Technology

Labor analytics: A how-to guide for company leadership

By Andie Burjek

Jul. 10, 2020

Data is everywhere, and business leaders have many ways to access workforce metrics. There’s a lot of power in labor analytics, and knowing how to use the data available is the only way to do it effectively. 

There are many areas of people management that can benefit from workforce analytics, including improving retention, increasing the effectiveness of recruitment campaigns, measuring employee morale and helping decide which employees deserve promotions, according to the Society for Human Resource Management’s 2016 report, “Use of Workforce Analytics for Competitive Advantage.” Even so, it cited a 2015 Harvard Business Review Analytics Services and Visier survey that found two-thirds of organizations had still not allocated an HR budget for analytics solutions and software.

More recent data suggests a similar trend. A 2020 LinkedIn study showed that 55 percent of surveyed talent professionals said they “still need help putting basic people analytics into practice.” Other research shows that most HR leaders are still struggling to join the ranks of mature analytics users. PwC’s 2019 Saratoga benchmark report found that 55 percent of companies failed their analysis of “good people data,” and another 41 percent were only “part way there.” They also found that lack of leadership around deploying people analytics severely limits how quickly companies can leverage this data for better business outcomes.

Does your organization have the right data and employee knowledge to translate data into actionable insights? For organizations looking to better utilize data analytics, these tips can help.

Request data regularly

Organizations that do more than the average company with data sources, analytics practices and key performance metrics see better business results, according to “Unleashing the Power of Performance Analytics,” a 2015 Raytheon whitepaper created by Workforce.com. While this paper focused on the learning function, it also found some broader workplace trends. It compared baseline organizations (those that do standard rather than innovative work with data) with vanguard organizations (those who do above average work). 

In the baseline company, 41 percent of C-suite and senior executives requested data analytics at least quarterly. But for the best organizations, that number jumped to 69 percent. Leadership buy-in is key.

Connect labor analytics with business needs

While organizations should always make decisions of the most current data available, having too much data can hinder decision making. “Experts continually warn against aimless analysis of data, emphasizing instead that each piece of research should be astutely directed, asking a specific question that the organization needs answering,” the SHRM report stated. “Although the organization collects a variety of data, not all of them will be relevant. The desired business outcomes should drive the analytics.”

Use multiple types of data and analytics

To best utilize data analytics, using multiple, targeted sources of data — including business-appropriate performance analytics and HR/talent management analytics — is important. But it’s not enough. “To have an effective analytics strategy, businesses must also use a wide variety of analytics, which will help them take effective action,” the whitepaper stated.

Internal reports, a more basic type of analytics, focus on metrics such as hours of training completed or satisfaction with training. Predictive modeling uses statistical analysis to project the outcome of various actions. And external benchmarking allows an organization to compare itself with others. Incorporating data from a variety of analytics types gives the business a more robust viewpoint, allowing for better informed decision making.

data analytics, labor analytics

Avoid common data analytics mistakes  

SHRM suggests that organizations should be sure to avoid common pitfalls when using analytics. The data needs to be organized and cleaned, and organizations should start with small, simple projects rather than something big to help get leadership buy-in. 

They should also be careful not to confuse correlation with causation in research results. For example, if data shows that older employees are more successful at a task than younger employees, that may have nothing to do with age but with years of experience. 

Data literacy — defined as the ability to read, write and communicate data in context — is among the most important abilities for organizations today, according to 2019 Gartner research. Some companies may still have ways to go to maximize the potential of its labor analytics. Hiring a chief data officer or data scientist or outsourcing analytics capability to a vendor can help make sense of the data collected . 

Companies that do all this right will see stronger business results. According to the Raytheon whitepaper, while 36 percent of baseline organizations saw increased productivity among employees, the vanguard companies saw a 55 percent increase. Similar trends existed for increased employee engagement (41 percent vs. 52 percent), increased quality of product/service (31 percent vs. 50 percent) and increased skills and capabilities in the workforce (50 percent vs. 69 percent). 

The growing importance of data analytics is inevitable. For the unprepared company, this may be intimidating. Getting leadership buy-in and using data analytics strategically to achieve a specific business outcome can help. But once the organization gets a handle on its labor analytics function, it can expect promising business outcomes. 

Do you want to use employee analytics data to optimize your operations? See real-time financial insights, get data when you need it and use that data to optimize employee performance with the Workforce.com platform. 

 

Andie Burjek is an associate editor at Workforce.com.

About Workforce.com

blog workforce

We build robust scheduling & attendance software for businesses with 500+ frontline workers. With custom BI reporting and demand-driven scheduling, we help our customers reduce labor spend and increase profitability across their business. It's as simple as that.

Book a call
See the software

Related Articles

workforce blog

Technology

4 Ways to Maximize HR and WFM Data

Technology and cloud-based applications and platforms enable companies to gather more data, but can the...

workforce blog

Technology

How to prevent workforce management system outages: mitigation through redundancy

Summary Workforce management data breaches and outages are a very real threat Businesses should build r...

data breach, network security, payroll system, system outage, workforce management

workforce blog

Technology

Kronos (UKG) data breach leaves businesses in the dark for “several weeks”

Summary Workforce management company Kronos (UKG) suffers ransomware data breach Kronos Private Cloud a...

data breach, Kronos, ransomware, security, UKG