- Workforce analytics encompasses data analysis tools that extract meaning from metrics related to various parts of a business.
- Combining and analyzing cross-departmental data drives strategic alignment among all business areas to positively impact business outcomes.
- HR managers and company leaders use workforce analytics to make decisions about strategy, execution, and goal-tracking to support big-picture business goals.
Workforce analytics provides context to the data captured in key human resource (HR) metrics by bringing various metrics together to reveal trends that impact business performance. Workforce analytics, therefore, helps HR identify and execute on new initiatives that support broader business goals.
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What is workforce analytics?
Workforce analytics is a set of advanced data analysis tools that not only captures but also helps HR managers and company executives make meaning of a company’s workforce data in order to:
- Improve HR processes.
- Prepare for future workforce needs.
- Gauge the effects of people management on overall business performance.
Workforce analytics is different from HR analytics and people analytics because it encompasses employees’ work and work processes more broadly.
HR analytics captures the tactical parts of HR, such as the cost of payroll and payroll run times. While these metrics are important and feed into overall workforce costs, workforce analytics takes a more holistic view of processes and technology — things beyond the people and the conditions of their employment — that also affect business performance.
People analytics, often mistakenly confused with HR analytics, refers to metrics that capture overall employee experience. It also includes the effects that external factors, like the economic climate, have on employee satisfaction and engagement.
Metrics for HR analytics related to recruiting, for example, are captured and tracked in isolation from metrics for people analytics regarding employee engagement and experience.
Workforce analytics software—as either a standalone tool or embedded in an HR software platform—brings all these data points together to identify patterns that HR might not have otherwise detected. Finding the story in the data gives HR teams traction to craft data-driven plans to improve pain points or capitalize on opportunities.
Best practices for using workforce analytics
Approaching workforce analytics with a broader framework in mind helps HR get the most out of it. Start with big business goals and work backward from there to determine how HR will support those goals and track progress toward HR-specific initiatives that support business goals.
1. Set HR goals that align with broader business goals
Workforce analytics is a means to achieve people management goals that align with broader business goals. For instance, if one business goal is to expand into new markets in Asia, HR needs to build up initiatives around that in the form of recruiting, hiring, and training employees to work successfully in that region. Setting goals for those HR-specific initiatives provides a clearer picture of what type of data to analyze.
2. Ask strategic questions
Brainstorm big-picture questions about how ready the workforce is and how effective the current HR strategy is to meet short-term and long-term business goals. These questions help narrow down the particular data to track down and act on. For example, questions might include:
- What are the factors impacting employee turnover over the next 1-2 years?
- What roles will the company need in the next 3-5 years?
- Does the workforce have the skills to take on new roles in the next 3-5 years?
3. Select the right metrics and tools
A clear understanding of HR goals and HR-specific questions informs the selection of the right metrics that will help HR get answers on how to execute in service of the goals. From there, the right tools to collect data on those metrics are necessary.
For example, to address the question about long-term employee retention, Workday’s Peakon Employee Voice tool is part of its platform that provides useful analytics to gauge and forecast employee retention and turnover.
4. Employ user-friendly dashboards
HR dashboards are available in standalone products like PeopleInsight, WorkForce, Glint that draw from the rest of the HR tech stack to generate data visualization. Otherwise, HCM vendors — like SAP SuccessFactors — provide embedded analytics, complete with workforce analytics dashboards.
Most workforce analytics dashboards are user-friendly; however, data scientists and analysts might be necessary to ensure that the dashboards draw from the right data sources and pull clean, standardized data.
Plus, data analysts can further analyze the HR data to deliver the findings in understandable and digestible ways to executives.
5. Craft and execute a strategy
Workforce analytics uncovers trends and correlations that HR managers might not have otherwise detected. The discovered patterns serve as a foundation for HR to develop and act on strategies.
For example, to upskill segments of the workforce for future roles and skills needs, HR professionals or learning and development staff would implement a learning management system—if none is already in place—and develop tailored courses or subsidize employee training on another major platform like Coursera or Udemy.
Before rolling out any strategy, though, workforce analytics platforms like isolved let users test out the impact of changes on the workforce to make data-informed strategy decisions.
6. Measure impact and performance toward goals
Workforce analytics not only helps on the front end with forward-looking data analysis. Reports in workforce analytics tools help evaluate initiatives’ effectiveness in real-time or after the fact, giving HR a chance to course-correct.
How does HR use workforce analytics?
Workforce analytics that tells a meaningful story helps HR managers, in turn, make more informed decisions about strategies and tactics to undertake. Workforce analytics often points to correlations between two or more areas of HR that impact one another.
Craft compensation strategy
Workforce analytics draws from payroll metrics data and industry benchmarks to inform HR how to implement role banding or bonus and rewards structures to help attract and retain talent.
Demographic data helps HR identify and address pay inequities. Workday, for example, features a Pay Equity tool that helps HR identify and address discrepancies in pay across employee demographics.
Boost employee retention
High employee turnover or attrition rates negatively impact a business’s bottom line and productivity. People analytics metrics with respect to employee experience in conjunction with demographics data and offboarding data help HR identify who’s leaving and why. Depending on the factors that most impact employee resignations, HR can pull a number of levers to address employee retention, such as rolling out or improving DE&I initiatives and investing in high performers through training.
OfficeVibe has analytics for employee engagement that can help HR pinpoint areas for improving the employee experience.
Increase employee productivity
The information captured in time-tracking, employee engagement, and performance management enables HR to make decisions. For example, workforce analytics can inform time-off policy and staffing needs to ensure equitable workloads and employee work-life balance.
On the operational level, workforce analytics helps HR and IT decide on which software and workflows boost efficiency in or across departments to ultimately deliver better products and services to customers.
Reduce workforce costs
Workforce analytics aggregates costs of the workforce from data sources like payroll, benefits administration, and expense management software. This helps HR note inefficiencies and prompt a software purchase that automates core HR processes.
Digging deeper into workforce costs associated with benefits might reveal underutilized benefits that need to be re-evaluated or rising healthcare costs that need to be mitigated with a switch in insurance brokers.
Future-proof the workforce with talent acquisition and development
Workforce analytics supports the HR department’s ability to prepare for future workforce staffing and skills needs by helping HR teams identify critical roles that need to be filled and skills that need to be mastered.
Oracle HCM, for example, offers a skills-matching dashboard that applies employee performance and skills assessment data to open roles. The ability to draw from an internal talent pool helps reduce recruiting costs and onboarding metrics. It also ensures the company’s top talent is engaged and on a clear development path, which fosters engagement and retention.
What are the benefits of workforce analytics?
Workforce analytics help HR staff make data-informed decisions that support broader business goals and objectives, assisting with decisions about how to best:
- Predict and prioritize hiring needs.
- Monitor aspects of the employee experience that aid and drain employee retention.
- Boost efficiency by implementing cross-functional workflows and technology.
- Address skill and knowledge gaps.
- Reduce workforce costs.
Workforce analytics aid HR decisions, but they don’t replace human decision-making entirely. Instead, workforce analytics ultimately serve as a launching pad for strategic HR initiatives.
Explore Top Human Capital Management (HCM) platforms that feature robust workforce analytics to drive cross-functional strategic alignment in your business.
Rippling is the first way for businesses to manage all of their HR, IT, and Finance — payroll, benefits, computers, apps, corporate cards, expenses, and more — in one unified workforce platform. By connecting every business system to one source of truth for employee data, businesses can automate all of the manual work they normally need to do to make employee changes.
Paycor’s HR software modernizes every aspect of people management, which saves leaders time and gives them the powerful analytics they need to build winning teams. Paycor provides a full suite of HCM solutions with a single source of truth for employee data, so users never have to switch platforms, log-in to multiple systems, re-key data or open multiple spreadsheets. Everyday processes become simplified, allowing organizations to focus on their most important work.
3 Darwinbox HR Software
Darwinbox is a unified HRMS platform that lets you manage the complete lifecycle of your employees – from hire to retire. Built for large enterprises, Darwinbox is used by 2M+ users across 700+ global companies such as Mahindra, Tata AIA, More Retail, Adani, Sembcorp, Kopi Kenangan, and more. It is a mobile-first platform that offers self-service capabilities and a great user experience to all your employees.