People Analytics for Small Business

Studying data can help address important issues and businesses grow.

By Alexandra Walsh

In a tight talent market, companies must find smart, effective ways to encourage long-term employee loyalty. A potential solution is people analytics, the science of using data on employee performance, skills, engagement, and sentiment to predict and shape the future of your workforce.

People analytics can reveal a variety of insights such as identifying potential learning and development opportunities, as well as skills gaps that may hinder forward momentum. It is also an opportunity for employers to provide interventions such as mental health resources before such issues become a crisis.

Currently, HR professionals at companies use people analytics to assess employee retention and turnover (82%) and for recruitment, interviewing, and hiring (71%), according to the Society for Human Resource Management. Some organizations also use AI to identify potential high-performing employees using profiles based on past successful employees.

A small business can use analytical tools to optimize its management, operations, workforce planning, and employee satisfaction.

Those resources aren’t just exclusive to large companies, though. A small business can use analytical tools to optimize its management, operations, workforce planning, and employee satisfaction. Even senior management with extensive experience can benefit from workforce analytics to enhance overall business performance.

It is an opportunity for a business to use all its data at its disposal.

What Is People Analytics?

Human resources analytics or people analytics is a way of managing your business data to maximize success.

People analytics is often thought of as an enterprise solution for big organizations. Generally, large businesses need robust tools to understand data across large teams, budgets, and goals, while small companies have leaner teams and fewer people. However, diving into workforce data is critical for smaller businesses and the investment in people analytics can make sense.

By using people analytics, you can uncover in-depth insights into your business and identify trends and patterns that matter to you and your workforce. Understanding your business’ people analytics can help you make better talent decisions, cultivate better work experiences, and improve employee behavior.

People analytics provides a powerful way to add value to your business by using data that’s unique to your organization. It helps align HR initiatives with workforce management techniques to create more efficient internal processes and optimize planning and performance.

Benefits of Using Analytics

Because HR reporting uses data to provide insight on employer operations, it’s an essential component of ongoing success. It also allows company leaders to gain a better understanding of employee data. They can use the data and those insights to create metrics to optimize HR practices and performance management, which may help support improved business performance.

HR analytics can also help identify problem areas so they can be addressed promptly. While tracking performance through HR reporting is an indispensable part of any business, HR analytics takes it a little further.

The potential benefits of using HR data analytics include:

• Attracting and retaining talent and improving overall talent management
• Improving operations and financial performance through understanding employee operations
• Boosting employee engagement, employee performance, and employee experience
• Addressing knowledge and skill gaps
• Regulating costs and risk mitigation
• Identifying compensation-related trends.

Analytics in Your Business

Your employee data can be used to provide insight on internal trends, employee performance, and ongoing internal development. A small business can use several analysis techniques to develop strategies, depending on the specific area it wants to improve.

Here are just two ways to use HR analytics metrics in your business. By analyzing talent management and recruitment efforts, you can stay aligned with market trends to prepare for future hiring needs. And talent analytics allows you to track ability and effectiveness in regard to sourcing and recruiting new talent while properly managing new hires.

Employee Experience

A 2019 study by the Harvard Business Review found that employee satisfaction is directly related to employee productivity and engagement. Additionally, having access to benefits is often considered part of a positive employee experience.

By tracking interactions using performance management reviews and satisfaction surveys, you can gain a better understanding of what employees think about their roles and how they feel about their employer.

People analytics can often track benefits-related data, providing you with the feedback you need to enact positive changes.

Employee Engagement

It’s beneficial for employees to use time off throughout the year, but absenteeism is a problem that should be addressed. When employees don’t feel engaged and aligned with their organization, they’re more likely to display habitual absenteeism, which can hurt productivity and overall office morale.

People analytics can identify employee engagement trends in your small business to help reduce absenteeism, improve productivity, and decrease turnover.

Employee Retention

With critical compensation insights and a detailed view into wages and bonus breakdowns, you can make more informed decisions and stay competitive in your industry. This can help boost employee satisfaction and retention rates.

Cost Savings

If you offer benefits to your team like medical, dental, and vision insurance or paid time off (PTO), it’s important to have a clear picture of usage and spend. For small business owners who are unclear about benefits, people analytics can help.

You can look at compensation data and see how resources and budgets are allocated across departments. You can look at historical data to understand past trends to plan for the future. Whatever metrics are considered, you may find an opportunity to cut costs.

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People analytics saves small businesses money because access is self-service. You don’t need to be an analyst to use people analytics. Anyone on the team can tap into it—meaning you also save yourself the cost of having to hire a data analyst.

On small teams, pulling data is often left up to someone who isn’t an expert, and may not know the right questions to ask. Even if you don’t know, people analytics provides both the questions and the answers, so your business doesn’t risk suffering from a comprehension gap.

As your business scales and your team grows, attracting and retaining the best people becomes a bigger priority. People analytics gives you crucial insights about your team that can help you eliminate blind spots, address issues before they become critical, and take steps to build a strong company culture.

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Alexandra Walsh is the vice president of Association Vision, a Washington, D.C.–area communications company. She has extensive experience in management positions with a range of organizations.