What can people analytics do for you and your business?
Ian Cook, VP of People Analytics at Visier, says it can give you the same clear view of the flow of people in your business as you have into the flow of cash in your business.
When Ian was running a small events business in the 1990s, he found that tracking the skills and experience of his employees in a spreadsheet allowed him to put together more powerful, effective teams that ultimately brought in more money.
People made the biggest difference, he says, and 30 years later, modern systems make it easy for any HR leader or business owner to use people analytics to have this same insight into their people.
Understanding the ways people move in and out of your business, and how that then affects your capacity to serve customers and your costs, is the foundation for more effective leadership.
How to think about capacity with people analytics
How do you keep your business staffed at the right level? That’s the question that investigations into capacity aim to answer.
Headcount, of course, is the obvious starting place; you have this many people to run operations, serve customers, check accounts receivable, and so on. But headcount constantly changes, and digging into these changes in the form of exits and starts lets you keep a close eye on the people who are doing the work so you’re prepared to maintain capacity.
But headcount constantly changes, and digging into these changes in the form of exits and starts lets you keep a close eye on the people who are doing the work so you’re prepared to maintain capacity.
Not all resignations or exits are bad, Ian says. It’s natural for some people to leave, so you need to know why, when, and from what roles to better equip your organization. Find out what resignations look like for your organization — the age profile, tenure, and role — instead of relying on assumptions or press reports of who is more likely to leave quickly.
Meanwhile, tracking involves looking at where people are starting and when — a key part of viewing your people flow like your cashflow. While resignations reduce your capacity, starts increase it — but there’s always a learning curve for new employees. How does that impact your ability to complete your mission? And what roles are you filling? Constantly replacing junior employees can leave you with an absence of seasoned employees to take on more responsibility.
Headcount and capacity is the first area you can derive value from people analytics intelligence, and further work builds on this knowledge.
The influence of people flow on costs
Once you’ve established a holistic understanding of your capacity and how changes in headcount affect it, you can look at how that flow affects your costs. The percentage of your budget that goes to employee pay varies based on industry — it tends to be higher at software companies and lower at manufacturing and engineering companies. Either way, at small businesses, small mistakes have big impacts.
Looking at costs in connection to people flow can be transformational, says Ian. Instead of just tracking how much everyone is paid, you look at how people moving into and out of the organization affects those costs. If pay in the market for a given role is increasing, and you have to hire a new person to replace someone who left that role, you could end up with higher costs for the same amount of capacity.
With this mindset, you’ll acquire a clearer approach to current employee pay and retention, which can bring your results to the next level.
Using movement to support employee growth
understanding which departments can support mobility and which ones tend to be more stable can help you plan to retain employees by providing room for them to grow.
From the foundation of headcount and costs, you can add depth to your people analytics journey by looking at movement, or how many people change managers or roles inside your organization. This kind of investigation can give insight into how well your organization supports growth and career pathing, which has become increasingly important among job seekers.
While some people are happy to stick in their role and department, Ian says, a growing number of others are looking for growth and movement. Without those, your organization will see constant churn of these growth-minded employees. So understanding which departments can support mobility and which ones tend to be more stable can help you plan to retain employees by providing room for them to grow.
Headcount, costs, and movement are only the beginning. With modern systems that support people analytics for even the busiest leaders and business owners, everyone can benefit from the intelligence and insights that people analytics supply.
For more of Ian Cook’s discussion of the 3 things business owners should be doing with people analytics, tune in to POPS! The People Ops Podcast.