What is happening to people analytics? A 15 year trend - PART ONE

Directionally Correct Newsletter, The #1 People Analytics Substack

Sep 02, 2024

By: Cole Napper, Jin Yan, & Ben Zweig

This article is written to discuss: how has people analytics employment changed in the last 15 years, and specifically how the environment has changed in the last two years since 2022.

Thank You

First, a big thank you to Revelio Labs (Jin & Ben) for your willingness to research this topic with Revelio’s data capabilities. We also would like to thank Alexis Fink for her insights and ideas that led to this article.

Context

Almost a year ago, Cole made a Linkedin Post about a trend that seemingly everyone he spoke with privately acknowledged, but no one was publicly willing to speak to. The market for people analytics job was weird. Moreover, the overall job market for people analytics jobs seemed to have changed (for the worse) – and accurate data on the subject was nowhere to be found. Luckily, in conversations between Cole & the Revelio Labs team, the Revelio team was willing to dig into their proprietary data and research what the heck is happening to people analytics.

This article will be formatted into sections comprised of:

Expectations - What we think is/was happening
Facts - What is/was actually happening (including “Methodology”)
Commentary - What we think the implications are to people analytics

We intend to diagnose what is going on in people analytics, and why, within the context of what has happened to the field over the last 15 years. This article series will likely turn into a chapter in Cole’s forthcoming book, so be on the lookout if you’d like to see more where this came from. We hope you enjoy it.

Trends in people analytics employment over the last 15 years

EXPECTATIONS:

With the massive growth in people analytics jobs over the last 15 years, we expected to see massive increases in people analytics employment. We had no notion of exactly how many people actually practice people analytics – partially due to the conflicting definitions over “what is people analytics?” – but we guessed it was probably around 20K people in the US.

Cole personally also had the notion that since 2021 headcount in people analytics was not growing or flat any longer, but actually declining primarily due to layoffs. We all personally know folks who’ve been impacted by negative employment trends in the field, yet we don’t have the data to know if these are broad impacts or merely anecdotal.

FACTS:

Using Revelio Labs’ HR data, we identified those positions in the US with titles and job descriptions mentioning the following keywords: people analytics, HR analytics, human resource analytics, workforce analytics, talent analytics, employee analytics, and human capital analytics.

The green line shows the count of positions with titles mentioning any of the keywords. The purple line shows the count of positions with only descriptions mentioning any of the keywords. The blue line indicates the sum of positions with either titles or descriptions mentioning any of the keywords.

Among the positions that mention people analytics in their job descriptions, the majority are HR specialists, including HR business partners, recruiters, and payroll specialists. People analytics is one of the functions incorporated into their roles, alongside many other HR responsibilities.

The growth rate below is the annual growth rate of people analytics positions identified using both titles and descriptions. For the rest of the analysis, we will use both titles and descriptions to identify people analytics positions.

COMMENTARY:

Much like our expectations, according to the first chart, the number of people practicing people analytics increased five-fold over the last 15 years (the highest level of growth in people analytics professionals occurred in 2012, with a YOY increase of over 20% of professionals according to the third chart). It was almost a six-fold increase in 2022, but has since decreased. The high water mark for people who practice people analytics happened in late 2022, just shy of 12K people in the US, which is now closer to 10K+ people.

According to the second chart, it was surprising to find out how many traditional HR professionals had people analytics responsibilities as a part of their job responsibilities, rather than having people analytics be a fully dedicated role. HR Business Partner had the highest concentration of people analytics responsibilities outside of fully dedicated people analytics roles. This is quite surprising, and lends credibility to the notion that people analytics is not just a “specialist” phenomena at large organizations with dedicated people analytics teams, but a much more broadly distributed role throughout differently-sized companies and industries. If we take the green line on the first chart as our indicator, only half of the people who practice people analytics actually have a fully dedicated role to the space.

Most surprisingly, though, is the finding that over one-thousand people practicing people analytics left the field in the last two years (however, we do note that roles with exact job titles in people analytics do appear to have leveled off, not decreased, since late 2022). The third chart indicates that we have seen negative growth in people analytics roles since late 2022, and the trend has yet to completely reverse itself. Why is no one talking about this? To note, these charts do not indicate “why” people left the field (which could be due to a variety of reasons), only that they are no longer in the total population of people practicing people analytics. More to come on this.

Where did people analytics practitioners go?

EXPECTATIONS:

Most of the high profile layoffs that began in 2022 started in the startup industry, followed by the big FAANG companies, and gradually spread throughout the rest of the economy. As a consequence, our expectation is that many folks who “left” the field of people analytics as a result of layoffs, and that most of those impacted would probably stay in the field of people analytics, but perhaps in a different industry that was less impacted by layoffs.

FACTS:

Using Revelio Labs’ individual resume data, we can track the transitions of People Analytics practitioners and see where they are going after leaving the company. We find that 83% of them are more likely to start a new job outside of a people analytics team. Most of the jobs are in HR.

Among other jobs, they are more likely to transition into roles such as Talent Acquisition Specialist and Human Resource Specialist.

Looking at the salary changes associated with the transitions, we find that transitioning into a non-PA job brings higher salary growth.

The seniority gain however is similar between transitioning into a PA and a non-PA job.

COMMENTARY:

According to the first two charts, the vast majority of people who left a people analytics jobs since 2021 did not go back into people analytics roles. Rather, they were more likely to go into talent acquisition and HR generalist/coordinator-type roles. To be honest, we were completely surprised by this data. People analytics has been seen as a “hot job” in HR for so long it is very surprising to consider people leaving the field for other HR disciplines.

However, once you see the 3rd and 4th chart, you see why people might leave people analytics from a “push vs pull” perspective. People moving to other roles in HR outside of people analytics were more likely to receive an 8% salary boost (“pull”), whereas people analytics roles were less than half of that (“push”), even when controlling for the seniority gained by moving roles – which were roughly equivalent. To put it differently, if you were to leave a people analytics role after 2021, there was a penalty on you for being “loyal” to the field of people analytics. This is a problem. We intend to make recommendations on how to address this problem later in the series.

Is people analytics a “luxury” HR function?

EXPECTATIONS:

In 2023, Cole gave a presentation at the TALREOS conference titled “Is People Analytics a Luxury?” which put forth the hypothesis that the negative trends in employment for people analytics in the last two years were due to HR and business leaders seeing the field as a luxury. This hypothesis was based on a real conversation Cole had upon exiting a company with the CEO and Chief People Officer saying “People analytics is a luxury we cannot afford right now.” Ouch, tough message.

Based on that context, you can likely infer that it is our expectation that people analytics is seen as a “luxury” function in HR right now (HINT: We think this can change). This expectation is based in the belief that, at least partially, the rise in people analytics roles over that last 15 years was an artifact of historically low interest rates. Which, in turn, made it less risky for business leaders to invest in new functions of speculative value, such as people analytics. We all know the stories of Google’s Project Oxygen and Aristotle, and the HBR article “Competing on Talent Analytics” (not to mention the book/movie “Moneyball”) which led to the scramble for HR leaders at most leading companies to build and adopt a people analytics functions. What we may not be willing to confront is that those same leaders could relatively easily make “low risk” investments in a new function, like people analytics, because the cost of capital to do so was at historically low levels. And perhaps they all just wanted to be copy-cats of other organizations they perceived to be of higher prestige than their own, or not feel FOMO for not having a people analytics function.

Time has passed since the “boom period” of people analytics growth. And in turn, now that interest rates have risen dramatically, we expect that this rise in interest rates to be at least one cause of the negative growth in people analytics roles. We expect the “speculative period” of the field of people analytics is ending. Moving forward, “results” are necessary to maintain growth.

FACTS:

When examining the annual growth rate of people analytics positions and payroll specialist positions and comparing the rates between 2021 Q4 (when the federal funds effective rate was close to 0) and 2023 Q4 (when the federal funds effective rate was around 5%), we observe that the number of people analytics positions dropped significantly. This indicates that people analytics positions, compared to other core HR functions, are more sensitive to interest rate hikes, making it more of a luxurious HR function.

Looking at the overtime plot comparing the number of people analytics positions with the federal funds effective rate, the negative correlation is evident. As the federal funds effective rate increases in 2022, we see the number of people analytics positions start to drop.

On the other hand, when we compare the number of people analytics positions with the M2 money supply, we observe a positive correlation. As the money supply decreases in 2022, we see the number of people analytics positions start to drop.

COMMENTARY:

If you wanted to test the hypothesis that “the rise in people analytics roles over that last 15 years was an artifact of historically low interest rates” it would be important to have a “control” versus “experimental” conditions in a natural experiment to compare changes over the last two years, in particular, considering interest rates rose dramatically during that time period. The first chart shows our attempt at comparing a “payroll specialist” (control condition) compared to “people analytics” (experimental condition) over the last two years as a natural experiment. If you accept the premise that “payroll” serves as a control for what happened to “normative” or “typical” HR roles over the last two years, you would not be surprised to see a -0.6% decrease in those roles over that time period due to the constrained investments by business due to higher interest rates. Nonetheless, you would likely be surprised to see a -5.1% drop in people analytics roles during that same period, compared to the control condition.

Similarly, if you look at the second chart, it appears that the “Fed Funds Effective Rate” (i.e., a typical gauge of “interest rates”) has a direct negative correlation to the total number of people analytics roles. Rationally, you should expect to see a drawback in investment for all types of roles/positions when interest rates go high enough. However, we posit that you should have only seen reductions in people analytics roles on par with “normative” roles, such as payroll specialist roles. Yet, people analytics roles were 8x more negatively impacted during the over the last two years compared to payroll specialist roles. Something is wrong. Perhaps our field is being categorized by business and HR leaders as a luxury item after all…

In the second article in the series, we intend to address recommendations on what people analytics can do to not be seen as a “luxury function", and how we can break the linkage between the “rise of people analytics” and the “era of low interest rates” – considering that interest rates are still at recent highs. No one knows what the future holds in regards to interest rates, global economic conditions, and the like; therefore, it would be wise to have plans for growth and success of people analytics roles regardless of what economic conditions the future holds.

In relation to the third chart, the Revelio team strongly cautioned Cole on the interpretation of the sizeable correlation between the M2 (i.e., the number of dollars in circulation) and people analytics roles – emphasizing it is interest rates, rather than dollars, that likely drives the negative impact on people analytics roles, and that almost every economic indicator is strongly correlated to the M2. That withstanding, it’s worth re-emphasizing that it’s time for people analytics to break the correlation with interest rates, dollars, or any other variable that is not related to driving value for organizations. We look forward to sharing more on how to do so in PART TWO. Stay tuned…

I hope you like this article. If so, I have a few more articles coming out soon. Stay tuned. If you are interested in learning more directly from me, please connect with me on LinkedIn.