People Analytics: New Opportunities And Common Challenges

Slavena Tsoneva

Today, companies are facing complex workforce questions like how to hire the right candidates, how to engage and retain employees, who to promote, and how to offer unique development opportunities. Organizations are more willing than ever to offer a great experience to their employees. But how can we understand their needs and meet their expectations?

The magical words are people analytics

People analytics are empowering organizations to create transparency, gain a better understanding of employee needs, and react more quickly to changing situations. Therefore, it’s not a surprise that the interest in people analytics is booming. Numerous studies show that data-driven organizations with advanced people analytics functions outperform other companies in financial metrics. According to a recent report, profit margins of companies with advanced people analytics function are up to 56% higher than their less advanced counterparts.

But if people analytics can really help companies better recruit, develop, manage, and engage the workforce, why has it taken businesses so long to jump on the analytics train? Marketing and other corporate functions have used analytics for a long time to predict human behavior. In social sciences, it is also very common to use data to test hypotheses about human behavior.

Companies encounter some major challenges when starting their people analytics journey. People analytics are based on data, and data accuracy and integration is essential. Combining data from different systems could provide valuable insights on the employee journey, but this is still a challenge for a lot of companies. However, modern technologies like the cloud can help solve this challenge.

With new opportunities arising from the growing amount of workforce data available, there are also some potential risks. Companies need stronger regulation around data security and privacy. There are legislations in place, such as the General Data Protection Regulation (GDPR), on how data is processed and used.

Furthermore, it takes some time for the HR function to achieve a certain level of analytical maturity, change mindsets, and develop the skill sets of the HR professionals who use the data to support decision-making. They need to move from intuition to a more evidence-based approach, ensuring more transparency in decision-making.

Finally, there are also some ethical concerns. Some people might ask: Will the model tell us which candidate to hire or which employee to promote? The marriage of new intelligent technologies with human cognition is the key to respond to such concerns. People will always be making the decisions; however, analytics and disruptive technologies like machine learning can offer us additional support in making smarter decisions. However, there will always be the person monitoring the insights, making sure they are accurate or unbiased.

People analytics opens the door to a new era of human resources. We should not reinvent the wheel, but we should foster exchange and knowledge transfers with other business functions. Combining data-driven insights with a human touch, we can reimagine the smart workplace of the future and gain valuable insights on how to hire the right candidates, how to engage and retain employees, who to promote, and how to offer unique development opportunities.

For more on the future of HR, see Is Your Organization Equipped To Lead The Workforce Of The Future?

Slavena Tsoneva

About Slavena Tsoneva

Slavena Tsoneva is part of the People Insights Team within the Chief Operating Office for Human Resources at SAP, supporting smarter decision-making with data insights. She is passionate about topics such as people analytics, future of work, and new technologies. Slavena graduated from the HR Early Talent Program and holds a master degree in Psychology from the University of Heidelberg.