For the longest time, businesses have apportioned value to tangible assets like land, buildings, and equipment, whose commercial value is easy to measure. However, this trend has been shifting in recent years as more organizations continue to place increasing value on intangible assets like knowledge, human capital, ideas, and intellect which unfortunately are difficult to measure. For this reason, labor issues shouldn’t take a back seat in any company’s strategic decision-making process.
Ideally, your company’s HR function should move beyond simply recruiting employees and running operations to active involvement in the strategy. It should also contribute to crucial business decisions that can drive value by relying on workforce analytics, also known as labor analytics.
What Is Workforce Analytics?
Workforce analytics refers to quantitative and qualitative methodologies that help facilitate data-driven decision-making. The process of workforce analytics involves data collection, organization, and analysis, which enables the recognition of drivers of outcomes that link to business results. For instance, workforce analytics can enable you to identify individual team members’ holistic values and organizational behavior drivers.
Although the term ‘analytics’ can easily inspire awe, it shouldn’t because statistics have been with us for many centuries. For instance, marketing statistics have been used for marketing campaigns, product design, and development. Financial statistics have also been used to make future projections and establish companies’ commercial value. Similarly, data from the labor market can play a significant role in your business.
While HR functions in big organizations are finally catching up with human capital data to inform business decisions, small businesses are still slow in adopting labor analytics, primarily due to staffing challenges. However, with the growing number of firms offering data analytics, such as Horsefly Analytics, even small businesses can reap the benefits of data-driven decision-making.
Below is a quick discussion on how you can leverage labor analytics for your small business.
1. Workplace Planning And Development
As a small business owner, it is essential that you align your company’s needs and priorities with your employees’. Labor analytics enables this through a process called workforce planning that has been proven to extend the following benefits to small businesses:
- Reduction Of Labor Costs
Any business can benefit from cost reductions in critical cost centers. Most businesses report employee-related expenses as some of their highest business costs besides production.
Organizations that engage in workforce planning may also experience culture change contributing to cost savings. For instance, ongoing training can empower employees to think of new and better work methods to help eliminate inefficiencies.
- Identification Of Relevant People Development Strategies
The business environment is highly dynamic, and your business must always prepare for change. Your employees must be prepared for any foreseen changes, which calls for continuous learning. Workforce planning enables effective training programs that are informed by identified skill gaps. Training and Development can fuel employees’ growth, motivation, and retention rates. Workforce planning can also help with employee onboarding, assisting new staff in settling into their roles quickly.
Labor analytics can also help you with day-to-day HR operational procedures concerning changes in the behavioral patterns of good employees. For instance, recurring absenteeism and alcoholism in otherwise punctual and sober employees could point to problems in their personal lives, for which you can recommend therapy sessions.
- Higher Staff Retention Rates
One area that most small businesses may struggle with is staff retention. A high staff turnover rate can significantly affect a business in numerous ways. For instance, it could be relatively expensive to keep training for the same role, and work may get disrupted whenever a competent replacement isn’t found in good time. As a result, it can lead to the loss of clients and financial losses.
Workforce planning can help your business identify and adopt good HR management practices that focus on attracting and retaining high-quality workers while slowly ridding your company of toxic workers. Labor analytics can enable business owners to identify new and upcoming careers you can implement as exciting growth opportunities for current employees.
Furthermore, labor analytics data can also aid in determining factors affecting staff welfare and higher engagement, contributing to improved work-life balance. Lack of work-life balance features highly during exit interviews as a reason for leaving employment. Workforce planning can greatly improve retention rates by helping design programs that enable work-life balance.
- Increased Employees’ Productivity
Labor analytics can also provide your HR with the information needed to support and improve overall team member performance and productivity. For instance, data captured from this can inform your HR policies and procedures on employees’ productivity and quality. The data can also help identify the kind of support team members require to achieve their maximum potential.
In addition, workforce analytics can help track your employees’ commitment levels. People data further enables HR to spot and eliminate problems that can decrease productivity in advance, such as initiating early processes to let go of workers that aren’t a good fit.
2. Talent Acquisition
Your business can also leverage labor analytics to come up with hiring strategies and processes that identify a perfect fit who’ll stay with your company long enough. As discussed earlier, employee retention can promote business growth and profitability. Through people analytics, HR can identify the characteristics and qualities of candidates that would make successful employees. Therefore, labor analytics can help you to make better sourcing and hiring decisions that can help enhance your company’s efficiency and overall outcomes.
Furthermore, labor analytics can also enhance your recruitment process by eliminating recruitment bias informed by age, gender, social status, race, and stereotypes. Recruitment bias has been known to result in poor hires by impeding objectivity during hiring decisions. At the same time, labor analytics can help you attract only the right people by pairing different personality types with the benefits that appeal to them. It can help you identify what motivates potential employees and encourages them to join your organization. For instance, some employees would prefer paid holidays to exotic destinations, while others would prefer cash bonuses as rewards for exemplary performance.
In Conclusion
It’s often said that your people strategy is your business strategy, and data is the new business currency. The growing number of internet users and software as a service (SaaS) continues to create a massive explosion of data about people and talents that small businesses must begin to consider as critical drivers of decision-making. You can partner with any competent labor data analytics company and start the process of aligning your company’s overall strategy with the needs of your staff.
