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Workforce analytics: Changing the way we work

October 1, 2012

Article courtesy of SBAM Approved Partner ASE

By Kevin Marrs

If you haven’t heard the term “workforce analytics” before, you may soon begin to hear it, and often.  Why? If you are like a growing number of businesses, you are likely looking for and finding ways to harness all the information and data your business collects each day. This is information that before technology and powerful analytics tools was mostly ignored.  But make no mistake; this relatively new science will change the way we hire, train, motivate, and retain our workforce.

A recent feature in The Wall Street Journal highlighted how using workforce data helps solve common Human Resource problems.  For example, when Xerox was experiencing turnover in its call center it turned to data for a solution. Historically, when hiring for this group the printing company would focus extensively on previous call center experience as a guideline on whom to hire. However, software and a personality test provided a contrary view of who was likely stay. The analysis showed that inquisitiveness, as measured by a personality test, can be a negative with respect to retention.  Creative types, the data showed, were more likely to stay.

Of course, personality tests have been around for a long time, and are hardly new in the hiring process.  What was new in the Xerox case was combining and studying the results of the personality tests with turnover data.  Fortunately for Xerox, given its size, there is a lot of data to explore.  Xerox is now working with a start-up to administer a battery of tests and study performance over time.

But smaller companies have also used advanced analytics to solve common workforce issues. Take the Michigan-based Richfield Management, a waste disposal company.  The firm recently turned to an online firm to reduce workers’ compensation claims.  It asks applicants a series of questions designed to identify those who might be a higher risk for filing a claim.

Another example highlighted in the Journal was the case of Caesars Entertainment. The casino company analyzed pay and its effect on employee retention.  What they discovered wasn’t earth shattering, but it was solid and will save the company a ton of money in the long run. They found that increasing employee salaries to the market mid-point improved attrition (i.e., reduced turnover) by 9%, but increasing wages above the mid-point had no pay off.

Clearly, what the Journal articles illustrate is the benefit of workforce analytics to the HR profession.  The use of analytics adds science to HR work.

Despite the new technology there are challenges.  The software and science driving analytics is still complex; it could be dangerous in the hands of the well-intentioned but inexperienced HR practitioner. Although Mark Twain never heard of workforce analytics, he was on the right track when he wrote over a hundred years ago, “Figures often beguile me, particularly when I have the arranging of them myself.”  It takes training and experience, not just the latest software, to effectively mine all the data that management has at its disposal.

In addition, using internal workforce data to make business decisions often intersects with legal issues like privacy and equally opportunity laws. Companies must take care that the software does not trump or even supplant the role of HR.

That said, all signs point to the potential strategic value to HR of workforce analytics. As a management tool, it is here to stay.

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