What is People Analytics?

The use of analytics in HR, as a replacement for human intuition and traditional testing.


What it is: People Analytics is the practice of using data-driven insights to inform Human Resources (HR) decision-making. As of March 2020, it’s most impactful in hiring strategy, but can also be used for retention, compensation, and other HR functions.

What it does: People Analytics tools use data to replace or supplement traditional ways of doing HR, which have historically been based, at least in part, on intuition. Data can come from internal sources, social media, quizzes and tests, or other sources. Outputs can range from the specific (e.g. recommended compensation for a given job candidate) to the general (e.g. variables that reflect team performance.)

Why it matters: Famously, psychologist Daniel Kahnemann discovered, while working as a psychological evaluator for the Israeli Army, that standardized intake tests were better at predicting officers’ performance than traditional intuitive assessments. This finding is suggestive of the hypothesis that intuitive processes are inferior to data-driven processes when it comes to estimating performance or rewarding positive attributes. People Analytics promises to expand the data-driven HR toolkit, allowing organizations to move further away from solely intuitive decisions about employees.

What to do about it: If your HR processes have yielded unsatisfactory results, consider a People Analytics solution. Remember that, as always, a data-driven approach is only as good as the model it uses: depending on what’s being measured, analytics can simply serve as a stand-in for human biases, rather than a replacement.

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