Last week, we looked at three of the key opportunities for organisations to consider, for the application and strategic use of their HR data and analytics. These were:
- The HR department shifts to a strategic business partner and centre of excellence, instead of an operationally focused business partner
- The ROI of HR analytics: better business decisions, better productivity, a better bottom line
- Sourcing best-fit talent, thanks to HR data
There’s so much value to be gained from HR data and analytics. These include:
- data-driven decision making – done right – has the potential to improve the quality of new hires (permanent and contingent)
- improved workforce engagement and retention
- increased productivity and hence a subsequent positive hit to the bottom line
- business leadership can make far better workforce decisions, and thus create better workplace cultures.
The key sources of HR data in most organisations come from the HR technology stack – including any and all of the following
- applicant tracking system
- vendor management system
- HRIS/HRMS/HCM cloud solutions
- employee CRM
- employee surveys
- the recruitment process
- employee professional history
- salary data and other sources
This data is then plugged into a centralised review platform, for visualisation, analyses and reporting.
The potential knock-on effect of HR data – business-wide – is incredible. And is not only worth investing in…. it’s becoming a critical business strategy in today’s complex working environment.
Today, we’re looking at the next three opportunities we’ve seen organisations enjoy, from the best use of their HR data. Let’s jump straight in…
1. THE KEY TO TALENT RETENTION (AND REHIRING)
Ever heard of ‘talent churn analysis’?
It’s when organisations use HR data and analytics to read the triggers, timing and influences on workforce attrition. The cost to organisations of talent leaving – especially high-performers – can reach 200% of their salary (source) when you factor in the following:
- replacement costs
- recruitment costs
- onboarding and training costs
- lost productivity costs
- decline in morale from remaining staff
- loss of IP
- project stagnation
- cost of early-stage employee errors
Hence, when an organisation makes talent decisions on the back of HR data and analytics, data insights can improve retention and engagement by looking at data points that include:
- exit interviews
- departmental attrition
- impact of commute time
- attributes of long-serving talent
- attributes of talent who leave in the first 12 months
- employee interviews
- onboarding experience
- performance data
These insights can help organisations to determine:
- the major triggers for talent leaving
- where the organisation is failing its workforce such as training and development
- where company policies are failing their people
- if departmental issues exist: for example, higher churn under certain managers or style of managers
- demographic issues: whether the company is embracing the needs of grassroots talent
- alignment of the EVP with talent experience: if there’s a gap, why?
These insights will also play an important role in being able to pre-emptively determine talent flight-risks, the need for policy overhaul, and whether business leadership needs to step-up their involvement in the application of insights. It’s worth noting too… some attrition is inevitable. But building a strong foundation for workers, encouraging them to return as alumni or contractors, provides further opportunity to mitigate the cost of people leaving.
It’s also worth noting what employees value at work…. (source).
2. the key to improved productivity
Think about this scenario: a key client of your organisation has increased its activity with your business. They need more from you – this might boost revenue, or it might not – either way, the typical response is to increase headcount.
A major and common problem in this scenario is that the selection criteria can decline significantly as talent is needed fast.
What if you were able to better manage your existing resources, to deliver a better outcome for that client?
The key issue here being able to use workforce analytics to leverage existing workers, as well as being in a better position to hire on the basis of your selection criteria.
In fact, the opportunity to improve those selection criteria may also become apparent thanks to your data insights.
By analysing the key characteristics and conditions conducive to high performance, HR data and analytics can help to better facilitate the appointment of like talent, and the creation of those conditions.
The result? Improved productivity. And when productivity improves, your business needs fewer people to deliver the same outcome.
Creating a culture of robust data analytics, where decisions aren’t purely qualitative, is crucial for your organisation to reach new productivity heights. And, by adopting HR data and analytics software, the real value will come from the analysis of your talent management data, providing a lever for maximised productivity, and organisational growth.
Additional productivity value you’ll reap from these data insights include:
- uncovering who are the high performers on your team
- learn where process deficiencies exist: how arduous is it for employees to make a decision, get approval, or source vital information?
- determine whether agreed processes are being followed, and rectify to boost productivity
- better hiring decisions means faster speed-to-productivity of new hires
- pinpoint teams or departments where output is down, and use the data to determine cause and effects
3. the key to a better compensation strategy
Typically the largest business expense, compensation plays a huge role in organisational decision-making. With access to potentially enormous swathes of market data and insights, your analytics software can give you a competitive advantage through timely and consistent market analyses.
Keeping tabs on competitor salaries, contractor rates, incentives and benefits, and using these insights, will consistently bring quality hires into the business. Data from exit surveys and declined offers will shed greater light on the compensation landscape for your industry and the job families inside your business.
With the backing of HR data and analytics, incentivising your workforce becomes scientific and quantitative; not ‘gut feel’ or opinion-based. Understanding the rewards that drive your workforce, both monetary and non-monetary, will play to your cultural strengths as your employees will be:
- more engaged
- more productive
- less likely to leave
- deliver greater value to your bottom line
Other potential benefits and outcomes of data-driven decision-making for people incentives include:
- establish employee referral programs, where talent is incentivised at the right rate and offering, for attracting quality hires to the business. With the right HR data, the business can determine the ideal bonus amount and cross-reference this with the relative increase or decrease in best-fit new hires
- Negotiating counter-offers: being able to determine how the employee is incentivised, how they compare to their colleagues, and what the market pays: only then, does it pay to enter into counter-offer negotiations. HR can go into the discussion relying on hard data, not on intuition, instinct or emotion – or the typically reactionary counter-offer
- Keeping pay equity on track: using HR data and analytics to determine any inequities in pay scale by salary bands, ethnic groups, role types, gender, age and tenure will mitigate your business from exposure to discriminatory treatment of any groups in your workforce. Sourcing data to ensure your compensation practices are equitable will keep your people happy, engaged, and keep you clear of potential litigation
- Market rate analyses for leadership, exec and board incentives: crucial for engagement of quality leaders in the business, keeping the direction of the business on track, with an active, motivated and properly incentivised exec team
Keep this in mind as well: you don’t need to be a data scientist or have years of technical experience under your belt to make HR data and analytics work for your business. Instead, you need to understand where to focus for your organisation’s unique needs, you need to make the data accessible, and you need to be able to interpret the data in a way that is meaningful and applicable to your organisation.
I’m keen to hear from you if you’d like to share any insights on your experience in the practical application of HR data and analytics.
Please feel free to contact me here.