HR Professionals Become Strategic Business Advisors Using Labor Market Analytics
Human Resource (HR) professionals routinely follow the news for the most current national jobs report and use compensation data in their workforce management strategies. But outside of these macro-level sources, HR teams have access to labor market analytics to help drive strategic, data-driven business growth decisions.
Understanding labor supply and demand and compensation and talent requirements for modern jobs is powerful business intelligence. With labor compensation and economic planning solutions, HR professionals, hiring managers and business leaders are empowered to become strategic business influencers.
HR professionals can leverage specific market-level economic data to strategically contribute to the organization, hiring parameters and workforce budget planning. But first, understanding the drivers that impact industries and businesses are what earn these professionals a seat at the table.
Key Drivers in the Labor Market
As with any subject matter, becoming a labor market expert starts with understanding the fundamentals and key drivers. Labor market data includes a variety of economic indicators, including job gain, job growth, wage gain, wage growth, net migration patterns, population growth and educational attainment. Labor intelligence also includes specific metro/market analysis, including talent supply in the area to lifestyle and cost of living.
True labor market analysis leverages current and projected demand for a specific job. For example, if demand is high and supply is tight for a specific role in a given market, business leaders may look at nearby areas to recruit talent. In addition, understanding supply and demand and employment participation rates for modern roles will influence budgets and compensation strategies.
Obstacles to Accurate Data Analysis
While most organizations have some form of analytics tools used by HR teams, there are several issues impacting their use and effectiveness:
Limited Focus: Oftentimes HR professionals focus on one metric at a time, effectively making talent acquisition decisions without a comprehensive picture.
Unreliable or Untrusted Analytics: A recent survey from KPMG stated that of 2,190 senior executives from around the world, 40 percent had doubts about the reliability of their data and analytics, and 25 percent said they had “limited trust or active distrust in their data and analytics.”
Ambiguous Scale: Numbers are frequently presented without reference to scale. For example, the significance of the number of job gains is highly reliant on market size. Gaining 1,000 jobs in small market like Pinedale, Wyoming may be significant, but the impact would be less compelling for a major market like Los Angeles. Understanding the market, at a granular level, can change the story, and lead to more precise and cost-effective hiring and retention strategies.
Lacking Context: Some metrics, like gross domestic product and national productivity, are talking points usually shared at a national level. This is done, typically, without any real relevance to an industry, subsector or specific metro area (microlevel). Inferences must be made to translate the data relevancy.
Help Wanted: Single Source of Truth
While labor market data exists in a variety of sources, HR teams should look for data as a single source of truth.
Providing HR leaders with a single source of comprehensive data-driven labor intelligence, as well as demonstrating why the information is vital to the business, leads to better talent planning and compensation forecasting. Access to relevant labor intelligence also provides professionals with the knowledge and skill that helps the organization reduce risk, increase competitive differentiation and refine its workforce for optimal productivity.
Learn more with LaborIQ at thinkwhy.com