Tag: employee data

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Labor analytics: A how-to guide for company leadership

astronaut with a magnifying glass

Summary

  • Requesting and collecting data in real-time allows your management to make better business decisions and keep costs low.

  • Focus on gathering insights that will ultimately address your business needs.

  • With labor analytics, variety is key. Use and collect data from multiple sources.

Data plays a vital function in all aspects of running a business. It is used in everything, from analyzing and predicting product performance to segmenting and understanding your customers in order to optimize the user experience. 

So naturally, data has an important role to play in workforce management through the process of labor analytics – also known as workforce analytics. Through labor analytics, HR professionals gather and analyze workforce data to:

  • Understand what new roles and functions a company should seek to fill and which ones it should cut. 
  • Understand what roles and functions might require a reduction or elimination altogether.
  • Forecasting the value and success a prospective employee can bring to a company.
  • Obtain actionable insights on how to better manage labor costs.
  • Gain a deeper understanding of the employee experience and what positively boosts employee engagement.
  • Optimize business strategy in a way that increases performance and productivity.
  • Make data-driven business decisions on fair and cost-effective worker compensation and incentives.

The good news is that most businesses already have access to massive amounts of workforce data – the catch is that gathering and making sense of this data can be tricky. But in the end, the benefit of utilizing labor analytics significantly outweighs the effort spent organizing the data. 

Research shows the positive impact that workforce analytics has on business outcomes. Case studies show that companies that use labor analytics say they have a clearer understanding of their workforce needs and can identify employees with high potential. They have also noted an improvement in retention rates and are generally happier with their human resources. 

Webinar: How to Stop Employee Turnover

Since the pandemic, attracting talent has never been trickier, and the benefits of labor analytics cannot be overstated. Following these four steps will help you optimize your labor analytics process and put your business in a better position for success.  

Gather analytics data in real-time

It is essential that your C-suite decision-makers have access to labor analytics in real-time, before they need to make critical business decisions. Visibility like this improves response time to frontline labor issues and ensures a more efficient allocation of resources. 

Real-time analytics give managers a clear picture of labor costs as a percentage of revenue across all locatins and throughout the day, allowing them to see where and when their workforce is struggling. This way, they can make better decisions regarding staffing levels, absenteeism, overtime, and more.

Whitepaper: Workforce Analytics

Connect labor analytics with business needs

While organizations should always make decisions on the most current data available, having too much data can hinder decision-making. Labor analysis shouldn’t be aimless in scope. Each research activity should address a specific question that needs answering by the organization. In other words, business outcomes need to guide the analytics process in the right direction.

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. In workforce analytics, variety is key.

Internal reports focus on metrics such as completed training hours 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 against the industry-standard. Incorporating data from a variety of analytics types gives the business a more robust viewpoint, allowing for better-informed decision-making.

Avoid common data analytics mistakes 

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 demographics but with years of experience. 

Data literacy – “the ability to read, write, and communicate data in context” — is a vital skill for any business today, according to 2019 Gartner research. Some companies may still have ways to go to maximize the potential of their labor analytics. Hiring a chief data officer or data scientist or outsourcing analytics capabilities to a vendor can help make sense of the data that’s collected. 

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. 

Optimize your labor analytics process with Workforce.com

Utilizing labor analytics tools like Workforce.com makes it easier to turn your data into real-time, actionable insights. These insights help you more efficiently tackle frontline labor issues like:

  • Predicting future hiring requirements
  • Understanding current staffing needs
  • Managing compensation and overtime
  • Understanding and optimizing employee engagement

If you’re interested in using workforce management software to improve both your labor analytics and your bottom line, check out our webinar below featuring exclusive research from a Forrester TEI report:

Building a Business Case for WFM Software

For more information, get in touch with us now. 

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Disclosing human capital data is now an SEC requirement

scheduling; time and attendance; forecasting

Thanks to the new U.S. Securities and Exchange Commission rules that went into effect Nov. 9, publicly traded companies are required to disclose human capital information such as workforce cost, human capital ROI and turnover rate, among others. 

There is no grace period, so publicly traded companies must begin disclosing this human capital information starting with their Nov. 30, Dec. 31 or Jan. 31 quarterly or annual public financial statement, noted David Vance, executive director for the Center for Talent Reporting, in a blog post on Chief Learning Officer.

What this means for publicly traded companies is: they must be prepared with the right data for their next public financial release. The SEC does not require specific metrics but wants appropriate information for employee attraction, development and retention at minimum. 

There’s leeway in the metrics you can report

Various resources and reports suggest what types of measurements employers can rely on. Vance suggested the following in Chief Learning Officer:

Attraction: Time to fill, time to fill critical positions, percentage of positions filled internally, percentage of critical positions filled internally.

Development: Total cost of training and development, percentage of employees who receive training in compliance and ethics, percentage of employees who receive any training, average hours of formal training per year, percentage of leaders who receive training, percentage of leaders who receive leadership development.

Retention: Turnover, turnover for critical positions.

Additional recommended metrics: Employee engagement score, leadership trust score, diversity by gender, age, disability, race or national origin, leadership diversity, pay equity, human capital ROI, total workforce cost, number of full time employees, contingent/contract and temporary workers.

The idea behind this is so that potential investors or stakeholders have all the information they need about a company before they make their investment or voting decision. A PwC report clarified that specific metrics aren’t required so that these human capital disclosures “will be tailored to a company’s own business or industry using management’s judgment and that they may evolve over time.”

Human capital disclosure has been gaining traction the past few years, with the International Organization for Standardization passing the first-ever standard for human capital reporting in November 2018. The decision prompted HR analytics expert Jac Fitz-enz to explain what this means for the field of HR. “An ethical code, a body of research, specialized education and performance standards are the basis of a profession. The adoption of ISO standards supports human resources’ claim to be a profession,” he said. 

Even as far back as 2015, Deloitte Consulting Managing Director and workforce management expert Lisa Disselkamp said, “To say workforce management outcomes affect shareholder value and business strategy is no understatement.” 

Collecting human capital data 

The right workforce management software can help organizations collect appropriate metrics for SEC disclosure. Workforce.com allows organizations to easily compile metrics including:

  • Level of compliance with wage and hour laws.
  • Employee feedback scores.
  • Employee star ratings and performance scores.
  • Data security for employees.
  • Employee retention rates.
  • Absence management and absence rate (i.e., rate of not showing up).
  • Schedule flexibility.
  • Payroll error rate and amounts.

Human capital data collection is simple with this tool. Data on employee feedback scores or schedule flexibility can give employers insight on employee engagement or satisfaction. Plus, employers can easily keep track of how many hourly employees they have in the system versus contract or contingent workers. Rates of employee absenteeism can inform organizations on how engaged employees are and how to help predict turnover.

Don’t fall behind on your new reporting requirements. If you’re in the market for a new workforce management software, Workforce.com can provide those needs while also giving managers access to key human capital metrics. 

 

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How to put together effective workforce management reports

compliance; workforce management software

A lot of organizations are putting a good deal of money into HR technology systems, said Matt Stevenson, partner and leader of Mercer’s Workforce Strategy and Analytics practice. The first wave replicated paper-based systems and transformed them for online use, he said. The latest iteration of workforce management systems allows organizations almost an infinite amount of reporting.

”We have a lot of people asking us, ‘There’s too much here for us to really figure out. Can you tell us what we should and shouldn’t be reporting?’ ” Stevenson said.

Also read: Labor analytics add power to workforce management tools

He added that people in various departments look for different information in their workforce management reports. Operations professionals may focus on questions like, “How can this process be more efficient?” while those in the finance department may ask, “What’s the cheapest way to do this task?” And workforce management professionals focus on a different set of questions.

Stevenson had other thoughts about what workforce management professionals should be focusing on with reporting. 

What’s your problem? 

“Our finding is that it’s harder to come up with the questions than it is to draw answers from the system,” Stevenson said. “What’s also problematic is if you interrogate the data enough, it will eventually tell you what you want to hear. Which means if you [dig deeply enough] into a data set, you can find a data point that will confirm your hypothesis, even if it’s just not right. So that makes it a little bit hazardous.” 

For those approaching these expansive workforce management reporting systems, what’s important to remember is to know exactly what question they’re trying to answer or what problem they’re trying to solve, he added. Don’t approach this with intellectual queries that have no clear connection to solving a specific problem. 

Also read: A technology integration is an intervention to dissolve common payroll errors

He gave an example of a client with so much data, their mantra became that they would not gather any more data until they knew exactly what decision it would inform. “Data for the sake of data just makes it too hard,” he said. 

Follow the trends

While these HR systems and tools are good for reporting, another important use for them is a trends analysis of what has changed over the years, Stevenson said. From there, users can go about exploring what caused the trends or changes. 

For example, organizations could create workforce management reports to assess what mix of employees in each store gets the most profits. One way to do this would be to look at the most profitable store and copy their mix, but that would ultimately miss the point. 

A deeper trends analysis could help them explore questions like, “When this store/location added another employee, did it lead to more sales over time?” Looking across different store locations over a period of time this way, the person doing this analysis may realize that the staff mix or adding more staff might not be a significant factor for profitability at all. 

It could be something more straightforward, like the highest-performing store does the best because of its location, Stevenson said. “A jewelry store and rich neighborhood will sell more than the jewelry store in the middle of a field.” 

Also read: Cloud workforce management saves on costs, resources and time

He said the tougher question is, does it matter on how many people you have? Or is it something else? The answer depends on factors like the store’s business model and what it sells. Flexible HR systems allow users to answer these more complicated questions, and a skilled user can create their own reporting process in the tool to answer their own unique questions. 

A good, flexible reporting system will allow users to discover the right question for their own unique needs, Stevenson said. 

Finding the right questions 

To find the right questions, users can hire experts or talk to stakeholders of the organization, Stevenson said. But that on it’s own may not be the most efficient strategy.

“To be honest, most [users] just find themselves reacting to the data,” he said. They find themselves in a reactive cycle rather than a proactive cycle, and it’s hard to get out of that.

That’s the complicated part of these HR systems, Stevenson said. Users have all this extra data and the system can help with administrative tasks, but there’s so much data that reporting can become complicated. “There’s too much to report, and you have to put it in that extra effort to figure out what the right things are to report. And that’s not always straightforward.” he added.

The right sections to feature on your workforce management reports 

The categories to feature on an organization’s report depends on their industry, Stevenson said. For manufacturing, it may be all about having the right number of people to operate the machines. In hospitality, what’s more important is having employees with specific skills to perform certain tasks. 

Also read: How to avoid overstaffing through wage tracker software

For most industries the “workforce planning” and “compensation” categories are important, he added.  Organizations also are wanting to report on its diversity, equity and inclusion numbers. 

Ideally, there’d also be some data regarding productivity, even though that may be tough unless a company has a measurement to rely on that signifies productivity, he said. 

Reporting in the health care industry 

Health care can benefit  from these HR systems and reporting the most, Stevenson said. Lives are at stake, so if there’s a possibility that changing an HR model can save someone’s life, that’s a huge opportunity. 

Also read: Mental health provider persists through pandemic to continue patient counseling

For example, he said that Mercer recently found that when they joined operations data with HR data, they can predict 85 percent of the variance of things like the likelihood of picking up infections in a hospital. These are predictions and not explanations for what is happening, but they’re still helpful. 

“When we work with our hospital clients, we can tell them, ‘Here are the things we can predict based on the types of shifts, the characteristics of the staff, the number of hours people work, where they work [and] the flows of people coming in and out.’ Then we bring them operational data like, ‘[What] kind of patients do you have at any given time? What’s the case mix?’ ” he said. 

“What we’re trying to do now is convince clients to program this into their HR systems,” he added. This may allow them to narrow possible causes for why an event (like infection spreading through a hospital) is happening on the premises. 

How these HR solutions are maturing 

“It is my personal opinion that these systems will reach their full maturity when they’re more integrated with the other parts of the business, like financial systems and operational systems,” Stevenson said. “Because then you can compare the people with the financials and compare the people data with the operational data.”

Stevenson said that it wasn’t that long ago that these HR tasks were done on paper, and now we’re at the point where some people are complaining about the fact that their electronic records don’t match up to those in another HR system. 

He believes that at this future level of maturity, HR systems will be able to help answer people’s questions about what the right questions are and what’s the right data to collect. 

“I think we’re pretty far away [from maturity]. but just because you’re far away doesn’t mean you won’t get there fast,” Stevenson said.