Use analytics to guide employment-related decisions

While humans have long used numbers to understand and influence behavior, the ability to access large amounts of complex data when making business decisions has expanded exponentially in recent years. There are five key areas where staffing firms and professional employer organizations (PEOs) can leverage big data — both to help their clients reduce employment-related risk and to manage their own workforces.

HR decisions. Employers can quickly and relatively inexpensively analyze data to make important employment-related decisions. For example, companies can pull internal data, supplement it with publicly available information such as social media accounts, and through algorithms, gain valuable insight, such as how long an employee is likely to stay at a job and which employees are likely to leave the company.

Productivity. Data analytics also provides a means of drawing insights that can increase employee productivity and morale, as well as decrease turnover. For instance, a company that requires all salaried employees to work defined hours at the office could experiment with letting a subset of its workforce work remotely on a more flexible schedule. The employer could then examine data on productivity and other key metrics in the months following to determine if workers were more productive or engaged under a flexible schedule. Depending on what the data reveals, the employer may decide to roll out the policy across the organization, positively impacting the bottom line.

Litigation. Employers face significant difficulties in managing workforces while remaining compliant with an increasingly complex web of federal, state and local employment laws. PEOs, staffing firms and their clients can use big data to manage the litigation process. For example, our firm captures and analyzes data on all of a company’s Equal Employment Opportunity charges and single-plaintiff employment litigation matters to help spot trends and potential risks. By analyzing data related to legal claims, such as the company policy involved in the case or the individual(s) named in the lawsuit, companies can identify factors that are triggering litigation.

Companies can also use predictive modeling to assess the likely length and outcome of each case filed against it, as well as the typical number of depositions and amount of discovery, in the particular case, for example. This information enables a company to anticipate costs associated with the litigation, both in terms of the hard costs (such as legal fees and the settlement/award amount) and soft costs (such as the impact on your personnel and brand). With such insight, companies can make informed decisions about how best to approach the case at inception.

Risk management. Understanding litigation and HR trends puts companies in a better position to manage risk within their organizations. For instance, a company that examines their legal matters in the aggregate in the example noted above may notice that a particular internal policy is part of several litigation matters. This signals that they may need to provide more training to managers on the policy or revise the policy itself. With a clearer picture of what is driving their litigation, they can proactively reduce risk of future claims.

Compliance. The enormous opportunity to use data analytics to guide employment decisions is set against the backdrop of a legal system with few guideposts that translate seamlessly into the world of big data. Accordingly, while there are great benefits to using data analytics, PEOs, staffing firms and other employers must navigate through the risks associated with relying on it, such as violating laws related to such areas as privacy, discrimination and background checks. To that end, it is highly recommended that PEOs and staffing firms work with a law firm with the substantive expertise and technological capabilities to provide data analysis to ensure legal compliance and to avail itself of the confidentiality protection of the attorney/client privilege.

Big data plays an integral role in employment and other business decisions. PEOs and staffing firms that understand the interplay between the opportunities associated with data analytics and the laws dictating its use will be able to most effectively leverage big data to manage their workforces in the years ahead.