Using People Analytics to Optimize Business Performance

As an HR leader, it’s your job to support the people within your organization, whether that’s through creating more effective hiring processes, building a supportive and inclusive company culture, or rolling out initiatives that help to engage your team.

But to do that, you need the right information. And the best way to get that data is through people analytics.

People analytics can help deliver the insights you need to build better teams, improve your corporate culture, and support your employees. Below, we’ll take a closer look at what people analytics is, the benefits it can bring to your team and organization, and how to get started using this game-changing tool.

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What is people analytics? 

People analytics is the practice of using employee data and analytical insights to inform decisions across the entire employee lifecycle. Sounds like the way most HR teams already operate, right?

Not long ago, many people teams actually relied almost entirely on gut instinct. HR leaders made decisions based on what they observed — who seemed like a promising new hire, whether a culture initiative felt effective, or which managers appeared to be thriving. But while instincts are valuable, they can also be biased and inconsistent, often failing to reflect the full employee experience. They can also lead to decisions that unintentionally miss the mark for employees, teams, or the organization as a whole.

That’s where people analytics comes in. Instead of relying solely on intuition, HR teams can use trustworthy, real-time data to identify trends, uncover opportunities, and spot issues early. When applied thoughtfully and supported by high-quality, ethically gathered data, people analytics helps leaders make smarter choices and move from reactive to proactive HR strategy. 

Benefits of People Analytics

People analytics can benefit a number of human resources functions within the company, starting with talent recruitment and retention.

“People analytics can be used by organizations to better obtain, train, and retain talent,” said Matthew Spencer, cofounder and CEO of AI-powered recruiting network Suited. “They can ensure the best people are being hired, help companies get the most out of their teams, and ensure they see a return on the sizable investments they make in human capital through increased retention.”

Below are some of the ways people analytics can help your business and HR function.

• Increase recruiting efficiency: Businesses can use data to identify job candidates with skills and traits similar to current top performers, helping them reach best-fit applicants faster. Metrics like time to fill and cost per hire reveal bottlenecks and bias, enabling teams to optimize sourcing channels, reduce expenses, and streamline the hiring process.
• Decrease attrition: By tracking trends in engagement, employee performance, manager effectiveness, and turnover, your team can pinpoint underlying issues pushing employees to leave and take targeted action to improve retention.
• Improve employee and company performance: Analyzing performance ratings, goal progress, feedback patterns, and engagement data can highlight where employees need support and where teams can improve. This helps business leaders strengthen coaching, align expectations, and drive higher performance across the organization.
• Reduce costs: People analytics surfaces inefficient business practices — like slow hiring processes or underutilized programs — so HR teams can allocate resources more effectively. These insights help organizations reduce unnecessary spend and invest in the initiatives that create the greatest impact.

Bottom line: People analytics can be a major benefit to your HR department. In addition to offering a clearer understanding of what drives performance and results across your organization, it helps reduce costs, eliminate inefficiencies, and ensure your people strategy supports long-term success.

HR Analytics vs. People Analytics

While both HR analytics and people analytics help organizations make more informed decisions, they’re not quite the same.

• HR analytics focuses on data from core HR functions like headcount, recruitment, turnover, compensation, and benefits. It helps HR teams understand organizational health and evaluate the effectiveness of their HR programs and processes.
• People analytics takes a broader view, layering HR data with insights about employee behavior, productivity, engagement, and wellbeing. It can even incorporate external data like customer feedback and insights. This more holistic perspective gives business leaders a deeper understanding of their workforce and supports more strategic, people-centered decision-making.

While both analytics approaches are valuable, the key is choosing the one that best aligns with the outcomes you’re trying to achieve.

Types of People Analytics

In general, there are four types of people analytics: descriptive, diagnostic, predictive, and prescriptive. Here’s a closer look at these types of advanced analytics and how they can give you a better understanding of your workforce.

1. Descriptive Analytics 

Descriptive analytics measures what happened in the past. For example, descriptive analytics might track how many employees left during the last quarter or review average performance ratings from your most recent review cycle.

2. Diagnostic Analytics 

Diagnostic analytics helps you understand why something happened. In practice, you might use diagnostic analytics to parse engagement survey comments, exit interview themes, or manager effectiveness scores to understand why turnover spiked within a specific team.

3. Predictive Analytics 

Predictive analytics gives you a glimpse into the future, helping you forecast and anticipate what’s coming. For example, you could use factors like declining engagement, stalled growth, or compensation gaps to predict which employees may be at higher risk of leaving your company.

4. Prescriptive Analytics 

Prescriptive analytics recommends what actions your business should take to reach your desired outcomes. It can help by suggesting targeted retention strategies to support at-risk teams, like creating more development opportunities, adjusting workloads, and revisiting compensation models.

Together, these four types of data analysis give HR teams a complete view of their workforce — from what happened to why it happened, what might happen next, and what to do about it.

Key HR Metrics in People Analytics 

To be both reactive and proactive, organizations need reliable HR data. The following HR metrics convert that data into actionable insights that support people analytics.

• Time to hire: A lengthy hiring process can cause you to miss out on top talent. Time to hire measures the number of days between posting a job and the candidate accepting the offer. Spikes in this figure can signal that bottlenecks are lengthening the hiring process, which helps the recruiting team identify and resolve these inefficiencies. 
• Cost per hire: Cost per hire tracks any costs associated with hiring employees. This includes both internal and external expenses, like paying for background checks, job board fees, hiring manager and recruiter salaries, compliance costs, and more. 
• Revenue per hire: This metric helps HR teams understand workforce productivity, efficiency, and overall company performance. It’s calculated by dividing your organization’s total revenue by its employee headcount, giving you a high-level view of how effectively your workforce contributes to business results.
• Engagement rate: Tracking changes in employee engagement helps HR professionals spot cultural issues early and take swift action to improve the employee experience. Filtering engagement scores by factors like gender, race, team, or office location can also reveal differences across employee subgroups, giving you a clearer understanding of how different individuals experience your workplace.
• Employee Net Promoter Score: Employee Net Promoter Score (eNPS) tells you how likely employees are to recommend your company as a great place to work. This can help your business track changes in employee sentiment and experience over time. 
• Absenteeism rate: Absenteeism measures how many days of work employees miss during a specific time period. High rates of absence can signal that your company is struggling with low engagement or high stress, so tracking changes can help your HR team identify and address underlying causes.
• New hire turnover: Recruiting is costly, so you want to be sure the people you hire actually stick around. New hire turnover measures the percentage of employees who leave within their first year, helping you understand how effectively your organization is onboarding and supporting new talent.
• Employee turnover rate: Turnover rate measures the number of voluntary and involuntary departures from your organization within a given timeframe. While people will always be coming and going, a sudden increase in turnover can signal deeper issues in your workplace that may require your attention.

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How to Use People Analytics to Make Decisions 

People analytics isn’t just about understanding what’s happening within your workforce; it’s also about using that information to make smarter, more strategic decisions that improve culture, performance, and business outcomes. Once you’ve gathered the right data, you can put it into action in the following ways.

Improve hiring and talent acquisition.

People analytics can take the guesswork out of hiring by showing which sourcing channels, roles, and candidate attributes actually lead to long-term success. By analyzing recruiting, performance, and retention data together, HR teams can learn how to build a more effective talent acquisition strategy.

People analytics can help you:

• Identify which hiring sources attract high-performing employees.
• Find bottlenecks in the hiring process.
• Detect bias or inconsistencies in hiring outcomes.

For example, people analytics might reveal that employees hired through referrals ramp up faster and stay longer than those sourced through job boards. With this insight, your team can invest more heavily in referral programs to attract candidates who are more likely to succeed and grow with your company.

Reduce employee turnover.

People analytics helps HR teams identify patterns and risk factors that contribute to employee attrition, allowing leaders to intervene before valued employees decide to leave.

By analyzing trends across engagement surveys, exit and stay interviews, performance data, and manager effectiveness surveys, people analytics can help you:

• Pinpoint teams, roles, or managers experiencing unusually high turnover.
• Identify early warning signs of burnout or disengagement.
• Understand the underlying factors pushing employees to leave.
• Design targeted retention strategies.

For instance, analytics may show that employees with low engagement scores who haven’t had a development conversation in six months are significantly more likely to leave. Armed with this insight, managers can conduct more regular career conversations and offer targeted development projects to re-engage employees and reduce unnecessary turnover.

Measure employee achievements and rewards.

People analytics helps ensure recognition and rewards are fair, consistent, and aligned with actual performance. By combining performance ratings, goal progress, feedback data, and manager evaluations, you can:

• Identify top performers who may be ready for growth opportunities.
• Spot employees who are consistently overlooked for recognition.
• Ensure rewards and promotion decisions reflect meaningful contributions.

For example, people analytics may reveal that high-performing employees on one team receive less recognition than peers in similar roles. That discovery could help managers correct the imbalance, thereby boosting individual engagement and keeping top performers from leaving.

Achieve diversity, equity, inclusion, and belonging (DEIB) targets.

People analytics can uncover inequities in the employee experience and help you build a more diverse, inclusive, and equitable workplace. It can:

• Highlight compensation inequality.
• Surface disparities in promotion rates.
• Uncover differences in engagement across demographic groups.

For example, you may find that only 10% of your leadership roles are held by women or that certain teams consistently receive lower engagement scores. These insights can guide updates to your hiring practices, development programs, or promotion processes to improve equity and representation.

Plan employee growth.

Data from performance reviews, employee surveys, competency assessments, and goals can help HR professionals and managers create growth plans that actually match employees’ needs.

People analytics can help you:

• Identify high-potential employees.
• Highlight skill gaps that require training.
• Proactively address succession and workforce planning.
• Map out internal mobility career paths.
• Measure individual development plan adoption.

For instance, a manager can analyze performance and competency data to discover that one of their direct reports consistently exceeds expectations, but lacks experience in a key skill required for a promotion. With these findings, they can help the individual create a targeted development plan to help them build that capability over time and prepare for the next step in their career.

Analyze the success of training programs.

It’s not enough to roll out training programs; you also need to assess whether they worked and instilled lasting change. People analytics helps measure the impact by looking at changes in:

• Performance scores
• Skills assessments
• Team productivity
• Engagement levels
• Retention within trained groups

For example, after a leadership development program, you might track whether a manager’s team showed improved engagement or reduced turnover compared to teams without trained managers. If the data shows no meaningful change, you can adjust the program or introduce new initiatives to support managers.

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How to Use Generative AI for People Analytics 

Generative artificial intelligence and machine learning algorithms are rapidly becoming a powerful accelerator for people analytics. While people analytics gives HR teams the data they need to make smarter decisions, generative AI helps HR leaders interpret data faster, spotting patterns they might otherwise miss and translating insights into clear, actionable recommendations.

Generative AI can enhance people analytics by helping HR teams:

• Track and interpret key metrics more efficiently: AI can sift through survey scores, turnover trends, performance ratings, recruitment data, and more in literal seconds. This reduces your team’s dependency on data analytics teams, summarizes key findings in a fraction of the time it would take a human, and dramatically decreases time from insight to action. 
• Summarize complex datasets: Have a large workforce? AI tools for HR teams can translate thousands of qualitative survey comments or exit interview notes into key recurring themes, helping people teams understand what their employees think.
• Identify patterns and root causes: Instead of manually searching for trends across teams, demographics, or time periods, you can use AI to quickly find and highlight correlations (for example, how workload or manager effectiveness relates to turnover in specific teams). This can also help flag early signs of burnout, disengagement, or attrition, so your team can address issues more proactively. 
• Recommend data-backed actions: At a loss for what comes next? Generative AI can act as an HR advisor, suggesting targeted next steps based on its findings, like manager training programs, changes in workload distribution, or updates to hiring processes.

Just remember, AI is still evolving. You must still use human oversight and judgment to ensure the insights and suggestions it generates support both your business’s and your employees’ best interests.

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Getting Started With People Analytics

Ready to start using people analytics to inform your HR strategy? Follow this step-by-step guide to choose the right metrics for your goals, turn insights into action, and start making more data-driven people decisions.

1. Define your goals.

If you want people analytics to help your organization, you need to know specifically how you want your organization to improve. “The first step is to define the goals and outcomes that the organization hopes to accomplish by using people analytics,” Spencer advised. “This will provide guidance on what type of data is needed, and can give insights into how and when it should be collected.”

For example, driving employee engagement will require a different people analytics strategy than measuring the financial impact of an employee wellness program or identifying drains on team productivity. Before you build your people analytics strategy, you need to know where you want it to take you.

Having crystal-clear goals and objectives ensures your people analytics strategy delivers the data you need to get the results and outcomes you want — so take the time to define them up front. 

2. Use the right tools.

Next, you’ll need to figure out what tools can help you put your people analytics strategy into action. While you may be tempted to collect and analyze people data yourself, most organizations need dedicated data science and analytics expertise to do this well.

As Spencer cautioned, “Most companies do not have the type of technology, level of expertise, or availability of data to maximize their use of people analytics on their own. Any dollars spent working with the right tools...will return themselves in multiples through superior outcomes.”

Not all people analytics tools are the same, and the “right” tool for you depends on your goals. For instance, if you’re looking to increase engagement, you’ll want a people analytics tool that measures key engagement drivers. Want to overhaul your hiring practices and build a more diverse team? You’ll need a people analytics tool that collects data throughout the hiring process and allows you to identify where and how you can improve.

Whatever your goal or objective may be, there’s a people analytics tool that can help you reach it. Lattice Analytics, for example, delivers insights that support a wide variety of HR goals. It offers DEIB data to help you understand the experiences of different demographic groups, an adoption dashboard to monitor and improve employee participation across people programs, and team analytics that give managers the information they need to provide timely, targeted support to their direct reports.

3. Get leadership and stakeholder buy-in.

Scaling people analytics across your organization can be much easier with executive support. When your CEO and leadership team are aligned on workforce data and insights, they’re far more likely to listen and act on your findings. That action might look like introducing new company-wide priorities, reallocating budgets, or adjusting long-term strategic plans based on your insights.

The good news? Many leadership teams love data, which often makes people analytics an easier sell than other HR initiatives. But to secure leadership buy-in, you need to show how people analytics will help both HR and leadership achieve their goals.

“HR leaders should always start their people analytics initiative by working with management to identify the top three to five workforce questions [or] issues that are important to the organization,” advised Jeff Higgins, founder and CEO of LYTIQS, a workforce analytics services and software company.

From there, you can develop a people analytics strategy that will deliver the data you need to address those questions or issues, and implement HR initiatives that drive the results your leadership team is seeking.

For example, if leadership is concerned about employee absenteeism, you might use people analytics to explore how engagement influences attendance — and, if a connection emerges, introduce targeted strategies to improve employee engagement and reduce absenteeism.

To secure executive support, you should also be prepared to explain the business value of people analytics in terms your leadership team cares about. As Higgins noted, “Be ready to show the ROI and impact on business results.”

Reimagine people analytics with Lattice.

People analytics has the potential to transform the way your HR team makes decisions by giving you clearer, more actionable insight into your workforce. With the right tools, like Lattice Analytics, you can identify trends and issues earlier, understand what your people need, and build programs that truly move the needle on engagement, performance, and culture.

Lattice brings together your demographic, performance, engagement, and career growth data into intuitive dashboards that give you a holistic, real-time view of your people and your culture. The result? A more aligned, supported, and high-performing workforce — and an HR team empowered to lead strategically.

Ready to experience Lattice Analytics in action? Request a free demo today and discover how clearer insights can help your people and your business thrive.

People Analytics FAQs 

How is people analytics different from traditional HR reporting? 

HR reporting tracks foundational data like headcount, hiring, and turnover. People analytics builds on that foundation by adding deeper insights into employee behavior, productivity, engagement, wellbeing, and even customer feedback. This broader view gives business leaders a more holistic understanding of their workforce.

Is people analytics only for large enterprises? 

Absolutely not. People analytics isn’t about the size of your workforce; it’s about the quality of your decisions. Whether you’re tracking a handful of metrics or building out more advanced HR dashboards and data visualizations, grounding your people strategy in data can help your organization operate with more confidence, consistency, and impact.

What skills do HR teams need to succeed with people analytics? 

To get the most value out of people analytics, HR teams need a mix of technical, analytical, and strategic capabilities. These important skills include data literacy, critical thinking, change management, communication, and a strategic mindset. Together, these competencies ensure HR professionals can interpret, communicate, and use data effectively.

Which HR metrics should I track/prioritize for people analytics? 

It depends on what you want to learn about your workforce and the outcomes you’re trying to influence. That said, most organizations start with a core set of people metrics that offer strong insight into culture, performance, and hiring effectiveness. These commonly include employee and new hire turnover rates, absenteeism rate, time to hire, cost and revenue per hire, eNPS, and engagement rate.

What are the business outcomes of implementing people analytics? 

People analytics empowers HR teams to make sense of workforce data and turn insights into data-driven decisions that improve the employee experience. Business leaders can use these insights to drive meaningful outcomes, including stronger engagement, more effective performance management, increased organizational productivity, and more strategic, people-centered initiatives across the company.

How does using people analytics affect the employee lifecycle? 

People analytics strengthens every stage of the employee lifecycle by helping HR make more informed decisions when it comes to hiring and onboarding, development, engagement, and retention. By understanding what employees need at each stage, organizations can create more effective, equitable, and supportive experiences. 

How can AI assist with actionable people analytics? 

AI can help HR teams track and interpret key metrics more efficiently, summarize complex datasets, identify trends and root causes, and recommend data-backed actions to drive engagement, productivity, performance, and more.