More HR leaders are looking for people analytics software right now than ever before.
They want tools to help them accomplish their objectives — like better workforce planning, talent management, and performance management.
In the last ten years, people analytics has evolved from the luxury of a few large tech companies to a highly accessible must-have for any people ops team. In fact, a Deloitte study found that more than 70% of organizations are “investing in people analytics” to make data-driven decisions about the workforce.
These insights are now more accessible than ever thanks to people analytics software — a tool that gathers and analyzes data about talent to inform decision-making. But people analytics is a multi-billion dollar industry with a wide range of tools available. Finding the right tool for your business isn’t straightforward.
And although there’s no ideal solution across every team, certain features are essential in any people analytics software. By looking for these features, you can better position your team to adopt people analytics effectively.
1. Data aggregation
One of the most important features to look for in people analytics software is its ability to aggregate data. Data aggregation is the process of centralizing multiple data sources to create a “single source of truth” for your people data.
In many cases, people data is scattered across the organization. You might have to pull in comp planning information from one database and applicant tracking from another. Then you still have to export all of that data to a spreadsheet. People analytics software should handle all of that for you by automatically merging people data from different HR systems. And it should automatically update and aggregate this data on an ongoing basis to capture changes to your organization in real-time. This is extremely important as a one-time aggregation will only offer a moment-in-time snapshot, which can not accurately reflect the dynamic nature of an organization over time.
From there, your team can easily get all the information they need to capture people analytics and tie those insights back to business goals. In short, this type of data aggregation gives you a complete picture of your organization.
Let’s say you want to cut the turnover rate. You’d need to analyze the data around employees who have left your company. This type of attrition analysis involves understanding how those employees “responded to employee surveys, whether they were recently promoted or received a salary increase, what development programs they attended, and more.” A people analytics software with automatic data aggregation brings together all the data you need to analyze so you can more easily make an informed decision about how to cut the turnover rate.
2. HR technology integration
Data aggregation goes hand-in-hand with technology integration. You need people analytics software that integrates with your HR tech stack to make sure you can easily pass data between systems to do everything from combining and analyzing data to taking action accordingly.
Ultimately, seamless integrations improve HR processes. There’s a clear link between HR tech stack integration and HR team performance. When tech stacks are connected, they produce more actionable and accurate data, according to a report from the HR Research Institute.
As a result, it’s important to prioritize analytics tools that integrate with your existing HR stack. Your people analytics software should connect with and sync HR data from tools like your HRIS (human resource information system), your ATS (applicant tracking system), and your performance management system.
Here are example integrations:
- Save your team time and ensure consistency by triggering an open role in your ATS when you add a new role in your people analytics software
- Ensure visibility across the organization through automated new hire or departure announcements by pushing any updates you make in the people analytics platform directly to the relevant Slack channel
Your people analytics software should be able to produce detailed reports about your people data. Which is to say, it should tell you what’s happening, ideally in real-time, in those areas you want to measure.
Let’s say promoting diversity, equity, and inclusion (DEI) is a priority. DEI reporting may look at representation, performance, and compensation by ethnicity and gender. A people analytics software with strong reporting capabilities should show you a breakdown of current employee numbers by race and gender. You should also be able to view trends over time.
John Sumser, principal analyst at HRExaminer, said HR teams who are just getting started with people analytics should look for software that comes with pre-built reports. Templated reports allow you to get started quickly and easily.
Here’s an example of a DEI report you could create using workforce analytics software. The slide below uses this report to illustrate headcount split by gender over time.
4. Easy to understand analytics
People analytics software should present analytics in a format that’s easy to understand and take action on.
Your HR team shouldn’t require extensive training to make sense of the data. McKinsey suggests the more time it takes to simplify the data, the less effective people analytics projects are. To solve that problem, McKinsey encourages companies to prioritize formats that make “useful data accessible to the organization.”
Example formats include visualizations, graphs, and charts. For instance, you might want to visualize diversity or span of control. Your people analytics software should allow you to quickly create org charts to check these HR metrics.
5. Actionable insights
Actionable insights are any data that can drive change in the business.
According to Harvard Business Review, employee data without insight “is meaningless.” People analytics software should produce insights your team can use to develop action plans for talent acquisition, skills development, DEI, and other key priorities.
Consider workforce planning, one of HR’s most important focus areas. A Gartner report found one-third of HR leaders cite a lack of visibility into current skills gaps as a major challenge.
People analytics makes it easy to identify skills gaps because it lets you create a centralized record of the entire workplace’s skills, which you can then check against the company roadmap to flag any gaps. Then, managers can create headcount plans directly inside the platform that take into account team goals and the necessary skills to get there. With a people analytics platform, managers should be able to easily view their team’s current skills, check the company’s growth plans, and identify hiring gaps — and then use that insight to propose a new role based on their department’s needs. HR and finance can also review and approve the role from within the platform.
Any people analytics software you consider should protect employee data. This makes it essential to prioritize people analytics software that comes with access control and encryption.
The Society for Human Resource Management recommends HR teams think of a people analytics platform as a secure data hub, as doing so means companies no longer have to share personal data via email. Look closely for solutions that are SOC 2 (Service Organization Control) Type 2 compliant. SOC 2 Type 2 is a set of data security standards developed by the American Institute of CPAs. When a people analytics vendor has completed a SOC 2 Type 2 examination, it means a third party has reviewed their security controls and found them effective.
Deloitte also suggests teams use permission controls to restrict access to employee information. HR frequently needs to make multiple copies of the same spreadsheet to protect sensitive data, but best in class people analytics tools will provide granular control that allows you to restrict access to employee information based on data points and roles (therefore avoiding the effort of duplicating spreadsheets).
It’s important to note that traditional BI analytics tools won’t satisfy these security requirements because they can’t distinguish sensitive data in the same way that a dedicated people analytics software can.
Choose the best people analytics software for your organization
When deciding which people analytics software to implement for your team, there are many factors beyond features you’ll have to consider.
With the right people analytics software, you’ll be able to make positive changes across the employee experience that contribute to better employee engagement and higher retention rates.
With that in mind, you’ll need more than just a checklist of important people analytics tools features to make a decision. Check out how InVision works with ChartHop to manage a global, fully distributed workforce and see the power of people analytics in action.