What is HR Analytics (and People Analytics): A Definitive Guide

What is HR analytics? Depending on who you ask, HR analytics can mean different things. Some practitioners will talk about transforming HR data into beautiful dashboards. Others will talk about data science, and generating insights. Others might talk more generally about the concept of HR becoming 'data driven'.

In this article we try and answer the most commonly asked questions about HR and People analytics in a way that makes sense in day-to-day workforce decision-making.

What is HR Analytics?

We prefer to define people and HR analytics as follows:

HR and People Analytics is the practice of producing and using evidence (in the form of data and analytics) to increase the likelihood that a better decision is made about the workforce.

Every day thousands of decisions are made that impact how the workforce delivers business, and how people experience their jobs. Some of these decisions are planned events that engage dozens of people. Others decisions are small and impact a handful of employees. Regardless of the decision scope, if the people making those decisions experience the right evidence at the right time, it is possible to increase the likelihood that a better decision is made.

What are the benefits of HR Analytics?

In theory there is no limit to the 'type' of HR decision that HR analytics can help with. Any time anyone makes a decision, if they have relevant evidence, they are more likely to make a better choice. Even if there is no data available, unless someone is literally guessing, decision-makers will use anecdotal evidence and intuition as forms of evidence to make the best choice they can.

In reality, there are limits to whether or not fact-based evidence can be used - usually because the data cannot or has not been collected. With the right level of planning, these limits can be avoided or mitigated.

What do HR analytics teams do?

As HR analytics professionals, we consider it our role to give the right people, with the right evidence, at the right time, in the right way. If we do this, then the organisation will make better HR decisions, and the workforce will operate more strategically, and employees will hopefully enjoy better careers.

Through a combination of inbound requests and active search, HR analytics teams enable evidence-based HR decision-making across their business. In some cases, the project will be a one-off, high intensity exercise using statistics and data science to generate advanced forms of evidence for senior decision makers. In other cases, the project may require simpler forms to evidence to be provided at scale to a diverse number of internal customers across the business in the form of a dashboard.

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How does HR analytics help business and HR? What does an HR analytics strategy include?

If you are a business or HR professional - and therefore the customer of a HR analytics function - you should expect your people and HR analytics team to provide you with the evidence you need to make a better decision, at the time you need it, in the way that best helps you make a better decision. This is what your HR analytics strategy will likely focus on.

Whilst many people and HR analytics teams have evolved from traditional HR reporting teams and the functions, modern HR and business professionals should treat these new functions differently. Historically, it may have been enough to request specific lists of HR data from reporting teams without providing any context. Nowadays, modern people and HR analytics teams have far more expertise than simply pulling lists - if you engage your analytics team properly, they will guide you and produce evidence that you didn't even know existed before.

It is always worth remembering that whilst people and HR analytics will provide you with evidence, it is all based on likelihood and probability. As with any risk-based evidence, analytics is not a silver bullet and should supplement - not replace - HR expertise.

What types of skills do HR analytics teams have?

HR analytics encompasses a wide variety of skills, which may or may not be required depending on a functions age, scope and the ambitions of its sponsor. A good HR analytics strategy will plan its skill requirements 12-24 months in advanced, meaning it can hire or train the skills it requires in the future.

Some of the key skills HR analytics include:

Consulting Skills - Whilst it is possible to improve all decisions using evidence, it isn't usually feasible. The best PA professionals will be able to understand and prioritise what decisions will most significantly help the business, and scope the best way to use evidence to improve decision-making.
Analytical Skills - Different types of HR analytics teams need different types of levels of analytical skill sets. Some functions require a good understanding of basic statistics, whilst other require advanced specialist knowledge of data science.
Data Knowledge - HR data is more complex than most people think. Every day, your organisation is generating thousands of HR data points that could be analysed to help decision making. HR analytics teams need to understand how, when and where to collect this data, and understand the nature of this data when they analyse it.
Visualisation and Communication - Analytical insights need to communicated in a way that enables decision-making. When decision-makers stop making a decision, and start asking questions about the evidence instead, you have already failed. HR analytics teams should aspire to create an Evidence Experience that ensures decision-makers keep making the decision without stopping to ask about the data or the statistics involved.
Functional and Technical Proficiency - Most (not all) HR analytics teams still have a responsibility for analytics and reporting. It is therefore usually required that teams have someone that understand not only analytics, but how cloud-based technologies are designed and rolled out.

What skills are required to effectively use HR analytics evidence?

In order for organisations to make evidence-based HR decisions, it isn't just the HR analytics teams that need to develop their skills. Organisations want to adopt evidence-based HR decision-making will need invest in enabling their decision-makers.

Whilst most HR people tend to consider themselves to not be data-driven, this is often not true. Everyone uses evidence all the time to make decisions - they just do not do it deliberately. For example, anyone who uses Google maps for travel directions is an evidence-based decision-maker, they just don't realise it.

There are two components necessary to drive the adoption of evidence-based decision-making: behavioural training and analytics capability. Behavioural training will combine with an Evidence Experience to enable a decision-maker to realise they are making a decision, and remember there is evidence available to make a better decision. The analytical capabilities of decision-makers will vary, but will ensure they understand the nature of the evidence in terms of data and statistics.

What are the different types of HR Analytics training?

Whether you are working in an HR analytics team or you are an HR decision-makers looking to improve your own knowledge and use of HR evidence, there are many different ways to learn.

Reading. The least formal of training, there are many dedicated sources of information to improve your knowledge of people and HR analytics. The HR Analytics ThinkTank, our partnership with University of Leeds and Utah State University, contains a lot of free information to get started with.
Short Courses/Workshops. If you need a short, dedicated piece of introductory training to different analytics topics, there are many available on the market place. Check out most major corporate training sites for shorter online courses, or if you prefer live sessions, check out our workshop selection.
Specialist and University Courses. If you are looking for a more formal training there are providers, including Universities, for both the HR side of the practice and technical/data science skills.
eLearning. If you are looking to scale a shorter, more accessible eLearning course that can be shared with entire HR functions, there are many providers that sell their own catalogues. These are particularly effective as part of a wide scale adoption/change management programme, or technology roll out.
Community and Events. It is probably most useful to hear and meet people who already work in the industry. Their stories and enthusiasm will probably help your own. If you are looking for free, less formal events, we suggest checking out your local HR and People Analytics Meetup community. If you are ready for some bigger, perhaps consider attending a conference or two.

What type of HR Analytics tools do functions need?

Different functions will need different HR analytics tools to create the right type of HR analytics value at different points of the journey. If HR analytics teams do not plan far enough ahead, they may lose unnecessary time to HR analytics success due to budget and tender cycles.

There are four main types of functionality relevant people and HR analytics:

Data Collection - These are tools that collect raw data about the workforce. This could be core HR data to learning and performance data to organisation network information to business data.
Data Transformation - Data transformation tools take raw data and transform them into a language of metrics which enable decision-makers to take actions.
Data Science and Statistical - These analytical tools take HR metrics and data and allow analysts and data sciences to conduct simple or advanced calculations and produce more useful forms of evidence.
Visualising and Reporting - The way a decision-maker experiences data is key to evidence-based decision-making. Different reporting tools will make it easier to create effective visuals and scale those insights across the business more or less easily.

In reality, most HR technologies span across multiple of these functions, and some are better at some functions than others. Different HR analytics teams need to pick the tool (or tools) that best help them deliver their strategy.

For more information on selecting the HR Analytics technologies you need, please check our blog Should we buy an HR Analytics (or People Analytics) tool?.

What is the difference between HR Analytics and People Analytics?

Some practitioners differentiate between HR analytics, people analytics, workforce analytics, talent analytics and more. Whilst it is arguable that the different terms emphasise a slightly different focus of the function/approach, generally there is no difference. All functions will work with similar data and probably aspire to have a similar positive impact on HR decision making (even if they have different approaches).

What are the different types of HR Analytics functions?

Research by the HR Analytics ThinkTank in 2018 suggests that there are many different functional typologies. Some functions focus very heavily on doing HR data science to address specific HR and business issues, whilst others try to build super MI approaches to scale their evidence to a wide audience. Some functions own Strategic Workforce Planning too. There is no right or wrong, although there do appear to be better ways to progress through the journey.

How do we get started with HR Analytics?

If you are thinking about starting an HR analytics function, we recommend you begin by identifying the decisions that HR and business professionals are already making - there isn't much point in investing time and effort into generating evidence that no one needs (which arguably discounts it from being evidence).

If you are able to identify what decisions are being made, and by whom, then you can prioritise which decisions matter the most to your organisation, and build a strategy that creates more evidence-based value over time for those people.

What is HR Analytics (and People Analytics): A Definitive Guide

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