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Employee Retention Using Big Data: A Strategic Imperative

Author

Bill Cushard

More by Bill
Author

Bill Cushard

More by Bill

Initiatives to improve employee retention using big data analytics should be an ongoing priority for CHROs. According to Gallup research released in January 2016, less than one third of employees were engaged in their jobs. Engagement, according to Gallup has been flat for the last 15 years. In 2013, Gallup estimated that low employee engagement costs the U.S. $450 billion to $550 billion in lost productivity each year. Low engagement is expensive and can threaten an organization's ability to remain competitive. Yet, most organizations still haven't figured out how to determine which factors are contributing to the problem of employee retention, and instead view low employee engagement acceptable.

Thankfully, there's good news. Organizations have increasingly found they can identify, and subsequently address, engagement issues using big data. But in order for this approach to truly be effective, CHROs must make the decision to revamp how HR functions and fully embrace data-driven decision making.

A Whole New World of Data-Driven HR Function

An Information Week article cites a 2011 study by IBM and MIT Sloan Management Review, which found that there are three keys to building an analytics-ready organization: "instilling a data-oriented culture, hiring or developing managers who are information literate and maintaining analytics expertise at the staff level." Clearly, this indicates a whole new mind set is needed. For example, when it comes to decision-making, most managers either rely on experience and intuition or cite industry benchmarks. But this method is not going to cut it in a big data world. HR managers must be challenged with specific questions: "How do you know?" "Where's the data to back this up?"

These changes won't be easy. HR professionals who have prided themselves on being focused on people, not numbers, might even feel threatened at the notion that their methods require rejuvenation. But the simple fact is that HR teams need to starting thinking differently about how to answer questions or their organizations will be left in the dust. Once your organization commits to taking an analytical approach to solving the employee engagement problem you're half-way there. Now you just need to think differently about which data you'll need to scrutinize to truly affect change.

Employee Surveys Are Not Big Data

Organizations use surveys to collect data from employees with good intentions. The idea is to ask employees for feedback and then use that data to make changes in the organization, but this process is riddled with deficiencies.

The first problem is using surveys to collect data when employee input might not be the right data for the particular initiative. Using a survey presupposes a solution when the advantage of big data is using existing employee data to discover trends and correlations without having to ask employees.

The second problem is that surveys represent only self-reported data. What employees share versus what they actually do are two very different things, so the data is not always reliable.

What Big Data Can Do For You

Although surveys can provide valuable insights, organizations also need to use data that already exists and paints a clear picture about was is actually happening from employee history. For example, according to The Wall Street Journal, companies like Wal-Mart and Credit Suisse use existing data from employee reviews, promotions and pay histories to determine who is most likely to quit. Credit Suisse, according to the Harvard Business Review, takes the process one step further by proactively offering those most likely to leave new career opportunities. Here, instead of just asking employees, these organizations analyze large amounts of data to find patterns that can explain why employee retention was low.

Big Change Requires Big Effort

It's clear that if organizations want to solve the employee retention problem using big data, two actions are required. First, CHROs must lead a transformational effort to become more data-driven. Second, CHROs must immediately start using historical and current data to find patterns that could explain future employee behavior. As the data changes, new insights can be discovered and acted upon more quickly.

It can be done. Xerox used big data to find out why employees leave as well as stay and, using that intel, reduced attrition by 20 percent during a six-month trial, according to The Wall Street Journal. In a call center of 48,700 employees, an attrition reduction of that amount makes an enormous difference.

Make no mistake, this process will be hard work. However, considering the high cost of low employee engagement, HR teams have a huge opportunity to drastically increase an organizations' competitive advantage by taking an analytical approach to employee retention and engagement.