The Importance of People Analytics
The article highlights the value of leveraging technology and big data to elevate how businesses care for their people.
According to Gallup’s 2022 State of the Global Workplace Report, employee wellbeing is the new workplace imperative. Globally, employee engagement and well-being remain very low, and it’s holding back enormous growth potential. For businesses to compete in the war for talent (attracting and retaining), organizations must prioritize the employee’s complete well-being, not just the work output. Advanced technology today has unlocked critical employee wellbeing measurements to be added to executive dashboards that can alert to warning signs that would otherwise go unnoticed until it’s too late (drag on morale or turnover). When organizations are empowered with data, they can truly be part of the well-being of their workers.
Approximately 75% of a business’s total spend goes toward the investment in people. Given this, it is no surprise that investors, Board of Directors, regulators, prospective employees, and other stakeholders continue to want more visibility into people programs, metrics, and goals. But management teams struggle to pull together data from multiple systems, cobble together relevant (and often outdated) benchmarks, and then track progress toward goals in a controlled way.
With a centralized, real-time resource, HR leaders have access to insights that can be leveraged to showcase holistic, ongoing people program management to the board:
- Invest in the Right Places (and Showcase it)
Employees want to feel invested in, and a total rewards statement showcases a company’s comprehensive investment in employees through salary, bonus, equity, healthcare, wellbeing, and retirement-specific breakdowns. Additionally, while equity is a key retention tool and a large component of many total rewards programs, employees can struggle to understand the potential value of their awards. Develop forecasts that model various equity scenarios for employees to drive an even deeper connection with the company’s mission and long-term goals. Employee utilization of this tool can be a great indication to the board of employees' understanding (and appreciating) the full investment received.
Additionally, easy-to-understand utilization data allows HR leaders to analyze the overall performance of a company’s benefits strategy and ensure employees are getting the most value out of their programs. There are many insights that can be garnered by regularly reviewing adoption and utilization metrics. For instance, if a program is not resonating with employees, businesses are now empowered to flexibly reconfigure benefits to include options that are better suited to the employees’ true needs and not a one-size-fits-all solution.
- Managing your Equity Burn Rate
Keeping track of equity spend is critical as it has implications for employees, board members, and investors. The board is accountable for maximizing shareholder value which, in part, entails a delicate balance of utilizing the equity plan to attract, motivate, and retain key talent while also managing dilution. As a private company, the majority of the board will be composed of the company’s primary investors. As a public company, the board represents the interests of all retail and institutional investors, while also needing to answer to proxy advisory firms such as Institutional Shareholder Services (ISS). In either case, a clear, ironclad equity strategy and accompanying burn rate forecast are table stakes in any Compensation Committee or Board meeting. Balancing external market conditions, the company’s health and growth plans, management’s philosophy, the board’s philosophy, finding appropriate market data (and using it appropriately), and of course, incentivizing employees in the right way is no small task. Baking this into an equity strategy and projecting how the chips may fall is even more daunting. This makes managing the burn rate a critical task to be thoughtful and proactive about.
- Define and Measure Total Rewards ROI
The value of individual rewards elements has historically been hard to measure. Additionally, the most successful programs have a clearly defined total rewards philosophy that takes into consideration each element of the program, tied directly to company goals and the broader mission. From there, determining if the program is effective can be complicated. Technology can analyze the size of investment by department, location, level, or tenure and compare it to turnover rates of the same categories to ensure a business’ investments are producing positive outcomes.
- Monitor Workforce Movements & Retention
Businesses need to look beyond employee turnover to start solving the mystery as to why employee changes are occurring. HR dashboards can identify an organization’s retention challenges to successfully support sustainable growth.
- Forecast Total People Spend
It’s hard to keep up with trends and strategize a way to apply it to the total people investment. The People Platform looks at trends occurring right now using up-to-date data and helps forecast where your organization is trending toward in the future, all in one dashboard.
Maintaining oversight despite an often-fragmented HR ecosystem, trying to keep a distributed workforce engaged, and ensuring rewards programs are competitive and equitable in the current environment, are just a few examples of the challenges businesses face.
About the Author
Kyle Holm is VP, Total Rewards Advisory for Sequoia, a total people investment company that manages compensation, equity, and benefits for over 500 VC-backed companies.