How to increase retention in a tight labor market through people analytics
As we enter the new year, the U.S. national employment outlook remains positive. That’s good news for workers and economic growth, but less so for employers who often struggle to hire and retain top talent in such a tight market.
More bad news for employers? We’re seeing the death of the job-for-life mentality. Gallup reports that 21% of millennials say they’ve changed jobs within the past year—more than three times the number of non-millennials who report the same. With millennials now the largest generation in the U.S. labor force, it looks like workforce transience is here to stay.
To tackle these labor market trends, top companies are turning to people analytics. Through gathering and analyzing data on their employees—on how engaged they are, which benefits they’re using and which they value most—employers can create a more accurate picture of their people, and deliver an employee proposition specifically designed to meet their needs.
As understanding of the value of people analytics improves, we’re seeing more organizations build this capability within their teams. Our recent research at Thomsons Online Benefits found that in just three years, the number of global organizations building people analytics teams rose to 68% from 15%. In the U.S. alone, 21% of organizations have had a dedicated people analytics team for more than a year, while 17% have had one in place for more than three years.
What’s more, over 85% of global employers surveyed currently use, or plan to use, employee data to report on business operations and performance—and the reason for this is clear. Early adopters are already enjoying significant advantages. Almost two-thirds (64%) have used people insights to improve employee engagement, while nearly half (47%) have improved employee productivity.
Using analytics to keep employees happy and engaged
Happier people stay longer at their company and this boosts its bottom line. Companies on Fortune’s 100 Best Companies to Work For list have stock prices that rose an average of 14% per year from 1998-2005, compared to 6% for the overall market.
So, how can HR leaders use data insight to effect?
One area they should look at first is reward. While salary will always be a significant factor as to whether workers stay or go, employee benefits are playing an increasing role in current and prospective employees’ perception of an organization. According to our research, 84% of employees feel that their benefits impact their feelings of loyalty toward their employer and their positivity at work.
Increasingly, top HR leaders are turning to data analytics to improve their benefits strategy by looking at which benefits their people are engaging with. For instance, if an organization has implemented a new wellbeing app for employees, they can analyze login data to see if employees are using the app and whether they find it useful. They could then look at absenteeism levels, or even check their insurance claims, to gauge whether it is yielding results. Our research found that organizations that use employee data to report on different aspects of the business have higher employee engagement scores than those that don’t.
Use analytics for supporting business objectives
But data isn’t just a way to find out what employees value—it’s also an incredibly important tool for HR leaders to prove the effectiveness of their strategy in supporting business objectives. For example, if a business wants to improve its productivity, HR leaders may want to improve the wellbeing of their people and invest in a wellbeing program. They can then map take-up of this against fewer sick days, lower insurance premiums and business productivity to prove that this investment has delivered return.
In a tight labor market, it doesn’t necessarily take matching the unique, quirky benefits of large companies such as Google’s nap pods or Johnson & Johnson’s free concierge service for companies to compete. Instead, companies should focus on achieving better benefits for employees by creating targeted reward programs that meet their needs.
By using data to achieve this, employers can be far more strategic. They won’t end up offering gimmicky benefits that might look cool but offer no real value. Instead, organizations will be able to offer benefits that have proven value to employees and support business objectives.