What is People Analytics?

It is more than presenting facts and figures. It goes beyond traditional HR metrics by integrating data from multiple sources, such as HR systems, payroll, employee surveys, and external benchmarks. Through its experimental design, organizations can pinpoint the key insights necessary to address critical questions throughout the employee lifecycle, enabling informed decisions that drive individual and organizational development.

Types of data people analytics can collect: 

• Employee demographics
• Performance data and productivity metrics
• Employee engagement & sentiment analysis
• Recruitment & retention patterns
• Learning management data
• Collaboration and communication frequency 
• Employee well-being score 
• Compensation & benefits usage
• Diversity, equity & inclusion (DEI) data

These insights help HR teams and business leaders make evidence-based decisions while optimizing workforce strategies, predicting future trends, and creating a more effective and positive work environment.

Difference between people analytics and HR analytics

The terms HR analytics and people analytics are frequently used interchangeably, but there is a difference. 

HR analytics focuses on traditional HR functions like recruitment, performance management, employee turnover, and payroll efficiency. It helps HR teams optimize processes and improve workforce management. 

People analytics, on the other hand, takes a broader approach by optimizing organizational workflows, enhancing employee experience, and driving data-informed decisions across various functions. It goes beyond HR metrics to analyze workforce trends, sentiment checks, collaboration patterns, and performance drivers, enabling leaders to improve productivity, engagement, and overall business outcomes.

While HR analytics is more operational, people analytics is more strategic, providing insights that influence company-wide performance, culture, and long-term growth.

Why is people analytics important?

Improving employee productivity, hiring the right employees, and saving costs are key reasons why people analytics is essential. 

Some leaders believe people analytics is limited to HR functions, but its impact extends across the entire organization.

According to Deloitte’s 2023 research, 84% of people analytics teams now have a clear vision and mission, a 23% increase from 2020, indicating a growing commitment to aligning people insights with business strategy​. Furthermore, those with mature people analytics functions report better collaboration across business units, faster response to workforce challenges, and greater success in embedding data-driven decisions across the organization​. 

Despite its potential, per HR.com’s State of People Analytics 2023-2024 report, only 32% of organizations rate themselves as good or very good at making constructive changes based on people analytics insights. While nearly half (48%) report proficiency in gathering data, significantly fewer excel at analyzing it (40%) or deriving actionable insights (34%). The challenge often lies in effectively collecting, analyzing, and applying workforce data. Using AI-powered analytics helps HR and IC teams predict workforce trends, enhance decision-making, and automate repetitive tasks, allowing them to focus on strategic initiatives. 

Simpplr uses genAI to boost analytics and personalization, learn employee preferences, and analyze intranet activity to deliver insights, recommendations, and predictions to intranet managers and end users.

Types of people analytics 

There are four types of people analytics, each of which offers different insights to help organizations make data-driven decisions. When deciding which method to implement, consider organizational needs and the data you have access to.

Descriptive analytics

Focuses on analyzing historical data to understand what has happened in the past. It summarizes trends, patterns, and relationships using reports, dashboards, and visualizations. This type of analytics is often used to track key metrics such as sales growth, employee turnover rates, or engagement levels, providing a clear snapshot of past performance.

Diagnostic analytics 

Goes deeper to explore why certain events or trends occurred. It identifies root causes by analyzing correlations and anomalies within the data. For example, it may help uncover reasons behind a sudden drop in employee engagement or a spike in turnover rates, enabling organizations to address underlying issues effectively. 

Predictive analytics 

Uses statistical models and machine learning to forecast future outcomes based on historical and current data. It helps organizations anticipate events such as employee attrition or workforce needs, allowing them to plan for challenges and opportunities proactively. 

Prescriptive analytics

Simply put, prescriptive analytics answers, “what’s my next move?” and then recommends a course of action based on  AI and machine learning algorithms that analyze historical and real-time data. It allows listening to the organization’s heartbeat by surfacing employee sentiment, feedback, and behavioral signals. From this data, leadership can develop the best action plan.

Benefits of people analytics

People analytics empowers leaders with objective insights gleaned from employee performance metrics, engagement levels and skill sets. Apart from this, here are a few additional benefits that can give your organization a competitive edge:

Enables smarter and responsive decision making

Business leaders often rely on gut feeling to make data-driven decisions. Today, people analytics combines internal data, research, AI-driven insights, and organizational values to support evidence-based decision-making. This approach eliminates biases, prevents short-term fixes, and ensures consistency, allowing HR and leadership teams to make strategic, data-backed choices.

Enhances employee engagement

According to Gallup’s latest findings, only 33% of American workers are actively engaged in their jobs, while 17% are actively disengaged. This can be due to poor employee recognition, professional development, and customer interactions. Relevant insights gathered from people analytics and employee engagement surveys through feedback or comments can help you discover if employees are engaged and connected to the organization.

Improves employee and organizational performance

People analytics leverages data-driven insights to boost both employee and organizational performance. By analyzing key performance metrics (KPIs), companies can identify areas for improvement, enabling people managers to implement strategic changes effectively. This results in more productive employees and higher organizational efficiency, ultimately enhancing the company’s overall success and competitiveness in the market.

Fair compensation

The disparity in compensation leads to the loss of valuable talent, burnout, demotivation, misaligned objectives, and low productivity levels. Therefore, integrating people analytics into an HRIS or employee experience platform compares job roles, experience, skill level, and market rates to make equitable salary adjustments. Additionally, it helps track pay equity across demographics, ensuring fairness and compliance with labor laws. 

Address skills gaps

According to the McKinsey Global Survey, nearly nine out of ten managers report that their organizations face skills gaps. If not addressed, skills gaps can negatively impact employee experience and cost millions of dollars to the organization. People analytics helps employers identify gaps and personalize employee training programs to help employees move forward with their leadership development plan.

Supports leadership and succession planning

Organizations that use people analytics collect and analyze data related to an employee’s performance, potential and readiness to step into leadership roles, ensuring a strong internal talent pipeline. Based on an employee’s learning objectives, it also creates individual development plans that align with their personal goals. 

Reduces employee turnover

Losing even a single employee is expensive for organizations today. HR incurs costs for hiring and onboarding replacements, and new employees take time to develop unique skills. With people analytics, you can understand: 

• Which employees are leaving and why
• Spot teams experiencing above-average churn
• Detect new hires who are likely to leave soon (early attrition rates)
• Monitor your organization’s retention rate

With this data, HR can work to reduce turnover rates by creating targeted strategies that address the root causes of why employees leave the organization.

Increases diversity, equity and inclusion (DEI) efforts

By systematically collecting and analyzing data related to employee demographics, recruitment, retention, and advancement, organizations can identify patterns and trends that may indicate disparities or biases in their processes. For example, people analytics can identify gender or racial gaps in hiring practices, promotion rates, or pay equity, enabling organizations to implement targeted interventions to address DEI issues.

Understands how employees truly feel

Employees want to feel heard and believe their ideas matter and people analytics plays a crucial role in understanding and interpreting these sentiments by leveraging data-driven insights from various sources. The data is collected through pulse surveys, social media interactions or internal communication platforms where employees connect and engage with one another. 

With an advanced analytics tool like Simpplr’s AI-powered Employee Listening solution, organizations can go beyond traditional surveys and gain real-time insights into employee sentiment.

Potential challenges of implementing people analytics

People analytics offers numerous benefits, but just like any other data, it comes with potential challenges. 

Data privacy

HR teams need to operate within the data privacy laws. In the UK, organizations adhere to the General Data Protection Regulation (GDPR), a law that mandates transparency in data collection, employee consent, and secure handling of personal information. Practicing good data governance ensures your HR data remains a valuable asset. Failure to comply can result in legal consequences and loss of employee trust.

Bias and discrimination

When algorithms and data analysis models are based on historical data, they may inadvertently perpetuate existing biases present in the data. This leads to unfair treatment of certain employee groups and may result in discriminatory practices if not carefully managed. Conduct regular audits to mitigate these biases alongside diverse and inclusive data inputs.

Resistance to change

Implementing people analytics requires a cultural shift. Employees and leaders may be skeptical about relying on data-driven decisions rather than traditional experience-based judgment. Open and clear communication with adequate training can smooth the adoption process. 

Related: 50 best ChatGPT prompts for communications workflows

How to get started with people analytics?

People analytics is no longer a far-off concept. More than 9 in 10 business leaders say that people analytics elevates the HR profession. Meanwhile, 71% of HR executives who use people analytics report that it is essential to their organization’s HR strategy. With these technological advances, organizations can build a more sustainable future and roll out initiatives to keep employees engaged.

Here is a step-by-step guide to implement a robust people analytics strategy: 

Clarify people analytics goals 

Begin with a clear vision of what you want to achieve through people analytics. Are you trying to reduce employee turnover, enhance communication, or improve talent acquisition? This will provide guidance on what type of data is needed, and can give insights into how and when it should be collected. 

Understand data sources and gaps

Identify where valuable workforce data resides — whether in HR systems, employee surveys, collaboration tools, or performance management platforms. Pinpoint any gaps or inconsistencies that could skew insights. Use AI to monitor, surface and remove outdated or duplicate data that could negatively impact analysis. 

Choose the right tool

Selecting the right people analytics tool equipped with modern technologies like machine learning and AI ensures deeper insights and more accurate predictions. Look for a solution that integrates seamlessly with your existing HR solutions and EX platforms to get real-time insights. Make sure your ideal tool enables predictive modeling, automates reporting, and supports decision-making with actionable insights.

Integrate and collect data

Effective data integration and collection are vital steps in people analytics. This process involves aggregating data from various sources — like HR systems, surveys, and communication tools, into a unified platform, ensuring consistency and accuracy. When data is well-integrated, leaders make better decisions based on real insights rather than guesswork.

Analyze and implement

After successful data integration, consider whether it highlights that your employee engagement is lagging or that your training and development need upgrades. Start developing a strategy and implementing steps that allow you to address these issues and generate positive outcomes. Remember to measure your efforts and track how people analytics helped you improve processes and performance.

Examples of people analytics strategy 

Here are a few examples of how successful people analytics strategy has impacted organizations:

Google

Google was among the first organizations to use people analytics in decision-making. Through initiatives like Project Oxygen, the organization’s People Operations team (formerly known as HR) analyzed performance data and employee feedback to identify the behaviors of great managers, leading to the creation of its “Oxygen 10 Behaviors for Great Managers” framework. This data-driven approach also informed decisions such as extending maternity leave, which reduced new mother attrition rates by 50%.

Uber

Uber transformed its people analytics strategy to empower managers, enhance employee engagement, and drive better business outcomes. Instead of limiting data access to HR, Uber ensured that managers had direct access to relevant dashboards, enabling them to make informed talent decisions quickly. Previously, managers had to wait two weeks for HR to process talent decisions — now, with real-time data at their fingertips, they can act immediately, improving both efficiency and effectiveness.

How Simpplr AI can supercharge people analytics

For HR leaders, timely and relevant sentiment insights are critical to better understand how they’re doing, so they can continuously improve EX delivery. But analyzing and interpreting employee data without an AI-powered solution, especially when employees are spread all over the place, becomes challenging.

Simpplr AI goes beyond traditional analytics by leveraging machine learning and natural language processing (NLP) to analyze real-time employee feedback, engagement patterns, and behavioral signals. This enables HR teams to identify trends, detect issues early, and take proactive action to enhance workplace culture. With automated insights and predictive analytics, Simpplr AI empowers organizations to make data-driven decisions that improve retention, engagement, and overall business performance.

Discover how people analytics can enhance internal communications and employee experience with Simpplr. Request for a live demo today!