Over the last several years, more and more U.S. corporations have invested in People Analytics teams, demonstrating that they place a high value on HR and employee experience (and want to understand it more deeply). While still considered a relatively new field, it’s undergoing rapid growth. HR technology analyst Josh Bersin wrote in 2017 that People Analytics had become an “established discipline” and in 2019 the global HR analytics market was valued at $2.25B with a growth rate of 14.2%. By contrast, most corporations already have mature Leadership Development programs – in fact, North America spent a collective $169.4B on training in 2019, far outstripping the market for People Analytics.
While they may seem different on the surface, in reality these two programs are opposite sides of the same coin. Here’s why I believe they would be more effective as a single department.
Understanding how employees operate
People analytics involves gathering and analyzing data on employees, processes and challenges to make more strategic business decisions. It aims to replace (or at least supplement) gut feelings or instincts about what works in business by using data. It’s a relatively high-tech field that uses data science, statistical analysis and visualization tools to process and draw conclusions from large amounts of information.
On the other hand, Leadership Development covers the programs that a business offers to develop leadership skills within employees. This includes selecting and assessing candidates and using techniques like coaching, feedback, mentorship, emotional intelligence development and new work experiences.
These two functions overlap significantly, and organizations can benefit tremendously by combining the two. People Analytics can provide important data that can shape leadership development programs. For example, it can look at things like:
- Which employee traits or behaviors correlate to higher performance.
- What types of employees thrive at this particular company and how hiring and HR processes can be changed to better recruit and retain them.
- Quantifying the issues that lead to poor performance and issues – for example, a major U.S. fast-food chain discovered in a people analytics project that their fast-food employees were productive for about six hours, but their productivity dropped off after that point if they were working a longer shift.
- Other issues related to retention, performance, leadership or culture.
Leadership Development can then use this data to design more effective programs. They benefit from understanding the current state of their employee base – what do employees already excel at, what do they need training in, and what’s the best method for delivering that training? What attributes make for a successful leader at this particular company and how can they best be developed? People analytics can help answer all of these questions and leadership development programs will be more effective if they can use that data.
For example, one of our customers used Cultivate data to determine digital behaviors that correlated with higher performance reviews (you can read more about that here). Now that they know what behaviors tend to help a person excel at their company (these behaviors may be different from one company to another; this is not a “one-size-fits-all” situation), they can focus on leadership training programs that develop those skills.
Technology is also changing both of these fields significantly, making it more likely that the skills and tools used in these two programs will converge. Virtual coaching and online learning options have increased significantly during the Covid-19 pandemic. In fact, the global e-learning market is expected to reach $325B by 2025. People Analytics technology is also taking off – a report on this space from analyst firm RedThread in late 2019 included 37 vendors, many of them less than two years old.
These tools provide value for both people analytics and leadership development. As these tools continue to develop, I predict we’ll see more natural overlap between the two.
Combining these two departments (or incorporating people analytics into leadership development as the organization adds it) will result in more focused, data-backed and effective leadership development, ultimately leading to better leaders and a stronger organization overall.
As Co-founder and CEO of Cultivate, Joe is focused on building leadership development and future-of-work technology for the digital workforce. In addition to leading Cultivate, Joe enjoys writing about workplace trends, teaching about startups and product management at UC Berkeley Extension, and occasionally running a marathon.