In a data-driven world, HR teams are increasingly taking notice regarding the importance of workforce analytics. According to Steve Allan, head of analytics at Silicon Valley Bank, “Analytics used to be a competitive advantage, but now it’s becoming table stakes.” (MIT Sloan Management Review, 2016). But analysis is only as good as the data from which it is drawn.
Despite the advent of this culture of analytics, companies across industries continue to rack up massive and costly workforce failures. Daily headlines abound of companies falling behind or undertaking massive layoffs because the skills of their workers do not align with the firm’s talent needs. (Figure 1: Misreading the Market is Wrenching).
Layoffs are a huge expense, and in many instances are driven by a lack of foresight. Companies lack a clear and direct bridge between their strategic direction and the human capital that is needed to execute on that strategy. In many cases, businesses rely on data solely from their HRIS system, using it to make key hiring, talent planning, and L&D decisions based on the past – not the needs of the workforce that the firm will need in the future.
Said another way, internal HR data only tells the first part of the story. For a richer and more accurate picture, external insights about the labor market and industry benchmarks can complement internal company data to help companies improve strategy decisions and fend off unexpected challenges.
External job market data provides the GPS view to where your organization needs to go. By tracking competitors and industry leaders, you can benchmark your own skill needs and evaluate the emergence of new demand patterns that may signal how your own needs are likely to change over time. Your company may not be hiring for experts in a particular skill set today but, if demand for those skills is growing across peer companies, you may want to start planning for change.
This broader dataset also provides an early indication of market challenges so that you can rethink talent strategies. For example, if you’re about to hire for a series of key positions for which you know peer companies are having trouble finding skilled candidates, you may step up your recruitment efforts from the start, or look beyond the usual talent pools.
While it’s impossible to anticipate – or even envision — every change in your industry that could affect workforce strategy, applying workforce analytics frameworks to a set of data that are more reflective of the broader world of work can offer greater insight.
Your internal HR data offers valuable information about the skills, experience, and retention rates of your current workforce. Now, imagine how much more powerful that information is when viewed in the context of labor market data that shows changes in skills being sought by your industry, or how industry disruptors are requesting new skills for familiar job titles. Both of these insights offer important signals about future skill needs and give your company a head start on preparing for coming changes.
In the coming days, we’ll discuss examples of how skills market information dramatically changes how companies shape talent and advance their workforce. We’ll discuss various industries and review how startups, robotics, locations, and more affect the ability to shape a successful workforce.
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