The Geeks Have Arrived: People Analytics is Here

As I recently wrote about in the article "Why People Management is Replacing Talent Management?" there is a major shift taking place in the market for people analytics. The Geeks have arrived.

A little history is in order.

The area of HR analytics, talent analytics, or as it is now called "people analytics" has been around for a long time. As an analyst (and former analytics product manager) I've been talking with companies about how to measure learning and HR for a decade. Back in 2005, after several frustrating years trying to figure out how to measure training, I wrote a book called The Training Measurement Book, which sets the stage for L&D teams to move beyond the traditional Kirkpatrick measurement model.

Ten years ago companies were building "HR Analytics" systems and tools (often data warehouses) to help companies look at simple metrics like "total headcount," "time to hire" and "retention rate" and clean up their messy, often inaccurate people data.

Vendors like PeopleSoft and Oracle tried to build analytics products back in the 1990s. They didn't sell very well, primarily because many companies had such complex HR systems they didn't have the budget or IT support to build the HR data warehouse. (Some companies did do this, and they have been benefiting from this for many years!)

About five years ago the book Moneyball came out, and we started a global marketplace called "Big Data." Tools like Hadoop, R, and other parallel data management tools became productized and industries like marketing, advertising, and finance started to analyze massive amounts of data. Much of this started at Facebook, Google, LinkedIn and other internet companies who simply had to analyze enormous amounts of data to run their businesses.

Along the way the term "Data Science" was invented, and today there are hundreds of jobs for "Data Scientists." (Typically defines as people who understand information management, Big Data tools, statistics, and modeling - a rare breed.)

During the last ten years we watched the discussion with HR stay very tactical, focused on operational reporting and simply fixing the mess of incompatible HR systems we have. There were many HR and learning analytics presentations and a few conferences, but most of the focus was helping technical practitioners improve their reporting systems. The idea of predictive analytics was little more than ROI studies to look at whether a training program worked.

(Full disclosure, I was the head of product management for two companies that built advanced learning analytics solutions in the early 2000s.)

Suddenly around 2011, with the focus on Big Data, I sensed a shift in the market. To understand how well predictive analytics was taking hold, we started our early research on "Big Data in HR" and developed a maturity model (it was published in the Fall of 2012). We found a world of "Haves" and "Have Nots." A small number of companies were investing heavily in predictive people analytics, but most were barely getting started.

The whole idea of our focus on "Big Data in HR" was to help HR organizations realize that they, too, could enjoy the wave of interest in Moneyball and BigData. HR is not as interesting a topic as homeland security or cyberwarfare, but it's a big area of spending (more than $400 trillion is spent on payroll around the world) so there's a lot of opportunity in this huge data set. And the world of "People Analytics" was born.

There is quite a history of data analysis in the HR profession, starting with Frederick Taylor in the late 1800s. The article I wrote a year ago called "The Datafication of HR" describes this evolution, and I think everyone in this space should read this article and get to know the history. Today we are standing on the shoulders of some giants and very innovative thinkers - they just didn't have computers to help.

Today, while the topic is hot, HR teams are just starting to get good at analytics. The problem has not been the concept, but rather the focus. We spent far too much time trying to measure HR and L&D spending, and figure out which HR programs were adding value. While that seems interesting HR managers, typically business people just don't care. What they want is information that helps them run the company better: "Get me the right people into the job, make them productive and happy, and get them to help us attract more customers and drive more revenue. I don't care if your L&D program has a 200% ROI or not."

We now see this as a huge trend, so we launched a focused research area on this topic. With the help of my partner Karen O'Leonard and others on our team, we launched a series of industry studies on what we called "Talent Analytics." Our biggest report, entitled High-Impact Talent Analytics, established the first-ever research-based maturity model for analytics. It showed that there were a small set of companies (less than 5% of the market) that were way ahead of the curve. These advanced companies were looking at people-related data in a very strategic way, and they were making far better decisions about who to hire, who to promote, how much to pay people, and much more.

Since then, interest in this market has exploded. And I mean like an atomic bomb. Everyone is now talking about it, and the whole concept has changed.

A few weeks ago I had a meeting with five major Silicon Valley and New York companies who are focused in this area, and the room was filled with statistics PhDs, engineers (like me), and I/O psychologist PhDs. Thus the title of this article:

The geeks have arrived, and we're all happier for it.

At this point, entering 2015, I believe "The Geeks have Arrived." Statisticians, mathematicians, and engineers have entered the people analytics space.

In this meeting I recently attended, the practitioners, who are among the leaders in this space, were all experienced in bringing together data, cleaning it up, and doing all types of analysis. Of course their companies have various issues with data quality, systems, and infrastructure - but they, as a group "get it." They understand the potential, they understand the problem, and they have the skills to get work done. And they are not just analyzing HR issues, they are analyzing the business.

Today this new business function is called "People Analytics." And over time, I believe it doesn't even belong within HR. While it may reside in HR to begin with, over time this team takes responsible for analysis of sales productivity, turnover, retention, accidents, fraud, and even the people-issues that drive customer retention and customer satisfaction.

• High tech companies now know why top engineers quit and how to build compensation and work environments to get people to stay.
• Financial services companies are now analyzing why certain people commit fraud and what environmental or hiring issues might contribute to such violations.
• Product companies are now analyzing the demographic, educational, and experiential factors that correlate with high performing sales people and why top sales people quit.
• Health care companies are looking at why certain hospitals or departments have higher infection rates and what people issues are behind these problems.
• Manufacturers and product companies are looking at the patterns of email traffic and communications to understand how high performing managers behave and what work styles result in the highest levels of performance.

These are all real-world business problems, not HR problems. The data which helps support these decisions includes experience, demographics, age, family status, as well as training, personality, intelligence, and dozens of other factors. More and more this will include data on email communications, employee sentiment, and ad-hoc feedback.

Many of the factors which contribute to fraud or turnover have nothing to do with the people - they are environmental. Where is the manager physically located? Who else is hiring in this location? So People Analytics requires a look at external data, not just internal data.

This is why this function eventually belongs outside of HR, it is really a part of a company's bigger "business analytics" team.

Just for grins I did a Google Trends search on the terms HR Analytics, Talent Analytics, and People Analytics, and look at what I found. "People Analytics" is winning.

(History of Google searches for People Analytics, Talent Analytics, and HR Analytics. The blue one is winning.)

As we talk about in our research, this is a huge market opportunity for business - one that is just beginning. Vendors of all shapes and sizes are starting to grow, and most of the large platform providers now include predictive analytics tools embedded in their core HR software. (Flight risk indicators are a good example - not necessarily accurate yet, but the right idea.)

While major software vendors are investing like crazy in this market (Read People Analytics Heats Up for more on all the vendor activity), businesses are still struggling to get started. HR leaders do not yet have a strong team in place and many have yet to deal with the data cleanup problem. And as much of our new research is going to illustrate, this problem is not just one of leveraging internal data - it's also important to leverage external data as well.

We'll be doing a lot more research on this topic over the coming years, but let me simply state clearly "The Geeks have Arrived: People Analytics is Here."

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About the Author: Josh Bersin is the founder and Principal of Bersin by Deloitte, Deloitte Consulting LLP, a leading research and advisory firm focused on corporate leadership, talent, learning, and the intersection between work and life. Josh is a published author on Forbes, a LinkedIn Influencer, and has appeared on Bloomberg, NPR, and the Wall Street Journal, and speaks at industry conferences and to corporate HR departments around the world. You can contact Josh on twitter at@josh_bersin and follow him at http://www.linkedin.com/in/bersin . Josh's personal blog is at www.joshbersin.com .

Other Recent Articles by Josh Bersin:

• Are you an Overwhelmed Employee? What to do about it.
• Why People Management is Replacing Talent Management
• Putting the Strategic into Strategic HR
  
• The Alliance: A Manifesto for 21st Century Talent Management
  
• Interview with Reid Hoffman about Talent in the Networked Age
  
• Why it's time to Redesign HR
  
• How to Build The Irresistible Organization
• Learning to Be Yourself
• The Secret to Effective Motivation: Purpose
  
• The Myth of the Bell Curve
• What's Good for Women is Good for Business
• How to Make Work Fun
• Why we Do Need The HR Department
• Are Performance Appraisals Doomed?
• How I Hire: Trust Your Gut
• The MOOC Market Takes Off
• Employee Retention: The Time is Now
• The Datafication of HR
• Quantified Self: Meet the Quantified Employee