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How to harness the value of people data and operational HR insights

Photographic portrait of Alexander Locher
Alexander Locher

Senior Manager, People Analytics Lead | EY Switzerland

8 minute read 19 Feb 2024
Related topics
Workforce

Understanding the significance of people insights and transactional HR data to unlock the transformational shift in the organization.

In brief

  • In the fast-paced world of global business, CxOs of multinational corporations are continuously seeking ways to outpace competition and drive sustainable growth.
  • People Analytics offer insights into both the effectiveness of operational HR as well as insights about the workforce itself.
  • Data quality and governance present one of the biggest challenges when deploying People Analytics.
  • A data-driven mindset can foster an efficiently-led people function.

How to harness the value of workforce and operational HR data

The pivotal role of People Analytics as a transformative force in achieving sustainable growth by accessing data to understand and optimize workforce performance and capabilities, leading organizations have documented significant advances, including a notable increase in sales and link employee with customer satisfaction.

With the rise of artificial intelligence (AI) in the workplace, companies have more opportunities than ever before to gain competitive advantage by turning data into strategic action. These developments unlock a transformational shift for human resources (HR) as well as people domain and their impact on the company’s performance. People data offer insights into the behaviors, motivations and productivity patterns of the workforce. By analyzing this human-centric data, companies can make informed decisions and create value for both their business and employees.

On a daily basis, engaging with multinational companies, people functions, and global leaders has brought to light significant trends that have made a substantial impact on the people domain and its data.

current trends

Differentiating operational HR insights and workforce insights

To fully grasp the significance of people data, one must distinguish between insights on the people working in the organization and insights we derive from transactional and operational HR Data as well as processes.

The common understanding of People Analytics is mostly linked to operational HR data such as accessing data in enterprise HR solutions. This involves metrics such as recruitment statistics, attrition tracking, performance and payroll data. Operational HR insights provide valuable snapshots of the operational effectiveness of the HR function.

However, to harness the full potential of the workforce – for example, to foster high-performing teams – People Analytics must go a step further and understand the behavioral patterns of employees in the workplace. Workforce insights provide a deep understanding of factors that drive workforce effectiveness such as team dynamics, collaboration or aspirations.

Leveraging workforce insights

Unlocking the potential of People Analytics is a game-changer for organizations striving to thrive in the modern business landscape. By harnessing the power of data-driven insights, businesses can gain a competitive edge in various crucial aspects. Below we provide some examples of how workforce data can be leveraged:

Anticipating future skills and talent needs: A predictive analysis allows organizations to forecast their future talent needs. By examining historical data, HR teams can make informed decisions and predictions about recruitment, succession planning and workforce development. This proactive approach reduces hiring costs and ensures a skilled and adaptable workforce. By adding external data, e.g., regional job market data, a broader analysis can shed light on the health status of the talent pipeline.

Enhancing employee engagement and retention: Through data analysis as well as active and passive listening, organizations can measure and improve employee engagement and retention. By identifying the drivers of employee satisfaction, such as leadership styles and workplace conditions, companies can tailor their strategies to reduce undesired employee turnover and foster a more productive workforce.

Fine-tuning leadership skills and training initiatives: People Analytics provides insights into leadership effectiveness and training needs. By analyzing performance data and employee feedback through active and passive listening, organizations can pinpoint areas requiring leadership development and targeted training programs. This investment leads to improved management practices, driving enhanced employee performance and overall organizational success.

Understanding workforce performance: Operational HR analytics provides granular insights into employee performance. By tracking key performance indicators (KPIs) and aligning them with organizational goals, HR professionals can identify high-performing individuals, recognize areas for improvement as well as provide targeted training and development opportunities. This data-driven approach not only enhances employee productivity but also contributes to achieving broader business objectives.

These insights translate into cost savings, higher job satisfaction and improved organizational performance — a powerful formula for long-term success.

How EY can help

Leveraging operational HR insights

For companies committed to efficient HR management, it is a strategic imperative to incorporate components such as process analysis, optimized resource allocation and budgeting as well as accurate performance tracking into their daily operations. Below we provide some examples of how operational HR skills can be leveraged:

Optimizing HR workflows: Process mining enables HR departments to visualize, analyze and optimize their workflows. By mapping out the entire employee lifecycle from hire to retire, organizations can identify bottlenecks, streamline processes and reduce administrative burdens. This leads to faster onboarding, improved compliance and enhanced overall operational efficiency.

Allocating resources strategically: Operational HR analytics empowers organizations to strategically allocate their resources. HR teams can optimize workforce planning, identify skills gaps and allocate budgets where they will have the most impact. A proactive approach ensures that resources are utilized efficiently and that the organization remains agile in responding to ever-changing demands from the business.

Cost-benefit analysis of HR initiatives: Operational data allows HR to perform cost-benefit analyses on its various initiatives, whether it is a new recruitment campaign, training programs or a workplace technology initiative, to ensure that any investment made contributes efficiently to the wider organizations bottom line.

Embracing operational HR analytics empowers organizations to achieve greater efficiency in human resource management and to ensure that the department maximizes its potential within the financial budget.

Challenges in harnessing operational HR and workforce data

Unlocking people data’s value within organizations can be challenging. Legacy systems, outdated and incompatible with modern tools, create hurdles for data analysis. Inconsistent practices across units result in data silos and conflicts over ownership. To conquer these challenges and reveal data’s potential, leaders should establish robust data governance in the people data domain. Standardization ensures data consistency, while data security safeguards against expensive breaches.

Data governance serves as a guiding compass, navigating organizations through the complexities of data management and positioning them for success.

Data quality as an imperative

Ensuring data quality is critical to the future success of any organization. Poor data quality can have significant consequences by affecting decision-making, employee satisfaction, legal compliance and resource allocation. Inaccurate or incomplete data can lead to misguided hiring decisions, legal complications and inefficiencies in HR processes.

This especially applies when artificial intelligence (AI) and advanced analytics are introduced into HR processes, making data quality even more important. AI systems rely on historical data to make predictions and recommendations, but if this data is tainted with biases or inaccuracies, issues are likely to be perpetuated. It may lead to biased hiring recommendations, inefficient automation, ineffective predictions and potential damage to the organization’s reputation due to wrongful legal reporting.

At EY, we define people analytics as the extensive management and use of people and HR data, statistical and quantitative analysis, explanatory and predictive models, and fact-based action to improve performance, drive better decisions around your workforce and proactively putting humans at center.

To mitigate these challenges, organizations should prioritize data quality and people data governance initiatives in HR. This involves regular data validation, audits as well as ensuring data accuracy and consistency. When implementing AI-driven HR solutions, a strong data quality foundation is essential. Data quality in HR is not just a matter of compliance, it is a strategic imperative for organizations to thrive in an increasingly data-driven future.

Maintaining high data quality presents the greatest obstacle in leveraging data and AI effectively. Starting with thorough reporting and depiction of data quality shortcomings is a solid foundation

Alexander Locher

Senior Manager, People Analytics Lead | EY Switzerland

Paving the way for a successful people data-driven organization

Cultivating a data-driven culture promotes informed decision -making within your organization. The following five factors define the DNA of successfully people data-driven organizations that should be fostered when building a thriving data-centric culture.

For companies still wondering whether the use of people data unlocks value, a couple of questions can help clarify the need for action:

  •  Do you have insights on HR initiatives which directly correlate with improved business outcomes?
  • Are you able to quantify the relationship between employee experience and customer experience in your company?
  • Do you trust in your ability to provide accessible and reliable people and HR?
  • Are you confident to efficiently supply regulatory and ESG reporting?

Summary

To harness the value we believe that high-quality data and governance, a data-driven mindset and a compelling People Analytics strategy is a prerequisite for becoming a truly data-driven HR function. At EY we can help you start your journey today by Building a solid foundation with workforce and operational HR data infrastructure as well as data governance. We support you end to end by creating actionable insights for the wider organization and discovering new use cases around workforce and operational HR for ESG reporting and to efficiently lead your HR function. Embark on a transformational journey with us to leverage generative and conventional AI, and using advanced analytics connecting the dots with finance, sales and operations data.

Acknowledgements

We thank Ava Dossi and Christopher Holtz for their valuable contribution to this article.

About this article

Photographic portrait of Alexander Locher
Alexander Locher
Senior Manager, People Analytics Lead | EY Switzerland
People Analytics and Strategic Workforce Planning Lead Switzerland. Passionate boat captain, water and winter sports fan and always with colored socks.
Related topics
Workforce

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