Actionable Data Analytics Is Critical for Modern Businesses

Gathering metrics is easier than ever—but companies must recognize what is important and use it

It’s not enough to run a successful business these days solely on judgment and instinct, no matter how good leaders are. Leveraging data by collecting the right metrics about your business, analyzing them, and, crucially, using and adapting to this information is vital. 

Unfortunately, many companies don’t invest in data collection or know what’s relevant to measure, or they fail to follow through with action and more assessments. Here are some examples of how data analytics can help, best practices, and where efforts often fall short.

The basic formula of effective data analytics

Impactful information is all around us if you know where to look and what to look at. There are many potential data points to measure, such as those tied to productivity, turnover, customer satisfaction, safety, and employee engagement. Some targets are relevant for all businesses; others are organization or industry specific.

Regardless of the application, here is a fundamental sequence for leveraging data well:

1. Quality efforts go far beyond assessing obvious numbers like P&L statements or employee turnover. The first step is digging deeper to determine what subtler goals and metrics are important, with an eye toward leading indicators and follow-on effects (more on those shortly).

2. Develop processes for collecting the data, whether through regular reports, surveys, or other methods.

3. Analyze the data, determining precisely what it communicates.

4. Use this information to make decisions and act.

5. Assess the impact of decisions and actions with more data collection and analysis, driving additional decisions and actions.

Simple, right?

Unfortunately, many organizations attempting to utilize data fail several of the above steps. Here are some scenarios illustrating common weak points and solutions.

Digging deeper for leading indicators is powerful

A close examination of what information will be useful for a business to collect requires more than tracking positive or negative outcomes.

Organizations should identify leading indicators that can reveal thoseevents will happen. These powerful signs identify threats and opportunities early, providing a competitive advantage, smoothing operations, avoiding turnover, and saving a lot of money.

A workplace safety report is a simple example that becomes more complex with leading indicators. A high number of accidents tells managers something vital and reveals looming consequences: lost productivity, decreased morale, higher insurance costs, and perhaps lawsuits and fines. However, many businesses recognize that closing the door after the horse has left the barn isn’t the best strategy.

So, they rely on leading indicators to signal the potential for accidents, such as “regular inspections or audits, measuring employee engagement with safety training programs, monitoring near-miss reports, assessing hazard identification systems’ effectiveness, or tracking maintenance schedules for equipment used in high-risk tasks.”

Workplace safety is a great example because many industries have long recognized the value of leading risk indicators and have developed robust processes. However, we can think in similar terms—of other ripple effects—for many aspects of business.

For example, once a high turnover report comes in, it’s too late. The disruption, lost productivity, and hiring and retraining costs will be realized.

In contrast, quantifiable measures of absenteeism, tardiness, and failure to meet deliverables can be reliable leading indicators of turnover. If the warning signs are there, leaders can collect more information, determine the cause, and perhaps head off problems.

In showing the impact of turnover, counting the direct costs of hiring, time to hire, opportunity costs of ramp-up time, and lost productivity and revenue per employee provide insights into investment decisions on training, employee investments, and other human resources strategies.

Really use analyzed data: dig into results and iterate based on them

Some businesses fall short of even making decisions based on good data.

For example, an organization might issue a survey asking what employees would change about the workplace or which benefits they’d like to receive. But some employers see the results and say, “Well, that’s interesting. But we really don’t want to do that.”

Of course, a company is under no obligation to enact suggestions, but data indicating something significant usually shouldn’t be ignored. In addition, rarely or never acting on feedback creates an unfulfilled expectation that workers can shape their environment. At best, the survey is useless; at worst, it turns people off, and the company would be better for never having asked questions.

It is also important to assess the results of actions to drive subsequent actions. For example, say your business conducts a survey about desired employee benefits, and many respondents indicate they would like long-term care insurance and resources. The company enthusiastically rolls out a program … but no one uses it.

Instead of leaders scratching their heads at this mystery, they should find out why.

• Was the survey poorly worded, and respondents assumed the benefit would be lower-cost or free?
• Are the benefits structured improperly?
• Did the makeup and life circumstances of the workforce change?

Whatever the reason, leaders should collect and analyze more data to account for the program’s failure and improve benefits from there.

For another example, let’s revisit tracking leading indicators about turnover. If a business unit shows signs of impending departures, such as increased absenteeism, leaders must also understand why:

• Is the workload too high?
• Are pay and benefits too low?
• Is support lacking?
• Is the unit’s manager toxic?

Based on feedback, leaders should investigate, act, and assess the results of those actions. It’s a continual and valuable process.

Data is powerful when it’s used correctly

Every company is awash in data, and some of it can help leaders head off problems and seize opportunities. The keys to leveraging information well are deciding what’s important based on a business’s needs, effective collection, quality analysis, and acting and adapting based on results. 

A data-based approach can benefit everything from human resources to operations, sales, customer service, and more. It all starts with understanding what really makes your business successful and drives the results you want. These items point to what to measure and how to decide, act, adapt … and do it all again.

Karp HR Solutions helps businesses master the mix of finance and human resources. Contact us today for a free consultation.