ALEXANDRIA, Va – Today, SHRM released new research, "The Use of People Analytics in Human Resources: Current State and Best Practices Moving Forward," documenting trends in the use of people analytics and AI-driven people analytics in human resources. The results of this research show that people analytics tools have great utility and promise, but without the infrastructure, resources, skills, and clear guidance to effectively use them, organizations may struggle to realize its full potential.
People analytics is defined as the practice of collecting and analyzing employee (or applicant) data to understand, improve and optimize business outcomes. AI-driven people analytics refers to applying computer algorithms to employee (or applicant) data to generate workforce-related recommendations, predictions, or decisions.
"HR leaders are increasingly looking to people analytics as a tool to answer key business questions, as 71 percent of HR executives whose organizations uses people analytics say that people analytics is essential to their organization's HR strategy," shared Alex Alonso, PhD, Chief Knowledge Officer, SHRM. "If HR professionals and leaders use people analytics and AI appropriately, they can make more effective decisions, improve the employee experience and impact the bottom line."
Among HR executives who use people analytics, with and without AI, only 3 percent believe their organization is very well prepared to deal with the potential lack of transparency around how AI makes decisions, —often referred to as the black box problem. Of the 9 percent of organizations that do use AI-driven people analytics, only 19 percent of HR professionals are very confident that their AI-driven people analytics tools eliminate bias. Another 70 percent are somewhat confident, while 11 percent are not confident their tools are unbiased.
"Organizations must invest in governance structures and quality data as foundational pieces to implement fair, ethical, and responsible uses of AI-driven people analytics," said Emily M. Dickens, Chief of Staff and Head of Public Affairs, SHRM. "Understanding and weighing the potential risks and benefits of people analytics and AI-driven people analytics tools before investing in them is critical to ensuring better workplaces."
HR professionals understand the importance of explainable AI and articulating how their systems generate output. These tools influence high-stakes decisions that directly affect people's lives—from which job applications are reviewed to which employees meet job performance expectations to qualify for a raise. For these technologies to be effective and accurate, they must rest on a strong analytic foundation. To help plot the path forward, the report outlines 7 best practices for organizations to consider. Organizations must commit to these best practices to realize the full potential of people analytics and AI-driven people analytics.
Additional key findings include:
- Among HR professionals who say their organization uses people analytics, 82 percent say their organization uses people analytics to assess employee retention and turnover and 71 percent use people analytics to assess recruitment, interviewing and hiring.
- More than half of HR executives whose organizations use people analytics say their organization provides insufficient resources to upskill HR professionals on data literacy (58 percent) and to support their data infrastructure (56 percent).
- Only 29 percent of HR professionals whose organizations use people analytics believe their organization's overall data quality is high or very high.
- 95 percent of HR professionals whose organizations use people analytics agree it is important to understand the rationale behind an AI algorithm's decisions, and 88 percent would not trust the recommendations without this knowledge.
To view the full report, visit: https://www.shrm.org/content/dam/en/shrm/research/use-of-people-analytics-in-hr.pdf
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All HR professionals and executives who responded to these surveys work for organizations that use people analytics. All datasets are unweighted. A total of 2,149 HR professionals who work for organizations using people analytics were surveyed. The professionals encompassed employees working in HR departments at the individual contributor, manager or director level. A portion of the professionals were recruited using the SHRM Voice of Work Research Panel from June 23 to July 6, 2022, and the remainder were recruited using the SHRM member database from Aug. 4 to Aug. 16, 2022. A sample of 182 HR executives was surveyed using the SHRM Voice of Work Research Panel from June 23 to July 6, 2022. The HR executives held a title of vice president or above and were doing HR work in companies with at least 250 employees.
SHRM creates better workplaces where employers and employees thrive together. As the voice of all things work, workers and the workplace, SHRM is the foremost expert, convener and thought leader on issues impacting today's evolving workplaces. With nearly 325,000 members in 165 countries, SHRM impacts the lives of more than 235 million workers and families globally. Learn more at SHRM.org.