The Role of Analytics in Workforce Planning

From marketing and sales to HR, workforce analytics planning now dominates every department in an organization.

In the HR space, analytics plays an essential role in guiding the process of recruitment, budgeting and performance, and scaling departments up or down.

Workforce analytics is huge right now, but what exactly is it and how can you make it actionable for your business? Let’s look.

What is workforce analytics?

HR teams utilize workforce analytics to make cost-effective, strategic decisions for their companies.

Analytics aren’t usually a primary focus for smaller businesses. However, for organizations with large teams, huge amounts of data to collate, and an ambitious growth plan, analytics are crucial.

Workforce analytics leverage big data and make it actionable for human resources. HR teams can then use data to guide informed workplace decisions and predictions for hiring, training, and retaining employees.

This might sound intimidating at first glance, but it’s really not. Organizations often have massive amounts of data, but it just isn’t processed and utilized correctly.

Workforce analytics tools help optimize this data by collating it, arranging it, and transforming it into valuable decision-making information for human resources. The end game is to streamline key people management areas like recruitment, performance, training, salaries and churn.

Types of workforce analytics

Workforce analytics methods usually fall into one of three categories. Let’s take a look at what these methods are and how businesses use them:

1. Descriptive analytics

Descriptive analytics (also known as historical analytics) is arguably the most simple approach to data on our list. It help organizations gather and analyze data that describes the current or past landscape. This is vital because it lays the foundations for future decisions and business growth.

Descriptive analytics example

Let’s say that a company grew exponentially between 2000 – 2010 and increased hiring efforts accordingly. Then, by 2012, they then had to announce redundancies and lay off employees. Descriptive analytics suggests that storing this data point can help the company avoid a similar issue moving forward.

2. Predictive analytics

The subsector predictive analytics helps anticipate future outcomes based on data scooped from the descriptive analytics exercises. This is also referred to as prescriptive analytics.

Predictive analytics example

Based on the data acquired previouslyLike with descriptive analytics, a company can use predictive analytics to see where they over hired. They can also ascertain the company’s current performance to see which departments are over and understaffed.

Predictive analysis goes much deeper than that too. It can also look at data like personality assessments and performance records of top performing employees. This will then help management draw conclusions about the type of people HR should be looking to hire in the future. The results can lead to specific direction like “Hire self-motivated extroverts with a background in tech that are comfortable working from home.”

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3. Diagnostic analytics

Diagnostic analytics help managers solve specific problems using workforce planning data. This is largely a problem solving exercise but can be backed up by big data and past analysis.

Diagnostic analytics example

Let’s say a company has a high churn rate, but only in the marketing department. Every other department has a consistent retention of staff.

Diagnostic analytics will look at where the problem lies in that department. Is it low salaries, poor bonuses, management, or a bad office culture? Exit interviews, feedback scoring, and manager appraisals will provide an accurate picture of the problem.

It’s important to note that workforce analytics do not take away the decision making responsibilities from HR or upper management. HR managers bring valuable training, human experience, and an understanding of the workplace and human psychology. Workforce analytics simply provide management with the data they need to make informed decisions.

“HR will not be replaced by data analytics, but HR who do not use data and analytics will be replaced by those who do.”

Nadeem Khan, Introduction to People Analytics: A Practical Guide to Data-driven HR

What are the benefits of workforce analytics?

Companies employ workforce analytics to improve a range of areas within the organization. These include:

• Hiring top talent
• Predicting new hires and gaps
• Managing budgets and costs
• Identify training needs
• Assessing and mitigating legal risks
• Uncovering labor gaps or inefficiencies
• Identifying a poor work culture
• Improving individual performance
• Benchmarking salaries against competitors
• Creating highly skilled teams
•  Avoiding workplace injustice like gender pay gaps
• Ensuring organizational diversity
• Creating efficient workflows
• Improving employee retention
• Identifying mental health crisis points or burn outs
• Reducing sickness and absenteeism

“Management expects HR professionals to be corporate soothsayers but our predictions should be based on an analysis of data, not just hunches. We’re the custodian of workforce information, but we’re not making full use of it.”

Kelly Rene Wenzel
SHRM-SCP
VP of Analytics, OptTek Systems

How to get started with workforce analytics

So, we’ve talked about workforce analytics and how it can help HR managers, recruiters, finance managers and CEOs to make informed decisions. But how do you do it? Let’s talk about some practical ways to get started and some analytics tools that can help you.

Study company KPIs

Developing a solid workforce analytics strategy requires you to understand your company’s KPIs and desired outcomes. You need to know what data you want and how you want it to help you.

If you don’t have workforce KPIs, then now is the time to set them. They might include factors like a desired turnover rate of under 15% or a maximum time to fill open position at 30 days. Remember, big data in workforce planning is not helpful if you don’t have a specific goal in mind!

Develop a strategy

Before embarking on your workforce analytics efforts, write a strategy that pulls in relevant data from various sources. These might be external sources like industry experts or sector predictions. Or, look internally at key members of your organization.

The data gathering needed to implement this strategy might take some time. It could include data like employee turnover, successful or failed projects, and budget. Your strategy and data gathering should aim to lay out workforce challenges, ideal goals, and the parameters that require data interpretation.

Align key stakeholders

At this point, it is essential to align key stakeholders. When you want stakeholder buy-in, present clear and well-presented data. Describe challenges and goals using visuals — not just spreadsheets. Presenting data without a visual representation is rarely effective and can be misinterpreted.

Utilize tools to help you

Once you’ve written your strategy and presented it for stakeholder buy-in, you will need to look at the tools that can help you achieve your desired outcomes.

Popular tools include Fuel50, Visier, Qualtrics People Analytics, and Lattice are popular choices. Hubstaff is another great tool you can use. With Hubstaff insights, you can view and compare activity benchmarks and define productive and unproductive apps and URLs. You can also integrate with project management tools and track time spent on specific projects.

FAQs

Who are workforce analytics for?

Workforce analytics can help HR managers, Recruiters, Finance Managers, CFOs and CEOs. This data is utilized by the biggest organizations in the world including Google, Wal-Mart, and Microsoft.

Is there a difference between workforce analytics, people analytics, and HR analytics?

Yes and no! Workforce analytics is more focused on the work and organization, rather than just the people. This includes technology, processes, budgets, and performance.

Of course, people do matter in workforce analytics. That said, this relationship is more of a helicopter view. HR and people analytics are often interchangeable. People analytics often extends to issues like well-being, work-life balance, maternity or paternity leave and stress. However, you often hear these terms used interchangeably and people do have varying definitions.

Could workforce analytics have helped during Covid-19?

Yes, it could! Workforces were sent to work from home, made redundant, or lacked the appropriate software to work remotely and handle the disruption. Workforce analytics could have analyzed that landscape and helped CFOs to identify and mitigate future risks before a crisis point was reached.

What are the barriers to implementing workforce analytics?

• Inaccurate or incorrect KPIs and goal setting
• Poorly gathered or inaccurate data
• Lack of stakeholder buy in leading to a failed outcome
• Fears over the legalities of data gathering (GDPR and data security)
• Poor technical skills. Deloitte found that only 9% of companies understand the link between HR and business performance.

Do you think workforce analytics has an important role in today’s corporate landscape? Does your organization utilize big data to drive HR decisions?

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