Workforce analytics is one of your HR department’s most important duties. It’s what allows you to promote productivity, identify workforce trends, safeguard retention, and discover new ways to boost engagement—but all of that is only possible if you examine the correct metrics.
As technology and the nature of work evolves, previously conventional metrics have already become obsolete.
Factors like the number of hours worked, absenteeism, and overtime expenses used to be the main points of focus. But these concerns correspond to the past, pre-pandemic era. Today, work is largely remote and teams are dispersed all over the world. As a result, the factors that drive engagement, productivity, and retention have changed.
Moreover, companies’ reliance on non-payroll staff such as freelancers, independent contractors, consultants, and agencies is higher than ever. Traditional workforce analytics, which focuses only on employees, are unable to paint a true picture of the state of your human capital.
Keep reading to discover how to measure the four most important metrics when performing workforce analytics.
What is workforce analytics?
Workforce analytics is defined as the act of monitoring and measuring certain HR metrics using data analytics tools, interviews, and surveys. The goal is to identify factors that could influence organizational health and look for opportunities to improve productivity and performance.
It analyzes all factors that contribute to the above, such as recruitment, training and development, engagement, and retention.
Today, to be applied correctly, workforce analytics must relate to all types of workers—including freelancers and contractors—and not just full-time employees.
How to assess 4 top metrics
To thrive in a remote, dispersed, and high-tech work environment, HR departments must alter how they assess key metrics in workforce analytics. Here’s a breakdown of the top factors to assess today, and how to examine them.
Metric #1: Engagement
Worker engagement has long been a top priority for HR departments. It contributes to retention, productivity, individual and team performance, and satisfaction.
In the past, things like company parties, signing bonuses, and other flashy perks helped “buy” worker engagement. Although workers will still appreciate these offerings, they are less tied to engagement in today’s remote work era. In other words, “Can’t buy me love” anymore.
Today’s workers have higher expectations for their overall experience, and what kinds of opportunities their roles afford them.
What does buy your workers love, and in return, their authentic engagement? It is the quality of managers, feeling valued and appreciated, feeling like they are making a meaningful contribution, and having the opportunity to do work that aligns with their personal values.
At the same time, other changes challenge employee engagement, such as the abundance of digital tools they are expected to use, the numerous channels of communication they are expected to be active on, and rising expectations to do more work faster. While working from home, these challenges can have an even stronger impact.
As a result of these shifts, your approach to measuring engagement should also evolve. Engagement surveys and interviews remain great methods of collecting information, but the questions you ask will probably be different. For example:
- Would you recommend your friends to join your team? Why, or why not?
- Do you feel like you have the software and tools you need to succeed?
- Does your work bring you personal satisfaction?
- How would you rate your relationship with your manager?
- How would you describe your work-life balance?
Through these questions, and more, you can gauge how motivated and fulfilled workers are in their roles, and if they feel a sense of belonging to the company. This is critical to engagement.
Measuring engagement is challenging since it depends greatly on how you phrase your questions. Therefore, try to be consistent and ask the same questions every survey as the trend is more important than the numbers.
Metric #2: Retention
Average employee turnover in the tech industry is 18.3%, among the highest of any sector, with many switching jobs every two years or less.
Ten years ago, analysts would attribute this rate of attrition to a rising class of job-hopping millennials. Today, it’s the norm. Top talents don’t hesitate to jump ship if they get a new opportunity that offers a better experience, conditions, and pay.
One factor many companies are ignoring is that when measuring retention, you must include your entire workforce. This means adding your freelancers, contractors, and consultants. Why?
Simply because finding good freelancers who can provide valuable work still requires effort in sourcing, training, and management. Just like employees. It can also help you pinpoint the strengths and weaknesses that improves or reduces retention.
Factors like the experience of working with a client, feeling appreciated and valued, and having the opportunity to do meaningful work are also important to freelancers and influence their retention.
If you find your organization is having a hard time keeping valuable freelancers, consider analyzing their responses to questions, such as:
- Why have you decided to discontinue working with us?
- What was the best part of your experience working with us? What was the worst part?
- How would you describe your onboarding and training?
- Do you feel that your hiring manager provided the tools and support you needed to succeed?
To calculate your company’s annual retention rate, divide the number of employees you had at the beginning of the year by the number of employees you had at the end of the year. Then, multiply that number by 100 to get your employee retention rate.
Metric #3: Talent acquisition
Talent acquisition requires time and money, so measuring the success of your recruitment efforts is a very important component of workforce analytics.
To determine the success (or failure) of your talent acquisition activities, start analyzing each step of the hiring funnel. How many CVs do you receive on average for an open position? How many first interviews do you conduct? How many second-round interviews? How many people pass the home test? How many new hires do you ultimately make?
Of course, you want to be selective and choose the best possible candidate for a role, which could mean interviewing many people and only passing a small group through each phase. However, you’ll want to keep track of how much you are investing in recruitment and compare this to how quickly you fill a new or open role.
It’s worth mentioning that the hiring experience can have a significant impact on retention, even for freelancers. To improve your interview and hiring process, ask new hires for their feedback, and ask candidates that didn’t make the cut how they would rate their experience.
To measure your talent acquisition efficiency, start by calculating your cost per hire. Just divide the total investment in recruiting efforts, including your in-house and outsourced recruiters, by the number of hires throughout the year.
Then divide your cost per hire in your employees’ average tenure. For example, you may discover it costs your company $10,000 to recruit a full-time employee and that your average tenure is 28 months. Then you need to spend $10,000 every 28 months, which is $4,300 per year. For a company with 200 employees, the recruitment cost will be $860,000 per year.
The better your retention rate, the lower your cost per hire will be.
Your talent acquisition efficiency should play a critical role in your strategic workforce planning.
Metric #4: Training and development
Without solid training, don’t expect your workers—employees and freelancers—to be very productive or perform at a high level.
Even experienced workers in senior positions need to be adequately onboarded because succeeding in a role is about more than skills and experience. Understanding the company’s values and goals, its product, enterprise technologies, culture, and expectations is equally important.
At the same time, providing ample opportunities for workers to gain new skills and achieve their personal career goals is one of the best ways to ensure organizational health. It also improves productivity. When workers feel that you’re investing in them, they will be more intrinsically motivated to perform at their highest level.
You can assess training and development the same way as you measure worker engagement: through surveys and interviews.
- How would you rate your onboarding experience?
- Do you feel you were given adequate training and support to succeed in your role?
- How often do you discuss your career goals with your superior?
- How would you rate the training and development opportunities you have been given?
Evolve your workforce analytics alongside your workforce
Today, different factors influence engagement, retention, recruiting, training, and success. Unless your workforce analytics shifts to account for those factors, you will find your insights are not very insightful.
But by focusing on the things that matter to today’s remote and technologically-driven companies, you will be better positioned to strengthen your workforce, boost productivity, and improve overall performance.