People Analytics – Understanding and Supporting Employees

What is People Analytics? – Definition of the Term

With people analytics, companies collect employee-related information and link it to other company data. This data is then evaluated collectively and used to make specific personnel decisions.

Based on this data analysis, HR managers can determine how well teams are working together, how satisfied employees are, or where there is general potential for optimization within the company.

Typically, people analytics is used to shed light on a specific issue in order to uncover correlations. This could involve analyzing sick days in the company, for example, in order to then examine possible triggers and how to effectively counteract an increase in sick leave.

What are the Goals of People Analytics?

People analytics is an approach that helps HR managers identify and understand certain cause-and-effect relationships within the workforce and (ideally) influence them positively. The aim is to increase the overall performance of the company in the long term.

In addition to the overarching goal, subordinate goals can also be formulated:

• Evaluate your own (HR) processes
• Develop new perspectives for employees
• Identify negative developments at an early stage
• Develop and implement measures

The strength of people analytics lies in the fact that it draws on a broad database to make predictive statements about the likely development of the workforce. 

How Relevant is People Analytics for HR? 

This data-based “look into the future” is of enormous value to the HR department and the company as a whole. In practice, this can be illustrated by several examples:

• Optimisation in recruiting: By collecting relevant data, HR managers can find out which incentives are important to employees (today), which type of communication they prefer via which channels, and what values they may appreciate in a company. This information can be used both for effective employer branding and for targeted recruiting of skilled workers.
• Intelligent personnel development: Which skills have proven to be of central importance in individual departments? Do employees who have successfully completed further training stay with the company longer than those who have not? And how does the performance of the relevant team members develop? Using people analytics, the HR department can predict whether and how well further training or continuing education in certain specialist areas will pay off.
• Strengthening employee retention: Historical personnel data provides information about when and to what extent employees resign. Do individual departments have particularly high or low turnover rates? Have patterns emerged over the years that indicate an employee's imminent resignation? Such aspects can be uncovered and specifically addressed as part of the analysis.

A prerequisite for these and many other application examples is that people analytics is consistently practiced within the company. The number of companies worldwide that use people analytics to gain insights into the impact of HR investments on competitive and business advantages is growing. 

It is important for HR to establish a proactive rather than reactive approach in the long term - while it is important to determine why, for example, a long-standing specialist has moved to a competitor, it is even more important to derive recommendations for action that will, in the best case, prevent such a scenario from occurring in the future. 

Other Possible Uses of People Analytics 

In addition to the examples mentioned above, the data and insights gained with the help of people analytics can also be applied to a number of other areas and corresponding issues in these fields. Here is a brief overview:

• Personnel planning: Determining the current employee structure and initiating measures for targeted development
• Sick days: Determination of specialist departments or divisions with high numbers of sick days and identification of possible causes
• Qualifications: Identifying existing skills and knowledge within the company as well as future needs to ensure healthy growth
• Productivity: Identification of departments with particularly high/low productivity and their impact on sales
• Collaboration: Determining the degree of collaboration between different teams and its impact on the achievement of individual business goals
• Satisfaction & motivation: Determining the attitudes of individual employees toward topics relevant to the company and how these attitudes develop over time

It is clear that the scope of such analyses potentially extends deep into the corporate structure. After all, uncovering cause-and-effect relationships is at the heart of this approach. And both the collection and evaluation of this information are essential for creating optimal working conditions for employees and increasing corporate performance in a sustainable and long-term manner.

The Key Benefits of People Analytics

In summary, this consistent use of personnel data brings a number of advantages for companies that work with this concept:

• Clear basis for decision-making: With people analytics, companies will make important personnel decisions based on a broad database - rather than on gut feeling.
• Early detection of risks: Negative developments in the area of human resources - such as migration trends or increased turnover rates - can be identified in advance. This allows necessary countermeasures to be taken in good time.
• Process optimization: A better understanding of important relationships/causal chains allows numerous processes, from recruiting to employee training, to be optimized in a sustainable manner.
• Overview of KPIs: Information and HR metrics can be viewed quickly and systematically, and the corresponding KPIs can be used for evaluations. This offers HR managers in particular an important advantage in terms of transparency.
• Precise forecasts: Systematic evaluation of personnel data allows many valuable forecasts to be made. People analytics is therefore a powerful addition to workforce analytics.
• Targeted support: Employees can be deployed according to their skills and, if necessary, receive individual support to enable them to perform their current or future roles even more confidently.

It is clear that the correct use of people analytics represents a valuable and, above all, quantifiable asset for the entire company - both for management and for employees.

People Analytics – Where does the Data Come From?

Data is indispensable when it comes to making empirically sound statements about employees. The more data there is and the higher its quality, the easier and more accurate it is to make concrete assessments. Companies can obtain this valuable information from various internal and external sources:

• Employee appraisals / surveys / regular mood assessments
• Extracts from central HR software / HR controlling software
• Data records from department-specific systems
• Benchmarks / third-party software
• Public social media profiles

Communication with employees is a particularly valuable factor here. For example, the Deloitte study “Beyond productivity” (2025) suggests that simply measuring company data transparently and regularly can have a positive effect on employee motivation.

However, the mere availability of this data is not enough - it is important to link it together in a meaningful way as part of a comprehensive analysis. Only then can a coherent overall picture be created from many separate data points.

Data Treasure vs. Data Protection – What Companies need to Consider

When collecting, linking, and evaluating employee data, companies must ensure that this is always done in accordance with the General Data Protection Regulation (GDPR) and the Federal Data Protection Act (BDSG).

Clear guidelines apply to employees' personal data:

• The purpose of data processing must be clearly defined in advance (GDPR Art. 5).
• Employees must consent to data processing (GDPR Art. 6).
• Employees must be informed about what data is collected and how long it will be stored for specific purposes (GDPR Art. 13). 

We have already addressed the topic of “time tracking and the GDPR” in detail. In the field of people analytics, it is particularly important to always keep an eye on the current legal situation and to involve employees in the data collection and analysis process – in the interests of both parties. This ensures that the necessary level of data protection is maintained in human resources.

How Can You Get Started with People Analytics?

How exactly does this work in practice? Getting started with people analytics is actually not difficult - we have created a brief overview:

1. Define clearly in advance what information is to be obtained and what questions are to be answered.
2. Put together a capable team to be entrusted with data analysis.
3. Define the scope of the project – this includes the scope of the data (time period/departments, etc.).
4. Compile the necessary information for later evaluation from the relevant sources.
5. Perform data analysis based on the specified parameters.
6. Present and review results and derive appropriate measures from them.