Data analysis is a critical tool for businesses looking to gain insights into their operations, with benefits such as spotting inefficiencies, allowing executives to make informed decisions, ultimately resulting in increased productivity and reducing costs.
Traditionally, data analysis has been associated with financial and commercial data. A growing trend, however, is the utilization of leveraging employee data to drive operational performance. Companies host a variety of valuable employee data such as age range, marital status, number of dependants and more.
This data enables HR professionals and C-suite executives to gain a better understanding of their current employees as well as future talent challenges, and make more informed strategic decisions relating to talent acquisition, overall improving the ability to meet business goals.
So while companies are sitting on this gigantic pool of data, many are probably not taking advantage of it. For instance, benefit and rewards data can be an invaluable source for global enterprises who are developing benefit strategies. This may be difficult for industry professionals to believe, considering the huge percentage benefits make up of total reward. Enterprises across the globe are spending millions on employee benefits without measuring the return. Thomsons’ 2015 Global Employee Benefits Watch report, which surveys more than 300 global HR and benefits professionals across North America, EMEA and APAC, found that the cost of benefits is often between 20-22% of employee salary.
Our recent report also revealed that 48% of businesses worldwide are struggling to report globally on their workforces. Why? Many enterprises use disparate data streams and legacy systems to administrate reward programs to employees, and it’s traditional for organizations to use benefits solutions for different markets. This means different data storage systems making analysis and comparing in a meaningful way difficult, not to mention expensive.
HR departments need to move toward a single, streamlined program for global reporting in order to better control budget for benefits and rewards, as well as effectively engage employees worldwide. This allows the HR team to gain better understanding of how effective benefits are across demographics, evaluate costs of certain programs, and more.
Effective employee engagement
Our research has found that employee engagement is a problem for a third of global companies. Employee data allows the HR team to gain insight on what types of benefits are the most popular among employees, so they can approach benefits with their workforce’s happiness in mind. A happy employee makes for a more engaged, productive and satisfied employee, resulting in better customer service and overall business outcomes.
Therefore, if executives see high interest in benefits like discount programs, they are likely to increase the offering of such programs. Employees will appreciate the effort that their employers demonstrated in considering their preferences. This is one step toward better engagement.
Another benefit of data analysis for employers is cost savings, which can be substantial. Using global data can help employers identify their liabilities. For instance, medical expenses may be more expensive in some regions than others, so executives can call attention to this and take steps to reduce costs in those specific areas, like removing benefit programs with low interest and engagement.
Life insurance and medical coverage expenses are on the rise, so organizations should utilize data in monitoring how effective and popular specific programs are regionally. One scheme that may be popular in one region may be unpopular in a different region that has a different demographic.
The Bersin by Deloitte Talent Analytics Maturity Model offers valuable steps towards incorporating big data into HR strategy. The four-stage model, Reactive, Proactive, Strategic and Predictive, shows the evolution from using analytics for reactive reporting towards predictive models.
The difference between reactive and predictive is huge. It’s the difference between asking, “What did we spend on health insurance last year?” and “What will we spend on health insurance over the next few years, considering we’ll grow by the expected 2% and premium rates continue to increase at 1% above inflation?” This reframing will help HR operate in a more strategic and productive manner.
Analytics may also be the key in solving issues around forecasting staff costings. Although they know approximately the salary they’ll pay new employees, it’s difficult to predict the cost of benefits for future employees prior to their start date. HR can analyse data to develop profile for employees of similar backgrounds and demographics, and develop some expectation for new employees based on these profiles.
Big data also offers organizations a process for comparing their benefits offering to that of their competitors, since benefits are a crucial differentiator for some talent. In the past, this type of information may have only been available through consulting services which require associated fees – now, big data can provide this internally.
There are some problems that may arise when companies use big data for benchmarking. For instance, companies must be willing to share their data. Though it would remain anonymous, companies are still often hesitant to share this data, unless the benefits, such as gaining insight on employee value proposition compared to competitors, is clear.
Businesses are also seeing the benefit in using data analytics for communicating their benefits programs. Since data reflects when employees are engaging with their benefits packages, employers can take advantage and communicate during specific times of day. For instance, if a specific demographic is regularly reviewing their benefits on Friday mornings, employers can communicate new offerings at this time moving forward.
HR teams can also see how effective their communication has been. For example, if the team is promoting a new wellness program, they can see whether or not there is corresponding data relating to uptake on healthcare benefits. A successful HR campaign should have a tangible result reflected in the data. If this is not the case, the team should know to re-evaluate the communication strategy.
Human capital management applications have huge benefits in businesses. As executives and the HR team get more comfortable with big data analytics, they will need to store the data in one system in order to analyze it effectively.
Insights from benefits data combined with insight from personnel data like days off or salary can help executives draw correlations on employee behavior. This multi-layered data analysis will help executives gain better understanding of their employees, and build on their strategic value. Data seems impersonal, but this insight provides opportunity to take a more individualized approach to benefits offerings. Not only are employers rewarding their staff, but in turn the staff is rewarding employers with profound insight.
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