Feature
Research Report
The ROI of Employee Experience
Workforce dashboards are supposed to be more than slices of numbers that tell you how many hires your company’s made in the past year, how long it took to hire a candidate or how many employees have left the company. Those numbers aren’t enough. Executives want the same things out of people data as they do with their business data: to identify trends and tie them to outcomes such as growth, productivity, budget and risk.
That’s why HR software vendors are providing more dynamic workforce analytics. Metrics once followed only by HR are now used in decision-making about the business as a whole. They look at the workforce’s impact on factors such as capital allocation, workflows and strategy. CEOs and CFOs now see employee issues like disengagement and skills gaps as business issues, not only “people” problems.
More employers see people analytics as a strategic tool rather than simply a reporting tool. The challenge, as described in SHRM’s report "The Use of People Analytics in Human Resources," isn’t to collect a lot of data: It’s to make the connection between the workforce and business performance.
Why Workforce Analytics Matter More Than HR Dashboards
HR used to use people data to gauge efficiency and ensure compliance. Time-to-fill measured recruiting speed. Turnover rates tracked workforce stability. Engagement scores gave an idea of employee morale. Today, however, HR must present more than historical performance numbers. It has to show why each set of data matters to finance and operations.
For example, look at attrition. Reporting on whether attrition increased or decreased 2 percentage points in a given period isn’t enough. Company executives want to know how that attrition affects financial forecasts, delivery timelines or customer service.
Observers and analysts have tracked this shift. People advisory firm Mercer discovered gaps between what HR leaders prioritize and what the C-suite expects, and found executives are more likely to engage when workforce insights are explicitly linked to business outcomes such as growth and agility. When HR analytics tie risk, return and readiness to business results, they become more relevant to executives.
Technology’s ability to deliver dynamic data and trends, as opposed to snapshots of a moment in time, is a factor in this. In the past, HR reporting looked backwards, summarizing or charting what’s already happened. But corporate leaders are focused on the future — what might happen next under different scenarios. As a result, predictive and “what if” numbers have become more valuable.
Predictive Workforce Analytics and 'What-If' Scenario Planning
Presenting and analyzing such numbers is a feature of today’s HR technology. They integrate data across systems such as HRIS, performance management, learning platforms and engagement tools and link their data with business outcomes. More organizations use workforce data to anticipate issues such as burnout, absenteeism and turnover well before they show up in lagging indicators, according to HR advisory company HR Acuity.
This isn’t about nuts-and-bolts or simple administration. Executives want to get an idea of their organization’s health by looking at measures such as productivity, manager effectiveness, internal mobility and skills. This data helps executives understand whether they can execute their strategy with their current talent pool or if they need to make changes.
People data also helps identify why certain things may be happening. By combining data signals on project delivery, collaboration and workload distribution, business leaders get an idea of where friction is rearing its head. Taken together, metrics on productivity, engagement and well-being show whether performance gains will continue or are contributing to burnout. Research from Cornell University describes how performance and employee experience data provides guidance on avoiding situations where short-term improvements lead to long-term challenges.
Vendors also say that tracking a broader set of people data, such as mobility and skills data, leads to better business performance. Data also helps temper risk. Workforce analytics help executives anticipate skills shortages, for example, or identify regulatory issues or technology changes.
In today’s business environment, executives want to more easily see early warning signals that indicate stress in the system. More and more, they see dropping engagement, manager churn or spikes in absenteeism as indicators of operational risk that require attention for corporate leadership — not just HR.
Why Data Storytelling Is Essential to People Analytics Success
Still, challenges remain, such as the need for improved data literacy among HR professionals. Many HR teams generate sophisticated dashboards but struggle to communicate insights in ways that get the attention of financial and operations leaders. HR’s essential role with the C-suite depends not only on having data, but also translating it into narratives that align with executive priorities, according to CultureWorks.
Another area requiring a careful approach is ethics and trust. As people metrics become more granular and dynamic, concerns about surveillance, bias and transparency are sure to grow. Responsible analytics governance — clear rules about who has access to data and how it can be used — is increasingly important to corporate leadership.
Companies must be especially aware when metrics evolve toward individual-level insight. Individualized scoring raises questions about fairness and intent. People analytics should inform better systems and management practices, but without reducing employees to risk scores.
One more thing: Analysts say the most valuable people metrics aren’t necessarily the most complex. Clarity, relevance and actionability matter more than sophisticated algorithms. Executives want to know whether the organization has the talent it needs, whether the workforce is engaged and productive and whether their leadership practices will result in sustainable performance.
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From HR Metrics to Strategic People Analytics
Executives like data, and that’s not going to change. Employers who see people metrics as a strategic tool will have a leg up. They’ll prioritize analytical capabilities, governance and telling the stories data reveals. They will use data to improve work, not just measure it, and they’ll recognize that data that helps them truly understand how people provide competitive advantages available in an uncertain economy.
Editor's Note: Catch up on other trends in the people analytics space:
- AI Is Moving Skills Management Out of Spreadsheets and Into Action — Skills shape hiring, learning and knowledge management, but efforts are often fragmented. Can AI-powered solutions finally fix how organizations manage skills?
- The Secret to People Analytics Impact Isn't Data, It's Relationships — People analytics teams can increase the impact of their work by designing data products to meet their stakeholders where they are. Here's how.
- Employee Retention Remains a Concern. People Analytics Can Help — Companies spend a lot of time, money and resources to hire the best and brightest talent they can find. People analytics can help you retain them.