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Mar 29, 2013

All HR departments strive to make smarter, more informed hiring and promotion decisions.

That need is especially salient in an era where a majority of U.S. companies say they are struggling to attract both critical-skill and high-potential employees, according to a Fall 2012 study from WorldatWork.

Collecting and aggregating workforce analytics is one way HR pros can arm themselves with the information to tackle workforce planning concerns head-on. Among many business planning functions, workforce analytics enable HR departments to get a deeper look at where talent and skill gaps lie, which departments are on track to be most vulnerable or most robust in the future and how company leaders’ decisions impact employees’ decisions.

With that intelligence, companies can inform and optimize recruiting and training decisions, build out succession pipelines and grab hold of the issues and trends executives want to hear about in board room discussions. Conversely, making hiring and promotion decisions without a cohesive dataset to draw from carries negative implications that go beyond missing out on the opportunities listed above.

Here are a few to consider:

1. We all know the trouble with assumptions

While broad economic and workforce trends nationwide may play into individual companies’ experiences, they don’t have the power to tell the story of the specific trends occurring within a company’s own walls. Without data to draw from, organizations are left to assume that economic trends will translate identically into how their employees will behave.

For instance, when the financial crisis hit, retirement savings accounts took a beating, and many homeowners found themselves carrying underwater mortgages. Giving more weight to the macro trend instead of analyzing it within the context of a specific work environment, far too many companies incorrectly reasoned that senior leaders on the brink of retirement would remain in the workforce longer than anticipated.

As a result, they put off investments in workforce training and succession planning. Instead, a steady trickle of workers retired or switched to part-time, leaving companies scrambling to find the skills and contingency plans to recover.

2. The “squeaky wheels” get the grease

Often times, in regards to training decisions or new hire decisions, the departments, managers or executives that pound their fists the loudest will get their requests answered.

Because most managers want their departments to stand out as a company powerhouse, they are likely to lobby hard for HR’s training and recruiting investment dollars. But, without knowing which departments have the most need for training or added resources in the context of the entire company’s budget, an HR professional could run the risk of directing resources to the most vocal departments by default.

Misappropriation of resources perpetuates skill gaps and inadequate workforce planning, which leads to the next issue.

3. Reaction-mode becomes the norm

It’s true that most companies do already collect bits of HR data from the systems they use to manage recruiting, performance, and succession. But those systems are often siloed, and are designed more to provide tactical head counts than to present HR pros with the information they need to strategically assess hiring, retention and training issues.

HR often ends up buried under multiple reports that don’t correlate to each other enough to convey meaningful trends that impact the bottom line. As a result, HR often misses a chance to understand which workforce investments are paying off and where glaring skill or talent gaps are developing in time to replicate initiatives that have worked and siphon off those that have not.

4. Money gets left on the table

Often times an HR team’s options to plan ahead for training, recruiting, and succession are limited in the absence of fact-based analysis — both logistically and financially. Without data points to prove that an existing program is delivering ROI, or that a particular department is low on a critical skill-set, it’s difficult for HR to justify why more investments are necessary.

The reality is that many companies are sitting on huge cash balances, totaling about $1.5 trillion for S&P 500 companies according to a Fall 2012 report from JP Morgan. That money is essentially up-for-grabs, but it’s up to HR departments to argue their case.

Although workforce planning analytics directly link HR to making the type of informed, strategic workforce decisions that can improve a company’s bottom line, many U.S. organizations leave their workforce planning needs to chance or personal instincts.

According to YOH’s 2013 Workforce Trends Study, 80 percent of U.S. employers expect their hiring will meet or exceed 2012 levels yet only 13 percent have a workforce plan. When making such mission-critical investments, HR leaders should take it upon themselves to plan ahead to prevent avoidable missteps and ensure those investments pay off.