While many companies have started to use employee data to conduct large-scale workforce planning, the field of human capital analytics is still growing.
As employee salaries as a percentage of revenue continue to weigh on some industries — 2006 data from the Society for Human Resource Management showed workforce costs averaged around 70 percent of operating expenses, while experts caution the number should remain at around 30–40 percent — it’s grown ever more important for executives to have a handle on their labor optimization.
To make more effective talent decisions, companies can use internal data about prospective and current employees, said John Lipinski, a data scientist in the human capital analytics at health insurer Humana Inc. and a co-founder of HRanalytics101.com.
To optimize costs associated with labor, the following can be tracked and analyzed:
1. Turnover: This is one of the most common metrics to track, as it shows where a company experiences more turnover or where there’s less than expected. Lipinski said this metric helps determine which employee groups to target, such as those who are at high risk for leaving the company.
2. Internal talent movement: This metric can give leaders insight into where opportunities for people might lie. If people are stuck in the same role for too long, they’re likely to leave the company, Lipinski said.
3. Talent acquisition: When looking to hire talent, track where skilled workers live, Lipinski said. Rather than building a whole office in a particular area and then filling it, make sure the skills are in the area.
4. Contract labor cost: Rather than jumping into contracting labor, see if it’s worth the cost. Different roles might require different balances of full-time and contingent labor, which can come at a higher premium than other options, said Mick Collins, vice president of workforce analytics and planning at SAP SuccessFactors.
5. Vacancy cost: Vacancies are a huge productivity loss for companies, so keep a pulse on this metric, Collins said.
6. Risk of fraud: By tracking patterns of communication and flags in interview processes, companies can have insight into their potential for fraud, said Josh Bersin, principal and founder of research and advisory firm Bersin by Deloitte.Filed under: Talent EconomyTagged with: analytics, bottom line, business, Cost, improve, labor, optimize, strategy, workforce