Momentum has been slow to build, but it seems that the last few years have finally seen workforce analytics emerge as a mainstream priority in the business world. Also referred to as HR analytics or people analytics, workforce analytics broadly refers to the practice of leveraging digital tools and data to measure, report, and understand employee performance. The goal is to drive better, smarter decisions around workforce planning, talent management, and operational improvement.
According to recent studies from Deloitte, 71% of companies consider the implementation of people analytics to be an important priority in their organizations (40% rate people analytics as “important” and 31% as “very important). And that high figure is hardly surprising when you consider the wide variety of business challenges that workforce analytics can help address and solve. Five of the most common problems that today’s companies are tackling through workforce analytics include:
A low employee retention rate is one of the biggest HR problems a company can have. When employee turnover is high, particularly in essential positions, the impact on revenue can be significant. More turnover not only requires more resources to be invested upfront in recruitment, onboarding, and training, but also leads to diminished productivity as new employees take time to get up to speed with business activities.
Workforce analytics helps with the question of employee turnover by offering companies new and detailed insights into which employees are leaving and why. Organizations can collect data on turnover segmentation (that is, voluntary versus involuntary departures), major drivers of turnover (including low morale, poor leadership, or a lack of employee development opportunities), turnover rates by region or company division, and the correlation between turnover rates and tenure at the company. With this information, companies are better able to predict which groups of employees are at greatest risk of leaving the company and to develop actionable and effective strategies to boost retention rates and hold on to critical talent.
Overtime pay certainly has its place in normal business operations, but if it’s not managed correctly, excessive overtime pay can quickly begin to drag down a company’s bottom line. Naturally enough, the first step to properly managing overtime pay is understanding why overtime hours are happening in the first place. This is where workforce analytics comes in.
Workforce analytics helps companies answer key questions around overtime, including which employees rack up the most overtime hours, when overtime hours occur most frequently, what time management issues are at stake, and which department is responsible for the most overtime hours. Armed with this information, managers can look at the broader patterns connected with a company’s overtime trends, unearth the root causes of excessive hours, and take action to reduce the need for overtime.
More employers than ever are putting a premium on employee engagement, as study after study has shown that an engaged employee is a more productive employee. Engaged employees are also more likely to stay with the company longer. But while employee engagement can be generally understood as an employee’s emotional commitment to an organization, their belief that their work is meaningful, and their sense of personal accomplishment, the specific factors that drive this engagement can vary depending on the company and on the employee.
To gain greater insight into the elements of employee engagement, companies can use workforce analytics to help understand the question from the other side. In other words, analytics can be used to look at workplace attributes that correlate with employee disengagement, including absenteeism, attrition, and falling performance ratings. Companies can then use this data to identify and implement rectifying strategies, such as adjusting compensation, focusing on job growth opportunities, and working to improve work/life balance.
A company is only as successful as the people who power it, which is why talent gaps, where important positions or skills are not adequately filled or represented, can quickly lead to inefficiencies and lost revenues. Understanding these gaps—where they occur, whether and how they match up with other in-house capabilities, and their overall effect on the organization—is a critical first step in filling them.
Workforce analytics allows companies to thoroughly assess the gaps in their workforce by providing critical data on issues like how the company is managing its candidate pipeline, how effective the onboarding process is for new hires, and how productivity and retention are faring at the end of designated probation periods. The detailed picture painted by this information helps a company to better manage its talent gaps by conducting more targeted recruiting and selection efforts, boosting succession planning efforts, and assessing the value and the potential of current employees.
Employee training programs.
Employee development and training is an important way that companies can increase employee engagement and satisfaction, as well as develop a more committed and motivated workforce. However, not all training programs are created equal—and not all types of training will be suitable for every workforce. Analytics can help companies assess the impact of employee training programs by looking at metrics like performance, retention, and return on investment. Companies can then focus their investment on the particular programs that are having the greatest impact on business goals.
Filling a key position at your company will nearly always involve deciding whether to hire an internal or external candidate. In other words, as popular wisdom frames it, it’s a choice between “buying” from the external job market or “building” from within. While this choice is often presented as an either/or situation, it’s important for today’s companies to realize that both approaches can have value depending on the circumstances and that one option is not inherently better than the other.
To help guide your evaluation of internal versus external candidates, read on for a look at some of the benefits, drawbacks, and other points associated with each option.
Advantages of hiring an internal candidate
- Quicker and less expensive
It’s no secret that hiring externally can be an expensive proposition. In addition to the costs of recruiting, onboarding, and training, many studies estimate that external candidates typically earn between 18% and 20% more than candidates promoted from within. Internal candidates can therefore be more budget-friendly, which is an important consideration if your company is struggling with a tight bottom line. In addition, hiring internally is generally a much faster process than hiring externally, which is helpful in situations where an unexpected vacancy means that a position needs to be filled quickly.
- Institutional and cultural knowledge
One of the main benefits that internal candidates bring is a working knowledge of your company and its culture, practices, and procedures, as well as strong existing relationships with coworkers and clients. This means that there’s no uncertainty about whether or not an internal candidate will be a good fit with the corporate culture and working environment, and it also means that much less onboarding and training is required in order to familiarize new employees with the workplace.
- Access to performance history
If your company has an effective performance review process in place, you’ll be able to gain much deeper insight into an internal candidate’s performance history than is possible with an external candidate. This can help to avoid uncertainty around what some HR experts call “firm-specific” performance; that is, the question of how much a candidate’s performance is related to their skills and competencies, as well as how much can be attributed to the particular firm for which they work.
- Motivated workforce
A company that has a reputation for targeting, grooming, and promoting internal candidates to senior positions will generally be more successful in recruiting and retaining employees. The possibility of internal advancement can also be a strong motivator for current employees, thus boosting overall performance and productivity.
Advantages of hiring an external candidate
- Outsider’s perspective
One of the main advantages that an external candidate can bring to a company is a fresh perspective on the organization’s culture, activities, and direction. For example, external candidates can draw on new and different experiences to offer solutions to problems that the company may have been struggling with on an ongoing basis, whereas an internal candidate may be too closely involved to be able to provide an impartial point of view. In addition, external candidates are not hampered by any feeling of “that’s the way we’ve always done things,” and so they are much more likely to test out and experiment with new ideas and approaches.
- New skills
Another major benefit of external candidates is that they can supply valuable new skills that your company may be lacking. Particularly for those companies looking to upgrade their digital and technological capabilities, the need to fill critical skills gaps is one of the main reasons for looking outside of—rather than within—an organization for new candidates.
- More candidates to choose from
External recruitment allows a company to choose from the widest possible pool of candidates, as opposed to having to confine its search process to existing employees who may or may not be an ideal fit for the job.
- No existing baggage
While internal candidates offer the advantage of existing relationships with clients and coworkers, this can sometimes be as much a drawback as a benefit. Internal candidates may have a prior history with other people in (and outside of) your company that are not widely known, but that could cause complications in the event of a candidate’s advancement. Sometimes, bringing in an external candidate is the best way to avoid ruffling feathers and to turn an appointment into an opportunity for a “clean slate.”
Other points to keep in mind when considering internal vs. external hires
When weighing the decision of whether or not to hire internally or externally, there are a few additional points that are important to consider. They include:
- Factor in where your company is at in its business cycle. For example, external candidates are usually a better fit at companies in times of corporate turnaround or strategic shifts.
- Be aware of any biases or pressures in the hiring process. Are you only looking to hire internally because there is corporate pressure to choose an internal candidate who is a safe bet rather than take a chance on external talent?
- Consider whether your company needs to improve diversity at the senior level. Studies have repeatedly shown that a diversity of people and perspectives greatly improves corporate innovation and productivity.
The workplace is changing in big ways in this new year and these are some of the top trends that you might find in your workplace and how to be prepared for the change. The workplace is in constant evolution, along with their employees, procedures, and technology, and this brings along constant change. Companies should be prepared to change when the time comes to adapt their procedures and tools to match their team and context.
1 – Candidate and employee experience becomes a priority
For many years, companies have focused on creating the perfect customer experience through marketing strategies. This, in turn, has increased loyalty and revenues for years, so now Human Resources has realized the value behind it and is turning internally to the company. In 2017, Human Resources are now tapping into marketing and customer service insight developing experiences for both employees and new candidates. Employees and candidates are now going online and offering reviews about their experience and this is something that is changing the way job search works. Procedures like notifying applicants about their status in the hiring process are vital, and when employees don’t get any kind of contact will most likely never send another application to a hiring process in that company again. This negative experience will possibly turn away future candidates as most comments and experiences can go viral nowadays on social media. By previous candidates spreading the word about negative candidate experiences, you’ll be missing out on some of the top talents in the market. Additionally, you’ll find the current employees’ experience will be just as vital to your talent acquisition in the future. Ensure employee experience by offering training, improving work spaces, and giving more rewards for a job well done. All in all taking care of the experience that people have when they encounter your company will go a long way.
2 – Blended workforce increase changes the panorama of companies
In the past couple of years, companies have found the advantages to hiring freelance employees and the virtues of the blended workforce. Projects are now being worked on by teams if full-time employees and freelancers each one bringing to the table their experience and know how. Being prepared as a company to explore blended alternatives of working. This trend is picking up and bringing to the workforce a whole new way of handling things. Companies can begin to start exploring remote workers, telecommuting and other alternatives that will suit your company and its needs, all while offering your employees the best possible experience as part of your organization.
Related article: 5 Keys to efficiently manage remote teams.
3 – Ongoing reviews replace yearly reviews
Human Resources has long discussed the possibility of getting rid of annual performance reviews, especially nowadays when the fast-paced technological world has prepared a different kind of professional. Today’s professionals are expecting immediate and instant feedback and/or gratification, similar to what they experience on social networks. Studies have proven that most employees don’t see the benefit behind annual feedback reports, which based on their responses don’t help to improve performance. The new generation of professionals prefer to receive daily, weekly or regular feedback to be able to make adjustments and performance improvements in shorter spans of time. Companies that have followed suit in changing up the performance review process, have seen great results through productivity increase.
4 – A whole new breed of professionals
Younger employees are now entering the workplace will transform the panorama once again, with younger professionals bringing along with them new demands and more technology. This new evolution of companies could drive a greater wedge between younger and older employees so it will be important to analyze the different strategies your company will undertake to ensure a good working environment, where each employee, regardless of age, can be productive. The transformation has to be fit to hold this new workforce with younger faces, but still align with the company’s interests and the older generation of employees.
5 – Incorporate technologies in the workplace
2016 brought with it a lot of advances in technology like augmented and virtual reality. Many of the younger generations are requesting and suggesting that their companies get on board and include these newer technologies in corporate procedures, products, and services. Facebook and Apple are already making great strides in including this tech in their new products, but the increase for 2017 is almost inevitable. Having access to this tech outside of the office will be the reason why most employees will want to have the same tech inside of the workplace. VR is already making its way into some company’s procedures, like offering virtual reality tours for potential new employees, or to explore machinery.
All of these changes, among others, will revolutionize the workplace and to ensure that you can keep up your company will need to, not only analyze the trends themselves but how these trends will affect the rest of the workplace paperwork, procedures, and legal contracts.