions to critical questions on topics ranging from diversity and inclusion to geolocation, from workforce planning to employer branding.

“How do we make informed decisions around labor mix, talent attraction, and development — even at the end of our life cycle around attrition or turnover?” asks Paul Stratford, general manager of talent and development at Orora and the former director of global talent for Telstra, the Australian telecommunications leader. “What is the supply of talent in the external marketplace?”

To answer those kinds of questions, LinkedIn has developed its own 16-member talent analytics team that primarily focuses on workforce effectiveness, workforce planning, talent acquisition, and diversity, areas that are the day-to-day domain of human resources. But the team has also partnered with our engineering group to develop a geolocation strategy for new products and markets that allows us to better understand the competitive landscape and to grow the business.

Final thoughts

Jenny, who is also the Chief Learning Officer at SAP, says that “most companies have all the data that they need, they just don’t know how to use it.”

Which means there is a huge opportunity for the HR professionals and companies who figure out how to unlock the answers hidden in the numbers.

Our analysis? By every measure, people analytics looks to be a high-growth field.

To receive blog posts like this one straight in your inbox, subscribe to the blog newsletter.

Topics