Blog: Why You Should Care About Workforce Analytics

They’re not just interesting, they’re business critical…

Workforce analytics is generating a buzz in the business world today, but does the reality live up to the hype? What actually are workforce analytics, and how do we use them well?

CRF’s On Demand course, Workforce Analytics and Storytelling, explores how organisations can use workforce analytics and how the emerging tools and techniques in this field can be successfully deployed to address the most pressing workforce-related business issues and improve organisational performance.

Understanding the factors

So, what are workforce analytics? At their core, they are the processes of discovering, interpreting and communicating meaningful patterns in workforce-related data to inform decision making and improve performance. It’s not only about data analysis but also about change management – generating meaningful insights to drive behaviour change and increase organisational effectiveness.

Before embarking on workforce analytics, it’s important to understand how people-related factors such as employee engagement or turnover actually drive tangible business outcomes – everything from reducing costs and increasing productivity to improving quality or innovation.

The problem is that many analytics projects start in the wrong place – they focus on the insights that can be gleaned from the data that’s available. A more business-oriented approach starts by identifying the elements that determine an organisation’s unique position in its market – its competitive advantage.

The next step is to build up a wider picture of the organisation as a system, looking at how organisational factors, such as team dynamics or job design, and people factors, such as the performance of individual employees, contribute to creating and sustaining competitive advantage. Workforce analytics should focus on identifying opportunities for improvement in those elements of the organisation model that have the greatest impact on successful strategy execution.

Avoiding the typical pitfalls

To avoid falling into the trap of wasting resources by analysing issues that have little impact on organisational outcomes, each step in the analytics process has to be tackled in the correct order.

Having a clear methodology can help ensure that analytics interventions are focused on the most pressing business questions, that key stakeholders are identified and engaged, and that the conditions are created for successfully implementing recommendations.

Many claims are being made for the potential of workforce analytics to help achieve business goals, but for most organisations this is still an emerging field. Many organisations are struggling with poor quality data and a lack of analytical capability within HR. There is often too much focus on HR for its own sake, and insufficient emphasis on business outcomes. Organisations frequently start by building a statistical model to predict turnover, but while this may be strategically relevant for some businesses, many start here because it is more straightforward than other types of analysis and the data are readily available.

Other common applications of workforce analytics we’ve seen include data-driven strategic workforce planning, examining the connection between employee engagement and business performance, and reviewing the effectiveness of compensation and reward practices.

Ensuring the effectiveness of analytics

Having put in all the effort to encourage the use of analytics, and dodged some of the classic issues, you will get to the stage where you can begin to refine their efficacy. Where should you start?

First, look again at your business strategy to identify where analytics interventions are likely to add the greatest value. Focus on generating actionable insights – you want to be testing hypotheses, not just crunching data. You can also use existing scientific research to guide the questions to explore in the analysis – relying on previous research can help shortcut the process of developing hypotheses.

Be clear from the outset what actions the organisation would be prepared to take as a result of your analysis. There’s no point undertaking workforce analytics unless there is appetite in the business to do something with it.

Next, you’ll need to engage with key stakeholders, to increase the chances that analysis is followed through with your desired changes in behaviour, systems and processes. Critical stakeholders for workforce analytics include the HR Director, who plays a vital role in creating the context for a commercially-oriented, data-driven HR function, HR business partners, who can act as advocates for analytics in the business, and business leaders, who are ultimately accountable for implementing recommendations.

The most successful workforce analytics interventions typically combine business, people and organisational data. Workforce analytics teams rarely have all the data or expertise they need, so they have to collaborate with other business analytics teams across the organisation.

Finally, it’s easy to get so caught up in the sorting and cleaning of existing data that you lose sight of the bigger picture. The right data strategy may also include generating new data, combining internal and external data sources, or analysing both qualitative and quantitative data.

You’ll also need to build in appropriate governance and prioritisation processes, to ensure your data-based decisions are clearly aligned with the business strategy.

Historically, HR has not enjoyed a strong reputation for analytical and data-driven practice. Investing in building both the skills in your employees and a more data-driven culture and mindset is the first step towards tackling this key HR challenge.

Want to learn how you could use workforce analytics to support your HR team? Check out CRF Learning’s On Demand course, Workforce Analytics and Storytelling.