This article was originally published by Melbourne Chamber member BGIS and reflects the author’s views.

In the last few years, we’ve seen substantial changes to how and where we work. Businesses were forced to rapidly embrace digital transformation. At the same time, reliance on HR data has moved to the forefront for a lot of organisations.

While the role of HR has evolved over the past decade, being able to analyse employee data is giving HR leaders and people functions a greater strategic role. And those who can leverage these insights will be best placed to advise executives and shape business strategy.

An emerging area with huge potential

First, let’s define people analytics. Sarah Novelli, Executive Director – People & Culture, says it combines qualitative data with quantitative data, so you’re able to gain insights into human capital.

“It’s the ability to take data-driven insights to make business decisions, and turn those into actions that help improve the performance of an organisation.

“Data-driven decisions are evidence-based HR, as opposed to intuitive.”

Most organisations will have a strategy, and their people are a big part of that strategy. People analytics offer a deeper understanding of the workforce. Being able to analyse this information, and identify specific problems, allows people functions to shape the broader picture. Specifically, this helps decision-makers with recruitment or employee engagement, identifying skills gaps or predicting what skills will be needed in the future.

“We’re able to analyse employee behaviours, as well as their values, workplace habits or social interactions in the workforce,” says Sarah. “Tapping into dashboards means quickly linking back to cost savings and return on investments.”

Not only does collecting this data replace guesswork, but it allows businesses to start thinking more creatively using those analytics. Let’s take a look at some examples.

Analytics in action

Understanding trends in workforce demographics is essential for balancing reward investment and organisational effectiveness. Some of our recent successes have come from identifying skills shortages and creating solutions that close critical supply gaps.

When we were reviewing our data, certain roles in our organisation had a higher turnover. The qualitative data became a starting point for us to look at: what’s going on? And who’s in these roles? What is occurring externally, at the industry level? We then had the opportunity to focus resources into developing targeted retention and attraction strategies.

This exercise recently informed us of skills shortages in the Critical Environments field, occurring beyond our organisation. A lot of people in Critical Environments, who primarily work within our big data centres, have either worked in this area for a long time, or fallen into it. In addition, not a lot of people at university were selecting this as an industry to pursue. Once we understood that there’s a huge need for this technical knowledge in our organisation, we created a bespoke two-year graduate program in partnership with one of our clients. We are very proud of this as we feel that we are not only giving back to such an important industry, but we are providing the next generation with a very unique set of skills.

Sarah says that looking at the demand and supply issues has led us to create an entry level program into an industry where there’s a significant skills shortage. “By establishing a pipeline of talent that wouldn’t have existed out in the market (right out of university), we’re able to develop in-house talent and teach people the fundamentals to move into a role in Critical Environments.” This program also opens opportunities for us to partner with clients, suppliers and industry experts.

And we took a similar approach with the launch of an apprenticeship program for heating, ventilation and air conditioning (HVAC) technicians.

We saw there was a lack of technicians in that space, with many students selecting more traditional trades like carpentry, plumbing or electrical. As a result, we set up an apprenticeship program targeted for school leavers, which is specific to HVAC. Identifying the issue has enabled us to address a talent gap, but additionally we were able to focus our efforts on closing a gender gap we were seeing in the trades area.

“By using that data, and understanding what it’s telling us, we’re in a stronger position to achieve our objectives. If the strategy is to grow in a sector, but there’s a lack of people to deliver it, then the issue becomes that the organisation can’t be competitive,” says Sarah.

“These examples show that if you look at what the data is telling us, then you can act on it quickly and efficiently.”

Driving strategy, not just supporting it

What’s at stake for organisations that don’t embrace people analytics?

If you look at the challenges that organisations are currently going through, like instability in some markets, uncertainty, globalisation, digitisation and different ways of working, capturing HR data is a way to ensure that change management occurs really well, allowing for thoughtfully designed initiatives.

Organisations that are not yet capturing quality data are overlooking the chance to study behaviours and monitor whether things are working in real-time. While people analytics in still in its infancy, it’s an exciting area that will take people functions from being there to help support business goals to actually leading and driving the strategy. It’s a function that’s well placed to inform the business about what actions need to be undertaken, and when, in order to achieve strategic targets.

“We’re no longer dealing with everyone in the office working nine to five,” says Sarah. “We’re talking about new workplaces with remote working, mobility and aggressive growth strategies. If you’re not using data to work out what to start planning for, you’re not going to be able to keep up with everyone else. You’re not going to have high performing teams, because you won’t have the right people in the right roles at the right time.”

Start with good quality data

Sarah believes organisations that are not already using people analytics should adopt a tiered approach. This begins with access to good quality data. From there, establish a working dashboard to collect employee attribute data. Things like ethnicity, gender, age, tenure, and work history – the absolute basics. Initially they may just inform something basic, like a lack of workforce diversity. Once you understand and use the data, these sets can be expanded to focus on the future of workplaces, measuring areas such as efficiency, effectiveness, and employee quality of life.

People analytics represents an opportunity to look at the entire employee lifecycle to make better decisions. Using data-driven tools to put in place new systems or programs may come with an upfront investment. However, you may find the consequences of inaction comes at a much greater cost to business performance.