People analytics: 5 big benefits

6 min read  |   12 February, 2024   By Laura Sands

Two women are in an office environment. One is sat at a desk, and the other woman is leaning over and pointing at graphs on the other's screen. Their body language is relaxed and positive.

Where do people analytics fit into your numbers?

You probably know your profit margin % and can find your growth in sales vs. last year in just a few clicks, but how much do you know about the people who deliver those results?

Do you know how many employees quit last year? And how long it took to replace those employees? What about your absence rates and how they compare to your competitors?

Knowing this data and understanding what to do with it is an important part of a well-run business.


What is people analytics?

People analytics is the science of using data about your employees to solve business problems.

This is also sometimes referred to as HR analytics or workforce analytics.


How can people analytics data help SMEs?

Gathering & analysing people analytics data is an important way of helping small business employers understand their workforce, as well as the drivers behind performance.

In this post, we'll share 5 ways you can improve your business’ performance by incorporating people analytics into your HR processes.

5 benefits of using people analytics


1. Raise the profile of HR

Our favourite reason for supporting people analytics is that it makes HR a more powerful force in your SME. And that’s good news for any business that wants to put its people first and create a healthy workplace culture.

It’s true that some people still see the HR function as a “touchy-feely” department that’s more focused on resolving grievances and mopping up tears than driving solid business results.

But - armed with people analytics -  HR managers have the power they need to get attention and results.

With undisputed facts and figures, your HR function can start proving the benefit of initiatives and provide persuasive arguments to support recommendations.


2. Get to grips with retention

Improve business performance by getting to the heart of your retention rate and turnover data.

Not only will you be reducing the cost of turnover – estimated at an average of £12,000 per employee - but you’ll also cut the lost productivity suffered when employees quit their jobs.

The simplest place to start is by calculating your business’ turnover rate:

The formula to calculate your business' turnover rate is:

(Number of leavers over given period x 100) / Average total number employed over given period

So, if you employ 500 workers over a year and 20 leave, then the calculation would be:

(20 x 100)/500 = 4% employee turnover rate

Now take this data and compare it to your industry average and split it by employee

group to understand the patterns.

Turnover data is most powerful when you review it against other information such as employee exit interviews, training and performance data, payroll data and employee engagement surveys

Standardised templates, such as an exit interview template will keep the data consistent. 

This combination of quantitative and qualitative data highlights details and trends, helping you address gaps in your business that may improve your retention rate and overall employee engagement.


3. Improve health & wellbeing

Health and wellbeing are recognised as a key tool in growing productivity, but it can be difficult to determine whether they’re a problem in your organisation.

Analysing absence data, benchmarking it against your industry and reviewing it over time can give you a better insight into your health and wellbeing performance.

Some HR software calculates your employees’ Bradford factor, helping you identify individual employees and groups of employees who have a higher absence rate.

But the story doesn’t end there - as with all measures in people analytics, the value comes with what you do with this data.

Coupling it with an employee survey or your knowledge about the pressure your team has been under can help you decide what to do as a result.

If for instance, you notice that parents are taking extra time off, then this may indicate they need extra support to care for their children, especially during colds and flu season or during the summer holidays.

Implementing a flexible work policy or better communicating parental leave rights may help your employees better manage their commitments and reduce their stress levels. In turn they’ll be absent less often and more productive when they are at work.



4. Make your recruitment more effective

Using people analytics can help you recruit more effectively.

Instead of firing out job ads to the same channels and recruiters time after time, analyse the success of each recruitment channel.

This will help you understand the cost of hiring and reduce costs where possible. Not only that, but by focusing on recruitment channels that work for your business, you can save yourself money in advertising fees and fill your vacancies more quickly.

And there’s another benefit, too. By analysing your recruitment data and time to hire, you’ll get a more accurate idea of how long it takes to fill gaps in your teams.

This information can help managers plan more effectively and budget for temporary staff if necessary.  


5. Help you pay more fairly

Paying your employees more fairly is proven to increase engagement and productivity.

Ultimately, it drives success. What’s more, there’s an increasingly strong push for pay equality driven by the need for larger businesses to publish their gender pay gap.

You can use your payroll data to analyse your gender pay gap. But why stop there? It’s important to ensure all your employees are paid fairly, so consider using the same principle to measure potential pay gaps in ethnicity and disability.

Once you’ve uncovered any discrepancies in your pay equality, you can start addressing the gap and create an action plan.


How HR software can help with people analytics

You’ll be pleased to hear that you don’t need fancy platforms or analytics tools to get started with people analytics. An HR tool such as Breathe gives you a solid starting point to get to grips with analysing your workforce.

Good HR software will help you manage people analytics by centralising your employee data and providing reports on:

With this basic data in one place, you can use a series of calculations to understand your workforce. You can also see how it’s changing over time and how it compares to industry or national standards.

Remember, people analytics are only useful when they're incorporated into business decisions.

Analytics for the sake of analytics will take you nowhere. For the magic to start, you need to investigate the “so what?” that your data is pointing towards and focus on the elements that are most relevant to your business.

This will help you support or evolve your HR and business strategy for greater success and happier employees.

Dig into your own people analytics with Breathe's Employee NPS feature (free on regular Breathe plans or above). 


Author: Laura Sands

Laura is a writer who enjoys getting into the detail of subjects and sharing that knowledge with snappy, interesting content. When not typing away, she enjoys walks in the woods and curling up with a good book and mug of something hot.

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