Tag: people analytics

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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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The risks of not utilizing labor forecasting

software, compliance

Labor forecasting promises many benefits to employers with a large amount of hourly workers. Still, many organizations have yet to utilize this process to inform their decisions on scheduling shifts. 

The risks of overstaffing or understaffing are very real, and organizations should be aware of what exactly they’re risking by not trying to create smarter schedules.

Also read: Labor analytics: A how-to guide for company leadership

Exempt vs. non-exempt workers 

Understaffing poses a significant risk pertaining to exempt/non-exempt classifications under wage-hour law, said Gary Pearce, chief risk architect at risk reduction platform Aclaimant. This is especially relevant when exempt, salaried staff members are working long hours because not enough people have been scheduled to work that day. 

“These people will be far more willing to challenge their exempt status, and there will be no shortage of attorneys ready to convert their case to a class action,” he said.

Employers cannot silently stand by and knowingly allow wage-hour law violations to happen, Pearce added. They have the responsibility to do something about it. 

Also read: Labor analytics add power to workforce management tools

“If frazzled employees are too busy to take uninterrupted meal or rest periods that they are entitled to, or the culture of the workplace is that it is acceptable for non-exempt workers to be asked to finish up work off the clock at home, or stay late but not record all work time in exchange for some future promise, then the employer is again highly susceptible to a class-action lawsuit,” he said. 

Workers’ compensation concerns

Understaffing often leads to overworked and tired workers, which can increase the likelihood of people getting hurt on the job, Pearce said. Not only is this a worker safety risk, but it can open up the employer to workers’ compensation costs that could have been avoided.

Overstaffing also introduces its own risks. “Inexperienced workers are time and again shown to be far more susceptible to injury, and an overstaffing situation might make this more likely,” Pearce said. 

He added that as staffing levels rise, employers need to spend more on workplace costs like training, protective equipment, benefits and whatever other support HR offers employees. 

Impact on unemployment costs

Pearce said that the impact of staffing levels on unemployment insurance costs can be significant. Understaffing can cause turnover when workers start feeling stressed or burned out and overstaffing may lead to a situation where employees don’t feel they’re being challenged. In cases like this, an uptick in unemployment claims may follow, Pearce said. 

“While truly voluntary resignations can be challenged, the system is structured to give claimants the benefit of the doubt and many employers lose challenges either because they are too busy to show up for hearings, or they don’t have sufficient documentation to back up their claims, or they fail to recognize the claimant’s side of the story,” he said. “Unemployment systems vary but there is an experience rating aspect to all of them, meaning that employers with higher claim volume will pay more in unemployment taxes than those with lower volume.”

Complying with the WARN Act and predictive scheduling laws 

There are a few ways in which overstaffing or understaffing can get employers in a difficult situation regarding various laws, Pearce said. With overstaffing, an employer may face a situation where headcount is too high and they must do a mass layoff — thus triggering employer obligations under the WARN Act, which requires employers to provide advance notice in qualified plant closings and mass layoffs. 

Understaffing may inspire a whole different range of legal hurdles with predictive scheduling laws. When managers want to bring people in with short notice due to headcount shortages, employers may have to pay penalties for unexpected schedule changes, for example. 

Keeping workers engaged

Worker alienation is at the heart of these risks, Pearce said.

“If an organization is materially understaffed or overstaffed, it is promoting this alienation and risking becoming nothing more than a commoditized counterparty to be financially optimized in the short run, since the employee has no stake in the long run,” he said, adding that how a company treats its employees can make a difference. “Engaged, happy workers aren’t as likely to obsess with real or perceived harms or seek legal redress for their grievances.”

Here’s where labor forecasting software comes in, by making it easier for employers to avoid these legal risks and by making it more likely that employees can have an appropriate workload and feel satisfied with their schedule. 

“Accurate labor forecasting can not only help to control costs while meeting changing customer needs, but [can] also be a key element in controlling unnecessary workplace risks and meeting the employer’s basic obligations to its employees,” Pearce said. 

 

 

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Labor data analytics can inform better talent decisions

labor analytics, people analytics

Labor data can help organizations make more informed talent decisions, but more companies could be taking advantage of it. 

According to Mercer’s “2020 Global Talent Trends Study,” 39 percent of organizations use predictive analytics to inform their people-related decision making. Thirty-one percent said they use a cause/effect analysis of key workforce and business outcomes, and just 18 percent gather data to assess the impact of different pay strategies on performance.  Meanwhile, 61 percent of executives who have used talent analytics said that doing so to inform decision-making is the number one HR trend that has delivered an impact

A workplace strategy expert spoke to Workforce about the potential of people analytics and how organizations can use it in their talent management strategy.

Using labor data analytics to measure employee impact

People analytics can inform complex predictive models, but it can also help organizations understand  how certain decisions have impacted employees. 

One prime example of this is pay equity, according to Tauseef Rahman, partner in Mercer’s San Francisco office. Labor analytics can be used to understand if there are pay gaps at an individual or group level, after taking into account factors like where employees live, what work they do and how long they’ve been working at the company. 

Also read: Labor analytics add power to workforce management tools

Analytics can also help organizations understand performance measurements better, Rahman said. Based on performance ratings and rewards like promotions or raises, are those performance ratings biased toward a specific subset of employees? 

Doing this analysis at a company-wide level is a good place to start, Rahman said. From there, leaders can see if there’s a company wide gap. There may not be a pay gap within the organization as a whole, for example, but through analytics, one can drill down and see if there are gaps in a specific business unit or a specific team. 

“That data can certainly help shine a light on where those patterns are and then that will help redirect efforts and resources to areas that need the most help,” Rahman said.

Using data analytics predictively 

Remote work has become more commonplace for many organizations during the COVID-19 pandemic, and experts expect remote work to continue to be more widely accepted afterward as well. Rahman said that analytics can help organizations interested in adapting an increasingly remote workforce. 

As organizations consider a more geographically distributed talent pool, many questions arise, like: If we hire people from across the country, how does that change how we do talent acquisition? How does that change how we pay people? And how do we manage the employee experience across different locations?

 Data can help answer questions and  inform decisions like this. 

Also read: The most pressing workforce management issues of 2020

Acknowledge the inherent flaws of data collection

No set of data can be completely unbiased, but what organizations can do to address this fact is simple, Rahman said. The key here is to clearly acknowledge that there’s bias in how data is created. 

Also read: Keeping Data Safe: The Next Wave of HR Tech Innovation

People who use data to inform decisions or strategy can acknowledge this bias by considering a few questions when they plan on using a dataset to do or plan something. These questions include: How was the gathering of this data framed? Was anything missing? Was answering these questions optional or required for survey takers? Were survey creators biased to presume certain outcomes?

For example, in recruiting, Rahman has seen the presumption that no one over the age of 65 would be interested in applying to a tech position. The reasoning behind this may be laziness or mental shortcuts rather than malice or age discrimination, but it’s flawed reasoning no matter the intention. “Things that are done in the spirit of making it easy can result in unintended consequences,” Rahman said.

Cross functional teams are critical

labor analytics, people analytics

According to Mercer’s “2020 Global Talent Trends Study,” the  “quality and reliability of data are critical.” Cross functional teams are critical for organizations interested in using data the right way, Rahman said. 

The team shouldn’t only include analysts and statisticians but also people with HR expertise, legal expertise and an ethical understanding of data collection. What data does an organization have access to, and how can it collect it in a way that’s not creepy?

“You can configure technology to do whatever you want. If you do something wrong, you can’t blame the technology. You blame the people who configured it,” Rahman said. 

Managing privacy concerns is an important part of these teams. There are interesting ethical questions that come up with the possibility of using labor analytics predictively. For example, Rahman said, what are the ethics of having a model that predicts how likely an employee is to quit? If they haven’t actually quit, what decisions can you ethically make with that prediction? 

Having someone with policy expertise is also beneficial for a cross functional team. For example, if an employee has a 90 percent chance of quitting according to an analytics model, a policy expert could consider what could be driving the employee’s dissatisfaction and what workplace policy could help them be more engaged. Maybe it’s something related to compensation or work-life balance that can be addressed.

The scope of people analytics 

Businesses go through times of uncertainty for many reasons, from global crises to national recessions and more. Times like this highlight the role of labor data analytics to make the employee experience better, at a time when many employees may be going through financial or personal struggles. 

Still, while focusing on improving the employee experience, organizations cannot lose sight of broader, also important areas of business that analytics can inform, Rahman said. These bigger picture topics include pay equity and diversity. 

“Having a broad mindset is really important,” he said. “You want to solve daily issues, weekly issues, monthly issues and multiyear issues, [all while] not losing sight of the fact that you still have to do your pay equity analysis and you still have to make people engaged in your company. It’s a lot more work, but who better to do it than these strong, multi-disciplinary [people analytics] teams?”

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Always be curious: Khalid Raza’s journey through human resources

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Khalid Raza, a 2016 winner of Workforce’s Game Changer Award, is now a talent acquisition leader at EY. As someone who’s been recognized for his achievements in human resources, Raza answered some questions for Workforce.com about his career in HR, the rise of data analytics and the importance of constant curiosity for a well-rounded talent professional. 

Also read: How technology fits into an HR manager’s job description

Workforce: How have you grown professionally over the course of your career?

khalid razaKhalid Raza: Career is not a destination but a journey where evolution happens with each experience. The growth of a professional is a story of continuous transformation stemming from experiences, interactions, reactions and self-reflection. Success and failures contribute to the depth of learning.

I had the luxury of being surrounded by visionary and compassionate leaders, talented team members who always set the bar higher, and my family which stood by me at all times. My professional growth has been fueled by curiosity to learn, do and achieve more.

WF: How has your career changed?

Raza: [As] someone who gets bored of [the] mundane, I moved roles within HR frequently, allowing me to appreciate and inculcate an understanding of every function and role. The organic accumulation of knowledge has helped me be more effective at all times. I am fortunate to not have a unidimensional career. 

 WF: What are some of the trends you’ve seen in HR over the past few years?

Raza: Equipped with data and analytics, HR now takes more informed decisions and provides measurable business solutions.

WF: What advice would you tell yourself five years ago? 

Raza: The only advice I have is to be more curious about the business we work for. HR exists to support the organization. Isolated efforts yield amputated outcomes.

WF: What have you learned over the course of your career in HR?

Raza: People are the key to success. Organizations that understand this theme continue to grow through tough times, too. Humans are not resources. The most successful teams are [successful] because of the people driving the transformation.

WF: What do you foresee in the future of HR?

Raza: I see more real-time analytics impacting outcomes [and] more open organizations, allowing leadership to tap and leverage mutual knowledge of all the employees. Those days are gone where a bunch of suit-clad executives decide in a boardroom what the strategy of the company should use, oblivious of the fact that the next big idea may come from a desktop engineer.

  • Impact of changes need to be understood in real-time through sentiment analysis.
  • Tailored bouquet of compensation structures.
  • Skills and value-driven compensation and growth.
  • More focus on inclusion than diversity.

WF: What are some things that you value most about your career field/position?

Raza: Talent or HR as a function deals with people, and as I alluded earlier, people drive companies to success or failure. I value the impact HR makes to the organization’s growth.

WF: Do you have any advice for HR professionals? 

Raza: Yes, I’d [like to share this] guidance to HR professionals:

  • Be Curious.
  • Strive to learn more at all times — people, experiences, struggles, success, and failures — there is always a lesson to be learned.
  • Don’t network. Build relationships. Adding random people on a social network is of no use unless you have built relationships with them.
  • Always find a mentor who can guide you — be it a career mentor or a skill mentor.

Also read: HR 101 for new human resources managers

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The in-demand potential of a data-driven CHRO

data analytics, data privacy

Are you leveraging predictive analytics to reduce turnover? Using hiring data to improve recruiting? Monitoring internal social media comments to measure employee sentiment or identify diversity issues?

If not, you are missing opportunities to become your CEO’s most valuable advisor.

Executives are finally recognizing that the ability to hire, retain and mobilize top talent is the key to their business success. And they are turning to their CHROs for advice, guidance and data to chart their course forward.

“HR leaders who adopt AI tools for recruiting, engagement and reorganization are reaping the benefits of these trends,” said Ben Eubanks, principal for Lighthouse Research in Huntsville, Alabama, and author of “Artificial Intelligence for HR.” “They can absolutely gain credibility and add value for the CEO and every business unit.”

But to become that indispensable business advisor, CHROs have to know how to capture and analyze people analytics, then link those insights to business decisions. And not all of them are ready to deliver. 

Also read: AI is coming — and HR is not prepared

The power of data

When companies figure out how to leverage human capital analytics, they experience measurable business benefits that go well beyond improved engagement scores. Visier’s “The Age of People Analytics” report found organizations with mature people analytics processes generate 56 percent higher profit margins than those with less advanced capabilities. They also found that these organizations are more likely to link people analytics to improved business outcomes and labor cost savings. 

This shouldn’t be a surprise. People analytics has been a hot topic in HR forums for the last few years. KPMG’s “Future of HR 2019” report found 80 percent of these leaders believe HR can provide more value through analytics. 

However, just as many studies show that most HR leaders are still struggling to join the ranks of mature analytics users. PwC’s 2019 Saratoga benchmark report found 55 percent of companies failed their analysis of “good people data”, and another 41 percent were only “partway 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.

Also read: Are more companies in tapping HR executives for board seat? 

This combination of high interest in HR analytics and low maturity among HR leaders can either be viewed as a risk or an opportunity, Eubanks said. “Companies need HR leaders who can be on top of human capital analytics,” he said. “It’s an opportunity to become a real partner to the business.”

How to get started

Historically, human resources has not had a lot of experience in using data and analytics in decision-making, said Dan Staley, global HR technology leader for PwC US. “Finance has always been viewed as more data-driven, but HR has to realize that it is sitting on a treasure trove of data,” he said. Companies constantly capture information about hiring, demographics, salaries, performance, turnover, diversity and other stats that offer powerful insights into the behavior and ability of the workforce, he said. The trick is figuring out how to access that data and ask the right questions to uncover actionable results.

Staley encouraged HR leaders to start by talking to the CEO and business unit leaders about what business obstacles they face and how they can use human capital data to overcome them. 

Then look at what internal and external data sets you already have access to and what questions it can answer, Eubanks said. For example, combining internal salary data with industry benchmark reports can allow a company to determine whether it is offering competitive compensation packages and where they can afford to make more targeted offers to high-demand candidates. “It’s no longer just your opinion,” Eubanks said. “The data can justify the decision.”

And when HR leaders have data-driven results, they need to communicate in business terms that are relevant to board members. “Don’t just report on reductions in turnover or absenteeism or time-to-hire,” Staley said. “Talk about the impact those metrics have on the business.”

CHROs who embrace human capital analytics and who can communicate the value of linking that data to business strategy can become indispensable to their C-suite. 

Also read: AI’s growing role in human resources

“HR leaders have the most influence when it comes to workforce decisions,” said Michael Moon, people analytics leader for ADP in North Attenborough, Massachusetts. They already have experience with hiring and performance management. By integrating data into these decisions, it replaces gut instinct with with evidence based decision-making, and makes it possible to pinpoint what is happening with the workforce and why, she said. “Once analytics are part of the way things are done, it becomes easy to measure the impact on ROI.”