People Analytics

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HR Analytics and Employee Engagement: What You Need to Know

Today’s HR professionals and business leaders face unprecedented challenges in attracting, engaging, and retaining their people, and this challenge is expensive!

HR Analytics and Employee Engagement: What You Need to Know

Table of Contents

Summary:

Employee engagement is more important than ever, and HR departments are making the shift to using People Analytics to make better decisions. Using robust People Analytics takes the guesswork out of measuring employee engagement; it helps create an optimal employee experience to reduce turnover, absenteeism and increase productivity. Simply put, measuring the employee experience motivates people to change at all levels. The "push to pull" shift from surveys to passive behavioural data collection gives HR, managers, and employees more accurate data to act upon.

Key Points:

  • Employees Engagement can pay significant dividends given the cost of labor and turnover.
  • Employers are turning to People Analytics to optimize their employee experience.
  • When HR professionals are working with accurate data on who their employees are, who they interact with, and what they value, it takes the guesswork out of HR decision-making.
  • The most effective People Analytics measures people’s interactions, behaviours, and sentiment over time.
  • People Analytics are shifting from “pull to push” where rather than actively collecting data, managers, and employees can see or are “pushed” actionable data in real-time.
  • If managers have accessible employee engagement and recognition data, they can improve business results by addressing any underlying problems and building on strengths.
  • If individual employees have access to analytics about their behaviours and contributions, they will be aware of their performance and be motivated to improve.

Today’s HR professionals and business leaders face unprecedented challenges in attracting, engaging, and retaining their people, and this challenge is expensive! On average, 50-60% of Fortune 500 companies' business spending is allocated to labor, including turnover, which is costing US companies 1 trillion dollars per year - the cost of replacing an individual employee alone can range from one-half to two times that employee's annual salary.

With those labor costs continuing to rise, the natural question for an organization to ask is, “how do we retain our talent?”

One way organizations are managing employee engagement is through human resources (HR) data and analytics.

HR writer and thought leader Josh Bersin defines HR Analytics, or People Analytics, as data that “allows organizations to understand the way they operate, improve productivity and performance, reduce turnover, and really make work better for people.” If People Analytics feels like uncharted territory for you, you aren’t alone; a survey of HR professionals found that just 9% of people feel that they have a “good understanding of the talent dimensions that drive performance,” and only 8% reported to have access to “useable data.”

Luckily, the space is becoming more and more accessible and user-friendly through simple dashboards that summarize data and make the information more digestible and actionable.

Most of today’s organizations use Human Resources Information Systems (HRIS) that allow for easy access to data on the length of the recruitment process, employee retention/turnover rates, and employee demographics. However, measuring employee engagement data is a much less common practice as the data has historically been more difficult to access beyond traditional surveys or anecdotal interviews – but change is coming.

Employee Engagement Analytics

Employee engagement has many sides. At the top of organizations, conversations surrounding organizational culture, employee engagement, and values are typically subjective and specific to the individual experience of the people in the room. This is not an intentional outcome from leaders, they are doing the best they can with the information they have, and People Analytics can provide them with more information.

People Analytics on employee engagement brings numbers and reports into those conversations, giving everyone in the organization a voice through the data. As an example, the leadership team may think that their values are representative or even understood by their workforce, but a simple report from their recognition system could show that what the employees’ values don’t align – timeliness might be valued over innovation, authenticity over professionalism, or creativity over productivity.

A piece in Harvard Business Review (HBR) suggests that using People Analytics makes human resources management more “deliberate and systematic,” which in turn leads to organizations becoming more effective by being “more evidence-based, talent-centric, and meritocratic.” When HR professionals are working with accurate data on who their employees are, who they interact with, and what they value, it takes the guesswork out of HR decision-making. Returning to the earlier example, if the organization’s values are not resonating with employees, it might be time to revisit them. Or, if there are inclusion issues, HR could run training on unconscious bias and diversity, equity, and inclusion to address these issues head-on.

So, how do organizations make that shift to People Analytics - and where does the data come from?

Historically, HR data was only collected through surveys. The problem with that approach is that surveys are just a snapshot in time and often do not tell the whole story. What’s more, many factors can affect a survey's results and the value of the results provided, including the quality of the questions, the respondents’ mood, the events on the day leading up to the survey, and more.

Still, surveys are effective at gauging employee sentiment (how employees feel about their role and organization) and can alert an organization to a need for deeper People Analytics if the results indicate poor engagement.

The most effective People Analytics measures people’s interactions, behaviours, and sentiment over time. One approach to measuring employee engagement with People Analytics is passive data collection that uncovers trends and actionable insights by analyzing how employees interact in communication systems like Slack, Teams, or Kudos.

This gives an understanding of culture and engagement that you would never get from a survey. For example, seeing firsthand which teams collaborate most often, least often, and if there are any communication siloes in your organization, to name a few. In short, behavioural and relational People Analytics gives data that more accurately reflects the true employee experience.

A study from Deloitte frames this as a shift from “pull to push” where rather than actively collecting data, managers and employees can see, or are “pushed,” actionable data in real-time.

How do HR Data and People Analytics Benefit Individual Employees?

The psychology behind why data tracking is effective in changing behaviour is simple. An article by Wired distilled it down to two factors: measurement and motivation. The piece also quoted Lord Kelvin’s famous saying, “If you cannot measure it, you cannot improve it.”

Stefan Olander, VP of Digital Sport at Nike, explains, "There's incredible power in knowing how you're doing,” he continues “it's inherently, incredibly motivational."

The same philosophy can be applied to People Analytics in an HR context. If managers have accessible data on employee turnover rates, absenteeism, and even the quantity and quality of recognition and gratitude they provide to their teams, the measurement will motivate them to improve their results by addressing any underlying problems and building on what’s working.

Similarly, if individual employees have access to analytics about their own behaviours and contributions, they will be aware of their performance and be motivated to improve. For example, if they know their company values and can see, through data provided by a platform like Kudos, how often they are recognized for displaying those values in their work and behaviours, they will see where their strengths lie. When employees know their strengths and are encouraged to build on them, they are more engaged and better contributors. A piece from Yale University explains:

“Employees have long focused on fixing weaknesses to increase chances of success. But recent research suggests that this long-standing advice may not be the best coaching. In fact, when leaders, teams, cultures, and individuals focus on strengths, they have a better chance at winning than if they focus on improving deficiencies.”

Looking ahead

Research shows that more than 70% of companies now consider People Analytics a high priority. How is your organization using people analytics to improve employee experience and engagement? If you think you could be doing better – reach out to the Kudos team for an enterprise strategy session today!

Kudos is an employee engagement, culture, and analytics platform, that harnesses the power of peer-to-peer recognition, values reinforcement, and open communication to help organizations boost employee engagement, reduce turnover, improve culture, and drive productivity and performance. Kudos uses unique proprietary methodologies to deliver essential people analytics on culture, performance, equity, and inclusion, providing organizations with deep insights and a clear understanding of their workforce. Book your demo today!

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About Kudos®

Kudos® is an employee engagement, culture, and analytics platform, that harnesses the power of peer-to-peer recognition, values reinforcement, and open communication to help organizations boost employee engagement, reduce turnover, improve culture, and drive productivity and performance. Kudos® uses unique proprietary methodologies to deliver essential people analytics on culture, performance, equity, and inclusion, providing organizations with deep insights and a clear understanding of their workforce.

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