Strategic HR management has become a crucial aspect of organizational success. Hence, HR analytics and workforce planning have significantly influenced the rapidly evolving recruitment industry in the past few years. These approaches provide insights and tools that help organizations optimize workforce solutions, shape decision-making processes and drive the overall growth of the business.
This article delves into the complexity of HR analytics and workforce planning, the benefits and risks as well as real-world workforce planning examples and HR analytics applications.
What are Workforce Planning and HR Analytics?
Workforce planning is a methodical process that organizations implement to ensure they have the right mix of talent with the appropriate skills to meet current and future business objectives. It involves forecasting future workforce needs, identifying gaps in skills and competencies, as well as designing strategies to address those gaps. Workforce planning aims to align the company’s strategic goals with its human resources.
On the other hand, HR analytics involves the use of data analytics to provide organizational leaders with actionable insights on recruitment, performance management, employee engagement and more. It helps organizations to gain a deeper understanding of workforce dynamics, identify trends and predict future outcomes. Leveraging HR analytics tools can aid Human Resource professionals in developing better, well-informed strategies that boost the overall employee experience and contribute to the company’s future success.
Although workforce planning and HR analytics share a common goal of enhancing human resources management, these approaches provide varying degrees of information.
Workforce planning tends to focus on the macro-level view, addressing questions like:
- What are the hiring needs for the upcoming quarter?
- What kind of skills will be crucial in overcoming current growth challenges?
- Are there skills gaps in our teams?
On the contrary, HR analytics delves into micro-level insights:
- Are there specific patterns in employee engagement and productivity?
- What are the factors causing high turnover in a particular department?
- What is the most common reason for high performers to resign?
Whilst workforce planning takes a more strategic approach, HR analytics contextualizes information to support data-driven decision-making. Leveraging workforce planning and HR analytics together helps promote engaged and productive teams.
Benefits of HR Analytics and Workforce Planning
Whilst the benefits of taking a data-forward approach to talent strategy are numerous, here are the top three benefits:
Improved Resource Allocation
Workforce planning aids in allocating resources effectively by ensuring the right people are in the right roles at the right time. HR analytics enhances this process by providing insights into individual and team performance.
Strategic Decision-Making
Workforce planning supports long-term goals, while HR analytics facilitates swift decision-making for immediate concerns.
Proactive Problem Solving
Workforce planning identifies potential gaps and challenges in advance, allowing organizations to take action before issues become critical. HR analytics offers the ability to identify and address emerging employee-related problems promptly.
Real-World Application of Workforce Planning
A financial services organization engaged PeopleScout and our Talent Mapping solution to unlock their talent segments and provide enhanced workforce planning data that would help streamline the client’s global contact centers into multilingual hubs. Within two weeks, PeopleScout delivered comprehensive insights into:
- Size and language skills of the customer service workforce in several countries
- Additional salary expectations for specific language abilities
- Age, gender, diversity data to aid DE&I efforts
- Candidate preferences to inform market messages
- Optimal platforms for recruitment advertising in each area
- Desired recruitment process for better candidate experience
- Regional variations based on location-specific data
PeopleScout’s findings were summarized into easily understandable reports for each country. These insights guided the client in assessing locations for their multilingual centers, refining their value proposition, designing talent attraction strategies, and structuring compensation packages. The solution enabled informed decision-making and optimized recruitment efforts.
Real-World Application of HR Analytics
A leading credit reporting company struggled with increased staff turnover, prompting the need for action. The HR department collaborated with the internal specialists who formulated the credit scoring model. Using a similar approach, the team was able to create a predictive employee turnover model. The model provided a risk score for each employee using diverse data sources and alerted managers about the potential turnover risks at various role levels. The model was based on roughly 200 variables that were likely to influence an employee to seek opportunities elsewhere, including aspects like team dynamics, supervisor performance as well as commute length.
The new approach was rolled out globally and has provided valuable insights for decision-making and workforce planning in the longer term. For example, it was evident that turnover in each region was affected by a unique set of factors.
The model’s implementation led to a 3% decrease in attrition over 18 months, translating to a £8 million business saving. The rollout’s success was attributed to leadership endorsement of analytics and a collaborative approach between the analytics and HR teams to ensure action based on predictions and continuous improvement of the model.
Navigating Risks in Talent Analytics
Whilst the use of data insights as part of workforce planning and HR analytics initiatives is appealing, this promising approach comes with potential risks. These challenges include data privacy and data quality risks, interpretational biases as well as data collection pitfalls. Navigating these hurdles is crucial in ensuring that the use of data in building HR strategies is effective and ethical.
Talent analytics relies heavily on employee data, including personal information, which can lead to concerns around data privacy and security. Employers must prioritize data protection and compliance to prevent data breaches.
Low quality data can lead to misleading conclusions and negatively impact decision-making. Well-designed data collection processes ensure that the records are complete and provide enough information from which to draw conclusions as well as to test hypotheses on multiple data samples.
In the modern business world, the synergy between HR analytics and workforce planning is undeniable. By leveraging them effectively, organizations can stay ahead in dynamic business environments, promoting a culture of adaptability, efficiency, and innovation. By aligning strategic goals with workforce planning and leveraging data-driven insights, employers can navigate the complex HR landscape with confidence and foster business growth.
