'People Analytics' Can Save You From Costly H.R. Mistakes

Here are five of those mistakes, just to start. Interested yet?
'People Analytics' Can Save You From Costly H.R. Mistakes
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"Data tells a compelling story -- way more compelling than whatever I can articulate," Maia Josebachvili, vice president of strategy, marketing and people at the recruitment software company, Greenhouse, told me.

Related: Why You Need to Embrace the Big Data Trend in HR

Josebachvilli is like so many others today who are striving to make their workplaces better. And, in that context, she described to me how her team members noticed immediately the difference people analytics could make at a growing company like theirs.

"We found that we could give the same advice to a manager over and over again, but they didn't always listen," she said. "However, once we started sharing metrics and backing our statements up with data, our managers became incredibly invested in the results.

"People analytics" involves the use of data to make decisions about company practices and processes. "With the help of people analytics," Josebachvili continued, during our conversation, "our managers now feel truly responsible and empowered to own the engagement of their teams."

As more leaders make this same discovery, people analytics -- which is reshaping human resources practices -- will become a bigger part of how business is done. In fact, according to the Global Human Capital Trends 2016 report from Deloitte University Press, 32 percent of the more than 7,000 companies surveyed said they were ready to start using people analytics. That's an increase from just 24 percent of companies in 2015.

However, many business leaders remain hesitant to start a widespread use of data tools. Especially for a startup, such tools might seem unnecessary or too expensive.

That's a shame because, in actuality, using data to inform talent-management decisions helps companies dodge costly mistakes. Here are five wasteful situations that using people analytics could help companies avoid:

1. A poor candidate experience

When job-seekers coming out of the hiring process are unhappy, the result can be damage to the organization's reputation as an employer and damage to its overall brand.

In fact, according to a May 2015 CareerBuilder study of more than 5,000 American employees, 69 percent of respondents said they were less likely to buy from an organization after a bad interview experience.

Similarly, when Josebachvili and her colleagues looked at data from their recruiting process, they were understandably dismayed to uncover a poor candidate experience. "We found that one of our KPIs, our candidate experience score, was not as high as we wanted it to be," she said. "The recruiting team dug into the data, assessed any existing problems and potential opportunities, created a plan and was able to raise the percentage of happy candidates by 13 percent in just one quarter."

Related: How Google Uses People Analytics to Create a Great Workplace

2. Mismatched employees

For a growing company, every hire matters. Choosing the wrong person for a role affects the team's productivity and inevitably leads to more resources being wasted as you look for a replacement. Luckily, there are now people analytics tools that help companies make better decisions.

Ray McKenzie, founder and principal of Red Beach Advisors, based in Los Angeles, Calif., said he uses Predictive Index to guide his hiring decisions. The tool employs behavioral, skills and cognitive assessments to provide unbiased insights about job-seekers.

"Implementing people analytics has helped me place individuals in correct roles within my company," McKenzie told me. "By positioning the individual properly, I receive a better work output from their efforts. People are in roles they enjoy; the workplace is happier. Employees have a sense of self-gratification and accomplishment. It's a win-win for everyone."

3. Incorrect assumptions about employees

For companies in new or niche industries, "best practices" are often not yet in place for companies to follow to create an enjoyable workplace. Unfortunately, adapting strategies from other industries or guessing what to do doesn't always work out.

But now, with people analytics, companies can get to know their own workforce rather than making unfounded assumptions. The insights gained can help them engage the best employees and retain them, to avoid costly turnover.

Keegan Peterson's experience is an example: "Being in the cannabis industry, there is not a lot of publicly available data on the people within it," Peterson, who's founder and CEO of Wurk, in Denver, Colo., told me. "In order for us to support the needs of the industry, we need to first understand who works in it and what needs those individuals have."

In his case, Peterson said, he originally assumed that a free-form work environment would allow his team to do better and more innovative work. But people analytics showed that wasn't the case. "There is really a science to it," he explained. "The data showed that structured processes with specific creative times was [a framework] much more attractive and beneficial to our workforce. Once we made the change, we could clearly see an increase in productivity, which also increased our company morale."

4. Missed trends

The longer an organization uses people analytics, the better its leaders get at being able to spot trends and get ahead of problems. Month after month, year after year, certain patterns become obvious.

"One of the biggest benefits of people analytics is the ability to track employee-sentiment trends over time," said Ketti Salemme, senior employee engagement manager at TINYpulse in Seattle, Wash. "Looking at our own data, we're able to see which time of year employee happiness is typically lowest or highest, and plan accordingly. It's immensely helpful with both business decision-making and predicting and preventing work-culture dips."

TINYpulse's own tool helps track these trends; so does another tool, Syndio. Through short surveys, Syndio provides insights into the relationships among employees to see how well everyone is working. It offers suggestions on how to improve the workplace, and identifies individuals who can help improve morale.

5. Costly employee expenses

Growing companies need to save money wherever possible. Being able to avoid paying more for unemployment insurance, or wasting a paycheck on an employee who isn't being productive, is a big benefit.

Celeste O'Keefe, CEO of The DANCEL Group Inc., in New Orleans, La., found that people analytics gave her the information she needed to avoid these costs. "We use Veriato to improve productivity and training," she said. "We look at the time spent working, as well as the end results."

Related: The Google Tool That Helps You Make Better HR Decisions

After the software revealed, for instance, that one particular employee had been spending most of the workday playing solitaire, O'Keefe said the company was able to stop an unemployment claim. "As a small business, that's a key savings," she pointed out. "When a former employee goes on unemployment, expenses go up. The software gives me something tangible to prove my position, so it isn't just 'their word against mine.'"

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