It’s official: Human resources is undergoing a major shift. Out with the old people management techniques and in with data science and talent management.

People analytics has arrived.

What is people analytics? It’s not technically a new concept – companies have been trying to bring smart analytics into human resources for decades. It wasn’t until big data and data science took off that we saw a real uptick in people analytics.

Here’s what it is, how it works, and how your company can benefit from implementing it.

What Is People Analytics?

First, the basics: what is people analytics?

Also known as talent analytics or HR analytics, people analytics is a tool for managers to make better decisions about their workforce.

It combines statistics, human expertise, and technology to comb through large sets of talent data. This creates comprehensive performance metrics that tell you about everything from hiring decisions to employee morale to retention rates.

This does something critical for your HR department: it eliminates the guesswork.

Instead of “going with your gut”, your hiring team can use analytics to find the best candidates and make sure that they stick around.

What Are the Benefits?

Let’s be honest: your HR department has no small task on their hands.

They’re not just responsible for hiring. They’re responsible for keeping a finger on the pulse of your employee pool, making sure that employees have what they need to work effectively and that they stay at the company.

This means they need smarter ways to get to the bottom of human problems like job satisfaction or morale about management. They also need to recognize what the workplace needs in a new batch of employees.

Oh, and they have to do it in an increasingly digital world. On average, 118 people apply for any given job–and keep in mind, 80% of available jobs are never advertised.

People analytics gives your team the tools to streamline their processes. They can make sure that the current workforce is satisfied, figure out why they’re dissatisfied, and identify the best candidate for an opening.

What Are Common Challenges?

That said, there are some clear challenges attached to analytics.

One of the biggest challenges? About 47% of businesses believe that their biggest obstacle is a lack of analytic acumen among their HR team.

In addition, many companies prefer decisions made with expertise rather than algorithms, which means that HR departments and job applicants alike prefer a more subjective process.

Keep in mind, however, that at the end of the day, numbers are numbers. In order to make the numbers useful, you need the expertise of a solid HR department. You need smart people to make sense of the data and transform it into useful company decisions.

How to Implement People Analytics

So, how does your company start to implement people analytics? The first step is to overcome an aversion to data-based decision making. You’ll need to create an HR culture that’s open to using analytics – otherwise, your HR team just won’t use them.

In a data-based decision-making culture, insights revealed by data take precedence over gut instinct. Encourage innovation, learn from mistakes, and always emphasize learning. Providing training is a great way to start.

From there, you need to identify your pain points – what problem will analytic tools solve for you?

Once you know what problem you’re trying to solve, you’re ready to start collecting data.