Nobody likes to think of people as numbers, so rarely do we bring the two together. However, when people and numbers are combined the results enrich us with knowledge, narratives and deep insights into the workplace, which is especially important in the fast growth SaaS workplace.
At this intersection of people and numbers is People Analytics. People Analytics is the science of turning people and company data into metrics that help managers and companies make better decisions on how best to utilize their human capital, whilst helping employees more likely to succeed and develop.
Questions People Analytics Can Answer
Here are just some of the questions People Analytics is trying to answer:
- What are the biggest issues facing the company?
- What are our future workforce requirements?
- Who are our most talented people?
- Who is best at doing [Task Requirement]?
- Who will leave the company?
- How much should [Person / Job] get paid?
- Who are the best Managers?
- Which Managers get the highest engagement, retention and performance?
- What’s the cost of Employee Churn?
- Where do our most talented people come from?
- Are we churning talent or under-performers?
People Analytics And Performance Management
Lots of the above question are linked to Employee Performance Goals. So needless to say, People Analytics and Performance Management are very much linked.
The big question being asked by HR teams and Execs being; how could Performance Management be made more effective?
Traditional ways of measuring the performance of an employee includes assessing productivity, efficiency and motivation via periodic formal performance reviews conducted by Line Managers and HR departments.
With 90% of employees wanting continuous and consistent feedback, is this way of measuring employees attributes as effective as it can be?
Brian Kropp, VP to Gartner Group says:
“Most company’s performance reviews happen every either six months or 12 months. The manager of that employee collects information based upon their own observation and feedback that they might get from that employee’s co-workers, that employee’s customers, or their manager’s direct reports.
The workplace is constantly changing. You may find yourself in an environment where the company has multinational offices or even work entirely remotely. So why is the way that we measure people so dated?
Here are three flaws with performance reviews:
- Too slow when adapting to how work changes within an organization
- Does not reflect the fact that work is less task-oriented and more intellectual-property oriented
- Does not reflect that work has moved away from being individualistic, and are now more team-oriented
So at the start of the performance review period, there’s a set of things that you want that person to accomplish, and you collect all that feedback to figure out if they actually accomplish what you wanted them to accomplish”.
The goal of HR teams now is to use People Analytics to transform Performance Management from the focus on annual appraisals to an emphasis on continual feedback, coaching, accountability and transparency.
It Worked For Google
“We have charts and graphs to back us up. So f*** off”
That was a sticker given to the early adopters of People Analytics at Google who felt that they had to defend their work against skeptics who felt that a deep analysis of people will reduce them to facts and stats.
No need for that sticker now. Deloitte Insights found that 70% of companies consider People Analytics to be a high priority – yet only 5% of big-data investment goes to HR teams who typically own People Analytics. Why?
Relational Analytics + People Analytics
Analyzed data shouldn’t be exclusive to individuals, we’re not developing “Person Analytics” after all.
When data from a group of people is analyzed you can observe the relationships they have inside and outside the organization – the way they interact and focus on achieving goals becomes equally as important as data collected from individual attributes.
Combining Relational Analytics with your People Analytics strategy will unlock and identify employees who are capable of achieving company goals and will highlight those who you really can’t afford to lose.
Your talent is the engine that keeps the gears of your SaaS company turning.
To scale you must ensure you have the right number of people, at the right times of growth, and that these people are happy, engaged and motivated.
Well constructed HR OKRs can be implemented to ensure the above is achieved, but additional actions from HR teams managing People Analytics will accelerate performance, reduce employee churn and steer the ship towards your North Star.
Consider these topics when analyzing your workforce:
Depending on the Goal, Initiative or Task, could you optimize not only who you employee, but who works in which teams. Making the perfect team blend.
Individual or Team: Individual
Forecasts: Who will have good ideas
Measuring education level, personality and intelligence is important but they don’t help you gain knowledge about an individual’s social circle, who they network with or gain information from. Who do they chew the fat with and bounce ideas off?
A study from Ronald Burt, which covered many industries, found that people who were not bound by a close network of people were more likely to generate good and strong ideas than those so tightly constrained.
In the above diagram Claire (pink) communicates with people in several other departments besides her own team, she shows very low constraint. She can see dysfunction in one department and finds a way to avoid the same problem happening in her own team.
After hearing about her success, the department Claire had been speaking to implement the same direction as her and the challenge they faced diminishes. Ben (blue) is a creative individual but he is highly constraint and only communicates with his own team. He is less likely to generate great ideas with purpose because he is only aware of what is happening around him.
We see this in ZOKRI. OKRs are visible for every team, along with their Initiatives. It’s easy to spot who you could help and suggest ways of helping them. Making sure the whole companies best ideas are never lost.
Individual or Team: Individual
Forecasts: Who will change the behaviour of others
This is essential for getting ideas implemented but not exactly how we would expect. Employees are more influenced by someone who has strong connections in a less formal role than someone in senior leadership. This influencer suggests others to believe in something because it has worked here and there – and they have the connections and clout to prove it.
Mike (orange) only connects to two people but is far more influential than Jane (green) who connects to four. Why? The connections that Mike has are far stronger and better connected than Jane’s. Even though Jane can spread a message faster, Mike can spread his further.
Individual or Team: Team
Forecasts: Teams that complete projects on time
Standard methods of recording attributes will help identify those who are more skilled than others to complete a task – but this will never guarantee that the task is completed in good time.
This is a software development team within a FinTech start-up. They are deeply connected together which indicates they clearly work well together. More interestingly though is their external connections. They don’t overlap. This team has a high external range which results in greater access to helpful outside resources – these resources could be critical in getting a project completed on time.
Individual or Team: Team
Forecasts: Teams that innovate well
Putting your best performing employees together will surely achieve great innovative results, right?
Research suggests that employees are more creative and innovative when placed together with others (and their accompanying networks) who share opposed views, a topic covered later in this post.
The formula has a team that work well together but not as tight as we see in Efficiency. Each member has a high external range which is needed to bring in ideas but to also get support from. The most innovative teams have disagreements and discussions that generate the creative friction needed to produce breakthroughs.
This innovation team are not deeply connected to each other. They have different view points on various topics. This is an ideal position to be in, as opposed views will develop more productive debates. Each team member has a close knit network who share similar views to each other which will help them gain buy-in and clout for their innovative ideas.
Individual or Team: Team – Entire Organization
Forecasts: To see whether the business is siloed
As much as a company tries to rid their organization of silos they always seem to develop and are unavoidable. Teams develop areas of expertise that are very distant to the skills needed in another department. They may not speak the same technical language or share the same or even distorted OKRs and KPIs.
If the ratio of communication between teams in the organization is 5:1, it is siloed. A way to get around this is to have specific employees of each team liaise with each other, discuss the work currently being conducted and how the impact of the work effects each team in the meeting.
Each colour above represents the manager of a department. They are deeply connected with their team, but they don’t interact with other departments. The leader of each team must come together and communicate with others to develop a culture of conversation amongst the currently siloed teams.
Individual or Team: Team – Entire Organization
Forecasts: Who you really can’t afford to lose
Let’s picture an employee called Mark. He is part of the Marketing team and has many connections to writers and designers – he bridges the gap between the ideas generated in the team and getting the final result executed by outsourcing the work.
He is social with other departments but his role doesn’t stand out on the company organization chart. There is no traditional attribute that would measure the real importance of Mark for the company.
Eventually he is head hunted and decides to leave the company- taking his network of writers and designers with him. The bridge between liaising with other departments and reaching out to a network of talent has been lost.
Above we see how Mark communicates with other teams (pink, blue and orange) and how the relationship between his network (grey) could be cut off when Mark moves to his new company (green). It’s not that Mark is irreplaceable…it’s that he wasn’t backed up – no other member of the Marketing team communicated with Marks network so that connection is lost.
An Example Of Brutal, Brilliant & Effective People Analytics
Ray Dalio predicted that the U.S. would have the largest debt crisis since the great depression and that the stock market would cash dramatically in the late 1970’s.
The debt crisis was true, but he was incorrect about the Stock Market.
“Rather than thinking ‘Am I right?’ I started to ask myself ‘how do I know I’m right? I gained a humility I needed to balance my audacity”. – Ray Dalio
He set out to find the smartest people he could to purposely disagree with him, meaning that opposing views could be heard and understood. This would create an idea meritocracy – the notion that in the end the best ideas would win. With this came radical transparency.
Bridgewater Associates have been operating like this for the past 25 years and now embed these findings and principles into algorithms. These algorithms run parallel with their thinking and aid them with People Analytics and People Management. A piece of software was developed called “The Dot Collector”.
The Dot Collector
How many times have you been in a meeting where nothing gets solved? An hour, or perhaps longer is wasted. What about meetings which are entirely run by Diminishers where, again, nothing gets completed?
Or the other extreme – you leave feeling like that was the best discussion ever had and the actions from the meeting are crystal clear for all parties involved. Now imagine you could rate each person in the room based on input, attitude, attributes and feelings. Who in your company would shine bright and who would be shown up?! I can think of a few in my career.
Ray Dalio’s Dot Collector allows each person in a meeting to rate others on a scale of 1-10 on various attributes. Members with opposite or similar opinions may score each other higher or lower than others, but that’s OK. Everyone gets to express their thinking, including critical thinking, regardless of their position in the company.
The radically transparent tool helps people express their opinions, but to then separate themselves from it as well – allowing them to see things from a higher level. When looking at the bigger picture, and the varying levels of thought/opinion, questions are asked about whether or not “my opinion is the right opinion?”
This shift allows employees to move from seeing in one dimension to multiple dimensions and ultimately turns opposing opinions into discussion points about actions and criteria for OKRs.
Over time – after many meetings, interactions and scoring – an all round data scrape creates a picture for the way each employee is like and more importantly thinks. All of which is guided by algorithm. Knowing how people behave and interact with each other helps to match them better to their jobs. For example a creative but unreliable person could be teamed with a reliable employee who isn’t creative. This data also gives HR teams insights into what responsibilities are given to which employees. Now reasoned decision making can be made based on algorithm, not autocracy or democracy.
It’s time for HR teams to embrace People Analytics and evolve to focus less on the attributes of an individual and more on their relationships with other employees and teams.
When armed with the data, metrics, predictions and insights, you’re able to work with facts about who is improving performance, who is not and what to do about it. The truth is out … or will be soon.
In the words of Ray Dalio, “this sort of radical transparency is coming at you. It is going to affect your life…In my opinion, it’s going to be wonderful. So I hope it is as wonderful for you as it is for me”.
Or as Neo said at the end of the Matrix:
“I know you’re out there. I can feel you now. I know that you’re afraid. You’re afraid of us. You’re afraid of change. I don’t know the future. I didn’t come here to tell you how this is going to end. I came here to tell you how it’s going to begin. I’m going to hang up this phone, and then I’m going to show these people what you don’t want them to see. I’m going to show them a world without you, a world without rules and controls, without borders or boundaries, a world where anything is possible. Where we go from there, is a choice I leave to you.”.
Do you agree with Dalio’s approach to People Analytics? Will this level of transparency help or hinder organizations? Perhaps you have implemented your own techniques for measuring People Analytics or specifically individuals amongst teams, as apposed to to them being asset by themselves? Please leave a comment, we’d love to hear your stories.