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How data analytics helps managers be more effective

By on 21/09/2015

Big data analysis is helping organizations better analyze their customers, predict the competitive landscape and suss out emerging trends before they go mainstream — all of which helps companies maintain a competitive edge. But turn the lens inward, and big data can also be a competitive advantage by helping managers sharpen focus on hiring, retention, compensation and developing top talent.

Which candidate should I hire? Who should I promote? Who’s going to leave the company within the next few months? Does John or Jane deserve that raise they asked for? These are questions managers regularly ask themselves. Their answers are typically based on their gut feeling instead of hard evidence. But big data is changing all that for managers, putting information at their fingertips and allowing for more scientifically sound decision-making. “Ultimately, decisions like this should be made on quantifiable data — but people aren’t that great at decision making and are swayed by factors they shouldn’t be. Thankfully, with the right statistical techniques, you can predict to a certain extent how people will behave and base decisions on that — it gives you a slight advantage over guessing, but even a small advantage can make a huge impact,” says Dave Weisbeck, CSO for workplace analytics firm Visier.


Reducing turnover

Turnover is expensive — recruiting, hiring, onboarding and training a new employee can cost upwards of 1.25 times their salary. That means businesses must make smart hire, and retain them in order to get a decent return on their investment.

Predicting why and when talent will leave can provide a lot of insight and save firms a substantial amount of money. “Organizations want to keep the talent they have, and by using historical data to make predictions about the future, you can often figure out what patterns are behind turnover. When people start leaving, it often happens in waves — turnover contagion. Big data and savvy analysts and engineers can write algorithms that find these patterns and pinpoint the cause — who’s the manager? How long is their commute? When’s the last time they got a raise? When was their last promotion? Then, you can put plans in place to mitigate those factors. Give that rock star a raise. Let them work from home a couple days a week. Have a talk with that manager,” says Weisbeck.

Leadership development

Big data and analytics also help organizations make sound decisions around succession planning, career progression and leadership development by tracking performance, success and other metrics. Who should step into a role when an employee does leave? What will offer the team the best chance of success based on current performance? “Our customers are using these analytics to plan and build the next generation of their leadership and make decisions about where to place their best and brightest talent,” says Weisbeck.

But analytics can also help determine what motivates great talent and what initiatives in talent development, hiring and retention are delivering the greatest ROI beyond simply increasing compensation and promotions. “Sure, if you throw money at your people, maybe they’ll stay. But what else is driving them? Because we have around 60 years of payroll data, we can correlate with data points like productivity rates and make correlations and predications about things like how productive employees are once they’ve come back from a vacation. We can track their productivity and match it up with the dates they were at work and see how that is related. As a manager, I can use patterns like this do help me decide how to incentivize employees,” says Marc Rind, vice president of product development and chief data scientist at ADP.

A caveat, though: While using analytics can help cut costs by determining where organizations can get the biggest bang for the proverbial buck, they don’t eliminate the need for more personal feedback from employees, says Rind. “You always need to take into account the background and the context, and by all means don’t discount workforce surveys and employee polling — your workforce wants and needs to have its voice heard. But when it comes to seeing these patterns and being able to measure return on investment, workforce analytics is powerful,” he says.

Measuring Diversity

As diversity becomes even more of a competitive differentiator, companies are doing all they can to track and manage recruiting, hiring and retention initiatives. Workforce analytics can help figure out what’s working and what isn’t. “For one of our clients, the big question was why, if they’re hiring a very diverse staff, why there wasn’t greater diversity overall? What they found when they looked at the data was they were hiring, sure, but these people were leaving. They narrowed the problem down to three departments, tracked what the issues were with retention and were able to fix them,” says Weisbeck.