Research Shows Causal Link between People Analytics and Higher Financial Performance

New book by noted academics and researchers does the math on people analytics, proving the value generated by organizations employing people analytics

Visier, the globally recognized leader in people analytics and planning, unveiled research showing the causal link between people analytics and associated best practices in improving the business performance of enterprise organizations. The research is featured in a new book from the Routledge publishing house. HR leaders and people managers should see this as declarative proof–the open-and-shut case–for the critical importance of data-driven approaches to managing a workforce at scale.

This research comes at a time when HR leaders and people managers are facing a perfect storm of challenges related to a global pandemic and newly distributed teams; a reckoning on race, equality and diversity; and a talent crisis that has made recruiting and retention harder than ever before. Without a robust strategy for people analytics, HR leaders and people managers are flying blind–and missing opportunities for substantial business advantage.

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Evidence to this effect can be found in this newly published book, Digitised Talent Management: Navigating the Human Technology Interface, which outlines the value of people analytics through joint research conducted by Janet H. Marler, Phd., Professor of Management at the University of Albany and Lexy Martin, Principal Research at Visier.

Marler/Martin’s statistically proven research validates that organizations stronger in people analytics and associated practices, have stronger financial performance–at least 7% greater in return on assets and 8% in profit margin.

“We’ve had plenty of research in the past that shows the correlation between higher financial performance and the adoption of people analytics. What the Marler/Martin analysis shows is there is a causal link between the adoption of people analytics and higher financial performance,” said Martin. “Visier’s own research found organizations that are advanced in their use of people analytics and a set of adoption practices have consistently outperformed their peers in using analytics to improve retention, employee satisfaction, diversity and inclusion, and talent acquisition. This work, plus the broader use by people managers, integration of financial data, and use of change management contribute to an overall economic advantage, with the financial improvement proving to be quite significant.”

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The Marler/Martin findings extend a 2020 research study conducted by Visier on the Financial Impact of People Analytics. In the report, Visier found that customers employing people analytics strategies were outperforming their peers in both return on equity and revenue per employee. The report found the average return on equity across all industry sectors in the U.S. was 15.4%, however for publicly-traded Visier customers, the average return on equity was 23.6%, more than 50% higher. Similarly, Visier customers generated an average of $125,000 more revenue per employee, resulting in $775,364 per employee, against an average of $650,797.

“The need for people analytics increased dramatically over the past year, with more organizations looking to understand their people—and the subsequent financial impact of those people—better,” said Stacia Garr, Co-founder and Principal Analyst at RedThread Research. “This research draws a very clear line between the adoption of people analytics and improved financial impacts, which is what we would expect, given how high-quality information about people can lead to much better decision-making.”

Martin will be hosting an expert roundtable discussion on the impact people analytics has throughout an organization, and the bottom line impact on May 25, 2021 at 9am PST. She will be joined by Visier’s Chief People Officer, Paul Rubenstein; Chief Strategy Officer, Dave Weisbeck and Vice President of People Analytics, Ian Cook.

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