Q&A: The real reason you need people analytics
People analytics aren’t a trend. They’re becoming a necessity as companies grow and thrive in the market. Why do you need them? Ian Cook, VP of People Analytics at Visier, shares insights around the importance of tracking people data and some basics you can start with. Additional Resources: Order your copy of our book People […]
People analytics aren’t a trend. They’re becoming a necessity as companies grow and thrive in the market.
- Order your copy of our book People Operations: Zenefits.com/pops-book
On this episode, you’ll hear:
- [00:39] Ian’s small business story
- [03:40] What people analytics looks like today
- [04:35] What intelligence you need to run your business
- [05:22] Understanding the impact of headcount
- [08:30] Understanding employee starts
- [09:45] How the movement of people affects costs
- [11:11] More mature analytics to track
Welcome to the Pops Show, that shows you how to shift from human resources’ paperwork to people operations for the new world of work. How? By answering one question at a time. I’m Ian Cook, VP of people analytics at Visier, here to help answer the questions, “Why do I need people’s analytics?” At Visier, we specialize in this thing called people analytics. It’s about the use of people data to help businesses run better. It’s really cool stuff. And it makes a big difference in the lives of our clients and their employees. But I’ve not always been a VP. Nor, have I always been in people analytics. I started my career building a small business with a friend and business partner. We ran large scale events, think hundreds of people running around in big parks for weekends at a time. Our clients were looking to engage their employees and team building in various things. We ran the business from my backyard and my friend’s garage and muddled our way to a steady income. It was really, really valuable learning experience, I promise you.
I learned a lot about sales. I learned about marketing, operations, logistics, but most of all, I learned a lot about people. How great people make your business go faster, how the wrong people can mess up even the best plans. How assembling, focusing, and motivating the best team to deliver an event required constant work, constant adjustments. And just when you thought you had everything about your people challenges nailed, guess what? Something new would come along and upset that balance. The other thing I learned that as a business owner, everything ran through me. There was never enough time, always too much work. My experience was back in the ’90s. Yep, I am that old. When there was no cloud, no integrated business software, no online payment processing, all of those nice things. We ran on spreadsheets, email and faxes. Yes, I have owned a fax machine. Seems a bit strange now. And we spent hours working on ways to automate or remove strips from our business processes.
We quickly learned how much of our business relied on people. And then we needed to know who we could rely on to deliver an excellent event. So we started doing what I suspect many people still do. We started putting as much as we knew about each person who worked with us into a spreadsheet, looking at the events they worked on, how did they fit? What kind of work did they do well? Who did they work well with? Who had chemistry, who didn’t? And so we started to build a picture of the talent that made our business work. Who was growing in experience? Who could take on more leadership if they were given the right opportunities to learn? Who was showing signs that they were a stable player, steady person that you could always rely on? Did we have any potentially risky players, people who were upsetting the dynamic? And we started to use this information to put together the teams that supported different events. And then we would update after each event building the picture, richer and richer.
Curious, motivated business owners, we were doing the work that has now been tagged as people analytics. We’re just trying to solve our business challenges. That field has now become a substantial field, and it’s called people analytics. We were just helping our business perform at its best. That was what was motivating us. So we did the same thing with the money that was going in and out. And this is probably familiar to you. We were trying to understand which clients paid, when they paid. Now, how do we bridge the gaps between money coming in and going out? Which kind of events had big margins? All of those things. So in the end, this is what our business came down to: lots of ideas, some really fun pieces of kit, but to make our organization run, we needed money and people. And the people were what made the biggest difference. They were what we needed to earn the money and to make sure we spent it wisely.
So let’s roll forward 30 years. Many aspects of running a business have changed. Business owners are able to take advantage of modern cloud based technologies. They do a lot of processing and data transactions for you. There are systems that help you manage money. There are no fax machines. And there are systems which help you maintain records about your team. Who joined? Who left? Who got paid? Who gets benefits? Zenefits, who sponsor this podcast, are an example of this time of modern business system. Another thing that has changed about these business systems is more recent, and it’s so valuable. It’s so powerful. Instead of having to do what we did, pull out the data, put it in a spreadsheet, build up our own models so we could understand our people, these systems now do that work for you. They do it automatically. They understand that that’s part of the business process, that it’s a necessary part of the business. And so they start to provide that intelligence, the insight that comes from accessing the data, not just the data itself.
So what sort of intelligence about people do you need to run your business well? So let’s look at a few examples and let’s just look at the foundations to get you going. And I want to keep it in mind that sometimes the relevance of these different things depends where your business is at, what stage you’re at, the scale you’re at. So if people make your business move, the first type of people analytics intelligence we think you need to access is what we call capacity. It focuses on understanding what do you need to do to keep your business staffed at the right level? The core input to this is called headcount. It’s the number of people who are working for you on a given day. But there are things that affect headcounts. That headcount number tells you, “I have got this many people to serve my customers, run my logistics, make my product, check my accounts receivable.” You constantly think about it, that’s headcount, but then there’s ins and outs, which adjust that headcount. They make it grow, they make it shrink, all those things.
So when we’re looking at this notion of capacity, the people I have to animate my business, we recommend you start looking at information about leaves, often called resignation. It’s a word that’s been in the market a huge amount, the great resignation. Actually small brag here, but we were involved in spotting the great resignation because of the amount of data we have about people and what that allows us to forecast. Bringing that down to the day to day in real business owners, it’s like, “Well, let’s understand what drives resignation in my business. How long do people stay? Are there certain people that exit faster than others? Are there certain roles or locations from which people leave more frequently? Is there an age profile?” We’ve all had the assumption about young people changing jobs fast. Sometimes that’s true. Sometimes it’s not. Sometimes that works in your business, sometimes it doesn’t. We shouldn’t just believe what the press tells us is actually true of our business. What we need to do is understand what’s true for our business so that we can react. And turnover, resignation, it’s not all wrong.
It’s pretty natural for people to leave, especially in our current times where growing your career is a big driver for work. Sometimes growing your career means you need to move on because there isn’t a chance to grow particularly common inside smaller businesses. It’s a challenge that I’ve had. So it’s not necessarily bad that someone leaves. When it becomes a problem is when the rate at which people leave, and the kind of people are leaving starts to hit your capacity to manage your business. There’s been a cycle currently where a lot of experienced people have been leaving their organizations at an enterprise level. That’s meant those organizations are having to backfill and train and grow capacity fast in order to meet their needs. Same thing could be true for you. You likely have a core of loyal employees who make things work. You can manage people coming in and out because that core group, orient people to the work, orient people to customers, they keep the system running. And so understanding leaves is important, not just how many, but who and where are they in business?
It’s like understanding how your cash is leaving your business. You would do the same thing with all the accounts payable that you’ve got. So keeping a detailed eye on the people that are performing that work for your business and then understanding that, it means you prepared to maintain people capacity. And it’s not one of those things where somebody leaving is necessarily a disaster, it’s just understanding what are the drivers for that flow so that you can respond as you need to. Also associated with this notion of headcount capacity is, it’s the opposite of turnover. I call it starts. How many people are starting in my business? When they start at my business, what does that mean? And this is the kind of three way factor of this overall notion of capacity. I’ve got my people, my head count. I got my people who left, which reduced my capacity. I got my people who join, who increase the capacity again, but they got to go through learning curves. They’ve got to understand and engage in building the team. They’ve got to understand my customers.
So there’s this really core foundational understanding, exactly as you would do with cash flow, of understanding that flow of people, their flow of experience, their flow of relationship capacity. And again, understanding, “Am I constantly replacing junior employees?” Okay. Or, “Am I adding depth and building experience and being able to grow my business up so that more and more people can take on more and more responsibility? And in effect, the business becomes less reliant on me because there’s more people who know how to get it done.” So getting started with people and this is your core focus. It’s the first area where you can derive value from this intelligence. How is the flow of people into and out of my business, helping me maintain a stable and productive team? Running a small, medium sized business, it can actually be harder than running a big one. I know, I’ve done both. There’s less money overall. So it means there’s less opportunity for waste. A bad decision can have a… whilst it’s not a big dollar figure, that can be a more significant percentage of the business you’re spending.
Larger organizations, they have bigger operating budgets. Small decisions that are bad often go unnoticed. And so this is the second area of insight into people analytics. It’s not just how much does everybody get paid? It’s not just that cost piece. It’s actually, how does the movement of people, how does the adjustment of people affect my costs? Again, depending on the business you’re in, there’s a varying degree to which people show up as your operating expense. But typically a software firm is going to have anywhere from 70 to 80 cents in every dollar is what they spend on people. Sometimes we get into manufacturing and engineering firms, they have a lot of expensive kit and they have a lot of raw materials. So it goes down to more the 50 to 40%, but it’s still usually one of the top five operating expenses. So the next area of intelligence is we’ve got all these people, but their pay is changing. New people may be joining.
The labor market’s really hot right now. So are they joining at a higher cost than the people who left me? Does that maybe give me some insight to think about how I might adjust the pay for my existing employees so that I’m not having to lose someone and then go to market and have to re-find that talent at a higher expense? And so again, layering onto the foundation, we then start to look at costs, that then starts to build this understanding of, “How is the movement of people growth inside my business, moving out of my business, actually then having an impact on my costs?” Pause there. How’s that? Okay, cool. Good. I got a third to go and then we are done
Mark. So capacity and cost to the foundations, having this type of intelligence automatically at your fingertips, it’s transformational in helping you run the business from here. There are other senses that can really elevate your business depending on your size and your stage. One of these is what we call movement. How many people change managers? How many people change role or move up inside your organization? Are you able to keep people by growing capacity? We’ve talked about career. You’ve likely read about career. As a business owner is your primary drivers. Can somebody come in, do this job, do it well so I don’t have to worry about them? That’s the business perspective. The employee perspective is we’re like, “I want to come in. I want to learn the job. I want to do it well so that I can go and do something more.” Again, it ranges often 30 to 40% of people want to grow. 60 ish percent of people may be happy to stick. That’s changing as our population demographics are changing.
But as a business owner understanding that if I don’t have career paths, if I don’t have growth, I’m going to have a certain percentage of my population that will cycle through. I’m going to have a certain population that will stick. What can I do to build that career growth? Because that’s going to help me keep more people in. And so understanding which departments like mobility, which departments are able to support mobility, which kinds of roles do that? For example, finance is classically very stable, customer success roles can be less so often. Again, software development roles, people are looking for that rapid growth. So understanding how that plays out across your business. And that’s where we get into this next level of intelligence around movement. So we’ve covered three examples of people analytics and how intelligence that comes from well prepared, well analyzed people data can help you be effective as a business owner.
We’re just getting started with the possibilities in this area and the leaders in the field, in this people analytics field, people who [inaudible 00:13:54] work with, having laid these foundations, they’re building more and more complex employee insights on top of that, around contribution, about experience, about how we bring people and money together so we can actually help shape business results. And all of that intelligence starts to flow into how you build and create results for your own business. So as a business owner, you have a lot on your plate and while you might appreciate making decisions supported by data, you often don’t have that time or the people or the skills. So this is why modern systems where people analytics is built into the workflow can really help take your results to the next level.
Do you have a question for us? Click the link in the show notes or if you’ve got other ideas and feedback are by our show, then please send them to you [email protected]
About The People Ops Podcast
Every week, we share the decisions, struggles, and successes for keeping up with an evolving workforce and a changing workplace. No matter if you’ve been in HR or are just getting started, this combination of transformational stories with actionable ideas, as well as context on hot issues, keeps you up-to-date while answering the questions you didn’t even know you had.
Oh, and you know what they say about all work and no play? We tossed in a little levity to keep it real. Lessons, answers, and humor: everywhere you listen to podcasts.
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