People analytics in the UK has room to improve. Here’s how.

People analytics (also called workforce analytics and HR analytics) refers to the integration of people data into business decision-making, to improve outcomes like productivity, engagement, and performance.

Organisations today collect enormous amounts of data about their people, spread across tens, if not hundreds, of systems. Companies use advanced data analytics techniques and technologies to digest this data and derive valuable insights.

These insights drive more effective people-related decisions. As HR analytics experts McBassi & Company put it, ‘HR analytics creates competitive advantage by generating actionable business intelligence on the “people side” of your business’.

But despite this potential, maturity is often still low, especially among UK businesses.

Tackling this is especially useful right now, as inflation approaches a near post-war record of 22%. This could have implications for HR, increasing compensation and recruitment costs, widening pay inequality, and eroding employee financial wellness. 

In this article, we’ll share practical actions to gather data – to better understand the issues your people face and support them to adapt. 

Underwhelming adoption of analytics in the UK

Employee data collection has been around for years and has transformative potential. For example, a report from Workday and the CIPD found that 65% of organisations with a strong people analytics culture report strong business performance, compared to only 32% of those in weak analytics cultures.

And an economic impact report from Visier found that publicly-traded European organisations with a higher understanding of their employees had a 51% higher average return on equity than the European average.

But despite widespread recognition of the benefits of – globally, 71% of organisations rate people analytics as high priority – most organisations still haven’t fully taken advantage of the opportunity.

That’s especially true in the UK. Although 57% of UK HR professionals have access to people data – more than the US, Southeast Asia, and MENA – only 17% use this data daily, the lowest of any region in the study.

As Workplace Insight puts it, ‘the wide scale adoption of people analytics practice is still low and that more needs to be done to improve skills and confidence in the HR function, particularly in the UK which is lagging behind other markets in both capability and confidence.’

An urgent need for workforce analytics

According to the CIPD, only 21% of UK HR professionals are confident with advanced data analysis techniques like predictive analytics. From the CIPD’s perspective, ‘the people profession has a long history of under-development of numerical and statistical skills, as well as low attraction of statistical or numerical disciplines to the profession.’

This underdevelopment of people analytics skills translates into a lack of credibility across the business. Only 36% of finance professionals agree HR has demonstrable numerical and statistical skills, for example, and only 37% believe HR demonstrates expertise in people data.

Lack of broader business credibility becomes a serious issue for organisations evolving towards the increasingly common HR business partnering model.

To deliver as a strategic partner, HR leaders must build strong cross-functional relationships and be strong proponents of evidence-based practice. As the CIPD write, ‘At the heart of evidence-based practice is the idea that good decision-making is achieved through critical thinking and drawing on the best available evidence. Leveraging workforce analytics is important to evidence-based HR.

Irrespective of your HR operating model though, understanding how to interpret this data is  critical for success – especially as the cost-of-living crisis intensifies. 

HR analytics critical for organisational resilience  

The workforce has undergone some extraordinary changes over the past few years, shooting HR right to the top of the corporate agenda. Widespread resignations impacted 85% of British businesses last year, for example, and employee engagement plunged to record lows.  

These workforce challenges had a profound impact in business terms. Bain & Company research finds that the companies that best managed their workforce’s time, talent, and energy during the pandemic increased productivity by 5% to 8% – while most organisations decreased productivity by 3% to 6%.

Robust HR analytics capabilities are instrumental to achieving outcomes like this, equipping HR leaders to better understand and combat the challenges your people face during a crisis.

And the crises don’t stop coming, as a recession in the UK starts looking unavoidable.

With analysts warning inflation could peak above 22%, it's little wonder that 94% of UK employees are suffering from money worries right now. 77% of employees say these concerns impact them at work. Financial insecurity causes workplace stress which can hurt productivity.

It also increases employees’ (current and new) salary expectations, putting pressure on organisations to match inflation or lose out on top talent. 

As businesses face continued upheaval, HR leaders should build on the data they have in order to make  complex people-related decisions with confidence.  

Three ways to improve the organisation’s data collection

1. Evaluate your HR skills mix

Having a data-driven approach to managing people at work requires a wide skillset. HR Analytics ThinkTank analyse relevant HR analytics skills across three categories: analytic/system skills (particularly HRIS, Excel, Tableau, SQL, and R), HR skills (particularly recruiting, talent management, and employee engagement, and business skills (particularly project management, process improvement, and leadership).

Evaluate your own skills mix across HR to understand where you might need to hire or upskill, to build your team's capabilities.

2. Focus first on local momentum

CIPD research shows that a major hurdle to data maturity is ‘the over-engineering of complex systems, under-investment in legacy systems, and over-reliance on overly-sophisticated analytical tools.’

Organisations already have mountains of data about employees that could improve a huge range of local decisions. Sweeping global transformation is laudable but don’t prioritise perfection over progress. Get early wins under your belt by focussing on how people data could help you address a single people challenge – like developing your leadership pipeline, or identifying top-performing departments, or evaluating pay equity. These early efforts give you a foundation to scale.

3. Build cross-functional strength  

Becoming better at data collection isn’t a case of simply upskilling your HR function with more advanced analytics skills. Eventually, true people analytics maturity means the organisation integrates people data into every decision – and this demands strong cross-functional support. For most organisations this takes time and requires C-suite sponsorship to drive change, banish silos, and surface legacy behaviour patterns.