In a data-driven world, the question of HR analytics vs. people analytics is rapidly evolving. Mature organizations may embrace the latter, but the former continues to be relevant for HR departments. This article discusses the differences between HR and people analytics. It defines the two and explains how they work in an organization.
HR analytics is defined as the study of workforce key performance indicators (KPIs) to improve the efficiency of HR processes and reduce operational costs. In contrast, people analytics is defined as the study of the thought processes, well-being status, opinion, and composition of the workforce to come up with actionable suggestions that will improve employee happiness and, thereby, the performance of the company as a whole.
Are HR and people analytics the same?
HR analytics and people analytics are two distinct ideas complementary to one another. People analytics emphasizes actionable analytics applied to people management and recruitment, while HR analytics concentrates on descriptive data analysis and decision-making tools.
To understand their differences better, we must first know how the HR data analysis process works.
How Does Data Analysis in HR Work?
Before we examine the distinction between HR and people analytics, let's examine an instance of data analysis in an HR application: a company's absence rate has begun to rise. This is problematic owing to increased expenses associated with employee absence, and a decline in productivity.
“Why" is the first question the executives will ask. Typically, this leads to coming up with answers based on personal views and hypotheses. that are not supported by credible evidence and are prone to inherent biases.
Instead, the HR team will have to look into the statistics to see why the absence rate is rising. What proportion of employees were absent this month? What is the forecast for the next month? Why has the absence rate increased from 5% last year to 15% this year?
After verifying the baseline data with HR analytics, next up is to determine the "why " using people analytics.
Various techniques, including surveys, may be used to determine the source of the rising absence rate, and figure out why individuals are not coming to work. Are the numbers similar to the previous year? What alternatives are available when the fullt-time employees are not in office? Then, an inquiry is conducted to arrive at a hypothesis: for instance, an increase in work pressure. This allows a solution to be derived. How can we educate managers to assign responsibilities more effectively? How can we reduce employee stress? Should we provide more flexibility at this time?
Essentially, the data analysis process involves collecting data, and identifying and measuring the causes and factors impacting or culminating in these business challenges. Companies use a combination of HR and people analytics to solve them.
Learn More: 8 Must-Have Features to Look for When Buying HR Analytics Tools
What Is HR Analytics?
HR analytics is the analytical determination and assessment of human resource factors that impact business outcomes.
HR analytics is, in its purest terms, the analysis of HR patterns throughout an organization in order to identify issues and consider potential remedies. HR analytics investigates factors such as absence rate, recruitment rate against departure rate, and just about everything pertaining to the workforce.
The objective of HR analytics is to identify and evaluate human factors that influence the performance of an organization. Here are a few examples:
- What are individuals doing?
- How involved are employees in organizational activities?
- What are their qualifications?
- What effect will this have on business outcomes?
The process beings with identifying the issue or problem the organization is facing. They then research the various organizational components collect pertinent information, and then evaluate it to uncover the root cause of the business's challenges.
Let us look at the meaning of people analytics in HR, which is more actionable in nature.
Learn More: 10 HR Data Analytics Metrics You Should be Tracking
What Is People Analytics in HR?
With a title change comes a shift of emphasis.
When HR analytics first came into being, the objective was to discover details about the organization. The emphasis is placed on the enterprise, not on employees as individuals. Over time, organizations have recognized that the human aspect plays a critical role in the operations of the company; therefore, the shift in emphasis.
Workers are no longer seen as just resources or numbers, but as an integral component of the overall success of the business. The method of data collection has been modified to gather more data on how people think and make decisions, and the approach to research and analysis has shifted as well Analysts are exploring questions such as: What are the opinions of individuals? What factors might foster a much more creative work environment? What factors might encourage collaboration? Such questions are fundamental to people analytics, and there is a clear difference between the questions that are answered by HR analytics vs. people analytics.
People analytics is being used in a wide range of corporate functions, including recruitment processes, the amendment of corporate policies, and the design and development of benefits packages. By knowing what is people analytics in HR, you can answer questions like:
- What motivates employees to stay on with their jobs?
- What inspires their optimal performance?
- What drives them to become more engaged with the organization?
- Why, then, do people quit?
The answers are instantaneously applicable, requiring minimal additional context. This is the advantage of employing people analytics above conventional HR analytics. Consequently, people analytics is the contemporary incarnation of HR analytics.
Learn More: People Analytics: A Step-By-Step Guide To Using Analytics in HR
Why Is the Distinction Between HR and People Analytics Necessary?
People analytics, HR analytics, workforce analytics or talent analytics, are used interchangeably in the industry today. Talent analytics has a slightly narrow connotation since it emphasizes professional aptitude and is frequently used in academics. Software companies specializing in workforce planning use workforce analytics more often.
But HR analytics and people analytics generally relate to the statistical examination of human resources data and are often used synonymously and interchangeably.
HR analytics has evolved into the most popular of these terms. The average number of HR analytics-related Google searches each month is around 5,500. People analytics ranks lower, with around 1,500 monthly searches.
However, the phrase people analytics has surged in use lately. This could be because:
- The term "HR analytics" suggests an HR-only focus. People analytics includes other aspects of working with and managing employees.
- HR analytics is fundamentally about people, hence the inclination to use the term people analytics.
- There’s a shift in focus from department-centric analytics to overall analytics at most organizations. So, people analytics as a component of a broader business analytics solution is a far more appropriate nomenclature than HR analytics.
Companies with advanced, mature HR/people analytics systems often use the phrase "people analytics." In contrast, "HR analytics" is more prevalent in organizations where the HR/people function in its nascent stages, with little or no data science involved.
Although they are closely connected, HR and people analytics have distinct applications. The latter may include behavioral trends, employee reactions to various circumstances, etc. Similar to psychological assessments in highly mature companies, there might be an infinite number of use cases if you have the necessary data.
HR analytics, on the other hand, would concentrate on personnel retention/attrition analysis and performance analysis, to mention a few typical action areas.
Learn More: Democratize HR Analytics to Drive Agile Decision Making with Darwinbox
The Role of HR Analytics vs. People Analytics in An Organization
HR analytics keep a watch on human resource productivity relative to industry benchmarks. Consequently, the HR team's data enables improved strategic planning — for workforce increments, salary appraisals, hiring, layoffs, shifts, schedules, and other considerations. Additionally, automated sentiment analysis assists HR departments in developing more effective employee engagement strategies .. Employees' competency development and appropriate workforce enhancements also come under the purview of HR analytics.
People analytics, in contrast, focuses primarily on the “why”. It involves using data to understand why employees do what they do, and using the insight to increase employee engagement, motivation, and retention.
The objective of a truly robust people analytics strategy should be to include, within its purview, the workforce and incoming customer data. People analytics institutionalizes the methodology of measuring, evaluating, and integrating all of this data. Consequently, the appropriate use of people analytics can contribute to the success of your organization, and ineffective analytics might lead to its eventual ruin.
Learn More: 19 HR Analytics Metrics You Should Track
Descriptive HR Analytics vs. Actionable People Analytics: A Key Difference
Most reports on HR analytics include descriptive metrics. They tell us about what transpired and help in evaluating the state of HR processes. However, HR professionals must concentrate on performance indicators as well, which are actionable metrics. This is where people analytics comes into play.
Headcount is an example of a descriptive metric. 2500 people is neither excellent nor terrible; it just is. Additionally, turnover rates are a descriptive indicator that may be viewed as positive or negative. With this additional layer, turnover rates become a diagnostic statistic, and the metric informs us if there is a problem: for example, "turnover is 25%, and that is above target."
AI and machine learning boost people analytics. They use sophisticated statistical models to predict future events, and enables organizations to handle impending issues. People analytics are based on the outcomes of projections and offer solutions to future developments.
In conclusion, people analytics provides actionable performance indicators, predictions, and proposed solutions. HR analytics reports often include the data necessary for people analytics, but their analyses seldom extend beyond basic interpretations. The majority of the strategic insights remain locked up within our HR systems – without the intervention of people analytics.
Learn More: Evolution of People Analytics | Research Report
The Difference Between HR and People Analytics Explained with an Example
Let’s take the example of an organization’s hiring process to better understand the difference and the interplay between HR analytics and people analytics.
A candidate has arrived for an interview. The organization carries out the interview and assessment process determined by data metrics analyzed from the hiring process of current employees and applicants at other organizations. The number of interview rounds, the members of the interview panel, etc., are decided based on this data. This is an example of HR analytics in practice.
People analytics, on the other hand, is the process of viewing applicant responses and comparing them to those of previous successful candidates-turned-employees. This provides actionable insights on which candidate to hire.
Essentially, the two come together and help optimize human capital management at organizations.
A robust data reporting and analytics platform can help your organization manage the rich employee data residing in your organization, and use advanced tools to derive actionable insight from your people data.
Make the most of your people data, using both HR analytics and people analytics, with an all-in-one analytics platform. Schedule a demo with Darwinbox today to learn more!
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