This post about the business case for people analytics software was originally published in February 2020. It was updated with new facts and information in October 2024.
Over the past few years, the immense value of a strategic human resources department has become crystal clear. HR is no longer purely an administrative team — it’s a key part of business success, aligning employee and organizational goals. One of the tools that’s essential for HR’s transformation from reactive to proactive is people analytics software.
People analytics software gives human resources departments critical insights into talent management, employee performance, and workforce trends. Those insights help you make smarter decisions that lead to improved productivity, higher retention, and better business outcomes.
When your HR department is able to work strategically, you contribute to the company’s long-term growth, help it gain a competitive advantage, and foster workforce sustainability. There’s evidence to back that up — using people analytics can lead to:
- 80% more efficient recruiting
- 25% higher productivity
- A 50% drop in turnover
Keep reading to find out why people analytics software is a necessity, not an option, for today’s HR teams.
What Is People Analytics Software?
People data, also commonly referred to as talent data or HR data, can reveal so much about your workforce. It can tell you which employees are most engaged, which teams have the highest (and lowest) performers, how long it takes to fill vacant positions, and so much more. To get insights from your talent data, you need people analytics software.
People analytics software is designed to collect, analyze, and interpret your people data. The software enables human resources departments to extract real insights about their workforce, uncovering patterns and trends that influence employee performance and engagement. The best software solutions give HR the ability to act as expert data analysts — without the need to hire any.
With the most modern, AI-powered analytics tools, you don’t even need to be particularly tech-savvy to dig deep into your data. With a built-in AI assistant, you can ask questions in natural language and get answers with detailed reports and insightful data visualizations that update in real time.
4 Benefits of People Analytics Software
Despite the demand for innovation in talent management, companies often neglect to invest in the tools and skills that would help them do so. 80% of HR teams say they don’t have the HR tech and analytics tools they need to maximize their effectiveness. It’s also rare that HR teams have access to an employee who specializes in data analysis, especially at smaller companies.
But if you’re not leveraging talent analytics, your company is missing out on an increasing number of opportunities to optimize its people management strategies. The benefits of people analytics software are already significant — and growing by the day. We’ll look at a few that can have the biggest impact on your business.
Read More About People Analytics:
1. Improved Talent Acquisition and Retention
What if you could see how your candidates measure up to the best of your employees? If you use a unified talent management system with people analytics, you can. Your top performers and longest-tenured employees all have something in common — they have a combination of skills and traits that make them ideal employees. Your software solution houses all of that information, along with data about their work performance, in one system.
This powerful system analyzes data in an instant, producing insights that would otherwise require hours of work — or be out of reach entirely. That enables your team to make informed decisions about who to hire and how to retain more people. It even gives you the ability to plan for the future.
For example, with an AI-powered system, you can:
- Analyze your hiring process to find opportunities for optimization
- Source qualified candidates faster than ever, increasing the chances of finding excellent employees
- Rank your candidate pool based on how closely they match the requirements of the job role, enabling rapid, targeted recruitment outreach
- Uncover patterns in performance and turnover to spot employees at risk of quitting or burnout
Increase your chances of hiring employees who will stick around and do well in their roles and launch targeted retention efforts with people analytics.
2. Accurate Workforce Planning
Strategic workforce planning isn’t truly possible unless you use technology. Without people analytics, you’re basically making intelligent guesses about who you need to hire next year or which employees would make good future leaders. But with it, you can accurately understand the state of your current workforce and get a view of what’s possible for its future.
People analytics software enables you to identify skill gaps among your employees, which helps you decide if you should hire for those skills or invest in employee development. You can determine which departments will need to grow and by how many based on business growth goals. You can also use turnover, average time-to-hire, and other important HR metrics to decide who and when to hire.
3. Elevate Employee Experience
With 70% of CHROs prioritizing a better employee experience for their people this year, it’s imperative to ensure yours is up to par with your competition. People analytics makes it clear if you’ve perfected an engaging experience and, if not, which improvements would have the most impact. For example, we know that learning and development is a top concern for employees and job seekers. Why work at a company where they might stagnate over one that invests in their growth?
Imagine there’s a recipe for the ideal employee experience. The recipe is different at every organization, requiring a different mixture of ingredients, including employee satisfaction, professional development, recognition and appreciation, feedback, and more. So how do you know the right mix and measurements for your company? Without people analytics, you just have to guess.
On the other hand, people analytics software can provide you with a detailed list of ingredients and measurements you need to create a winning employee experience. Your data can tell you if your finance department doesn’t feel appreciated or if your sales team needs more face time with their managers. With the recipe revealed, you can target your engagement strategies and, eventually, intelligently experiment for even better results.
4. Data-Driven Decision-Making Power
At the heart of all of these benefits of people analytics software is the ability to make choices based on the reality of your workforce rather than gut feelings. That’s important because HR makes or informs many significant business decisions, and data helps make the right decisions much more clear. Check out a few common use cases where data-driven decisions are ideal:
- Compensation: Whether you’re choosing the salary range for a role or giving out raises, your people analytics software can help determine whether you’re offering competitive pay and giving fair increases based on performance management data.
- Training: Do your employees need additional training on a skill they use often, or do you need to fill a growing skills gap? People analytics gives you insight into waning performance that might make additional training necessary, whether for an individual or a team. It can also help you decide if reskilling or upskilling needs to happen now or next year.
- Restructuring: It’s not unusual for businesses to get to a point in their growth where teams or departments need to be reorganized for efficiency. With people analytics software, you can identify underperforming teams, assess how workloads are distributed, and spot employees whose skills fit elsewhere in the organization. That data helps you confidently make restructuring decisions that boost performance and align with business goals.
Now Is the Time to Invest in People Analytics Software
People analytics have become more accessible than ever, thanks to the rapid pace of technological advancement. What that means is that your competitors are using it now — if you haven’t yet invested in people analytics, you’re catching up, and someone else is leading the pack.
When you do start to use people analytics, you can regain the lead and come out on top. The more time you spend consulting the data to make your decisions, the more you’ll come to know and understand your workforce. You’ll be able to experiment strategically and quickly see the impact of your efforts. You can turn away from traditional, reactive HR strategies and fully invest in future-focused, proactive people management.
Becoming a data-driven HR team doesn’t happen overnight, but with the right people analytics software, it won’t take much longer than that. The sooner you embrace people analytics, the more your talent management strategies will benefit.
People analytics isn’t a passing trend — it’s the future of HR. Bring your HR team into the future with ClearCompany’s ClearInsights, your AI-powered virtual data analytics sidekick. Get a demo of ClearCompany and ask about our first-of-its-kind reporting and analytics suite.
