People analytics – solution to the labor force crises

Digitization has its proven advantages in increasing economic competitiveness. Implementation of digital solutions is a must for sustaining competitiveness. However, before capitalizing on digital solutions, it is necessary to know them for adoption, as relevant for each company. At this time, the common challenge of companies on labor shortages highlights the data analysis solution for employees.

The advance of digitization brings information to users fingertips. The flair or instinct is no longer the only measure of decision making. Due to data analysis, decisions are informed ones. Lack of labor led to an increase in the importance of employee retention rate. The existence of data on which top management and human resources departments can make predictive analysis models prove to be very important.

Technology helps decision-makers

Micro-segmentation of employees according to performance indicators, seniority, role, but also their correlation with various variables, changes the dynamics of promotion decisions, dismissals, incentives schemes, optimal staff use, organizational design.    

Positioned at the intersection of human resources management, information technology, and statistics, employee data analysis is gaining momentum. If the integration of these three components will prove robust in company decision-making, and so will the success of data analysis on employees.

Agility without technology is not possible

McKinsey’s „Digital America: A History of the Haves and Have-mores” study shows that companies with advanced digital capabilities for assets, operations and labor increase their revenue and market share faster than the competition. They increase their profit margin three times faster than the industry average and are often the most agile innovators.

There is much information about the employees in the company. It is often unstructured, fragmentarily stored and processed with various tools and rarely integrated. It is unproductive for decision-makers to muddle through this labyrinth of information and to be stuck in too much information. Therefore, employee data analysis skills allow the alignment and creation of relevant correlations between pieces of information.

The benefits of the people analytics

Specifically, employee data analysis helps: Identify people-relevant metrics and human resource activity, integrate data from all HR processes, link business and HR metrics.

It also helps to understand the reasons behind employees’ attitudes, behaviors, performance, and results, make predictions based on past information and use data for strategic changes that will positively change the end-result.

According to McKinsey, companies using employee data analysis increase their recruitment efficiency by 80%, with a 25% productivity and a 50% attrition rate.

Processes tailored to strategy and technology

Rethinking business processes, re-evaluating hiring strategies and retaining talents and labor needs are challenges and opportunities for companies that adopt employee data analysis. The same is the careful consideration of the optimal number of people and those who can be redistributed elsewhere, or the identification of business functions where new talent may be needed.

Companies that fail to make real-time management of employees through the responsible and professional use of data will be vulnerable. Analysis of employee data is similar to the results of medical laboratory analysis, ie an organizational health indicator.

Instead of a conclusion

Finally, we make five recommendations for companies interested in implementing the people analytics:

  1. Create a dedicated team led by a top management representative to support investment in IT resources and training people on this topic.
  2. Select and prioritize verified data from the HR department and the organization by implementing a data governance program that provides procedures to maintain the accuracy and uniformity of data in the HR and organization department storage bases.
  3. Make a working group understand and implement employee data analysis that includes people from all departments.
  4. Scale the fluency of using employee data by identifying experts who can train employees, implement specific work tools, and standardize reporting.
  5. Focus on the action by translating the information found in solutions and implementing them in the organization.