How to Leverage Human Capital ROI for Better Business Results

How to Leverage Human Capital ROI for Better Business Results

Guest Contributor: Melissa Stewart, CriterionHCM

In the dynamic world of business, where talent stands as the cornerstone of success, maximizing human capital ROI is paramount. 

As leaders and HR professionals, grasping the intricacies of human capital and understanding its direct impact on the bottom line can sometimes feel overwhelming. In this day and age, it’s not enough to simply recruit. You also need to foster and leverage that talent for maximum return. 

If you’re poised to unlock the hidden potential within your organization, here’s a deep dive into human capital ROI and why it’s revolutionizing traditional performance metrics.

Understanding Human Capital

At the heart of every organization lie its people. Human capital isn’t merely a conglomerate of your team members; it’s the collective knowledge, capabilities, and competencies they embody. 

In today’s ever-evolving business landscape, organizations must recognize that their true competitive edge isn’t in their products or services alone, but also in the unique blend of expertise and innovation that their team brings to the table.

Human Capital ROI: What It Is and Why Use It

Human Capital ROI is a cutting-edge metric that quantifies the return on investment derived from employee performance and development initiatives. It offers a clear perspective on how effectively an organization’s talent investments translate into tangible business outcomes.

How it Differs from Traditional Measurements

Traditional performance metrics often paint a one-dimensional picture, focusing primarily on financial outcomes or isolated productivity indicators. In stark contrast, Human capital ROI goes beyond superficial figures. It integrates their skills, competencies, adaptability, and potential for future growth. 

This multidimensional approach provides a holistic view of how talent investments drive business value, allowing for more strategic and informed decision-making.

Advantages of Using It as a Metric and KPI

By seamlessly integrating Human Capital ROI into your strategic arsenal, you’re not merely staying in tune with modern metrics; you’re also embracing a forward-thinking approach that recognizes the invaluable worth of your people and the boundless possibilities they bring.

  • Comprehensive Insight: Human capital ROI delves deeper, presenting a multi-faceted analysis of employee contributions. It’s not just about numbers; it’s about understanding the nuances of talent optimization.
  • Strategic Allocation of Resources: By pinpointing areas that offer the highest return, leaders can allocate training budgets, development programs, and other resources more effectively.
  • Talent Retention and Attraction: Organizations that understand and prioritize the value of their team members often foster a culture of growth and learning. This not only retains top talent but also becomes a magnet for future industry leaders.
  • Adaptability and Future-Readiness: In an age where change is the only constant, human capital ROI empowers businesses to stay agile. It helps leaders anticipate skills gaps, adapt to market shifts, and prepare for future challenges.
  • Data-Driven Decision-making: Leveraging this metric as a KPI enables businesses to move from gut-feel decisions to data-backed strategies, refining talent management processes and ensuring alignment with broader organizational objectives.

How To Calculate Human Capital ROI

Efficiently harnessing the potential of your workforce requires a methodical approach to understanding the returns on your human capital investments. As with any metric, a clear, actionable formula is crucial to extracting meaningful insights.


Human Capital ROI is calculated using the following equation:

Net Operating Profit – represents the company’s earnings before interest and taxes (EBIT).

Cost of Employee Compensation –  encompasses salaries, benefits, training, and any other expenses related to employees.

By determining the value created above the cost of employee compensation, this formula provides a clear measure of the return on investment in human capital.


Imagine a company with a net operating profit of $5 million and total employee compensation costs of $2 million. Plugging these values into the formula, we get:

Human Capital ROI = (($5 million – $2 million)/($2 million)) x100 = $1.50

This means for every dollar invested in human capital, the company generates a return of $1.50.

For a company with a net operating profit of $10 million and employee compensation costs of $8 million:

Human Capital ROI = (($10 million – $8 million)/($8 million)) x100 = $2.50

In this case, for every dollar invested in human capital, the company gets a return of $0.25.

Benefits of Using It to Improve Workforce Productivity

Human Capital ROI is a strategic tool that, when leveraged effectively, can propel businesses toward optimized productivity and profitability.

  • Strategic Investments in Training: By understanding the direct impact of employee training on ROI, businesses can allocate resources more efficiently, investing in programs that bring the highest returns.
  • Performance Management: Using human capital ROI as a guide, performance metrics can be aligned with business objectives, driving individual and team productivity in directions that generate real business value.
  • Improved HR Strategies: High human capital ROI can often correlate with effective retention strategies. Recognizing this can help businesses double down on what works, ensuring that top performers remain engaged and loyal.
  • Budgeting and Forecasting: With insights into the returns generated from human capital investments, HR and finance teams can collaborate to create budgets that allocate resources towards high-impact areas, ensuring sustainable growth.
  • Incentivizing Productivity: By linking compensation, bonuses, and other rewards to contributions towards positive human capital ROI, companies can foster a culture where employees are motivated to continuously improve and drive business results.
  • Diversifying Skill Sets: This metric can shed light on which skills and competencies bring the highest returns, allowing businesses to focus on diversifying and honing these skills across their workforce.
  • Enhancing Employee Engagement: A clear understanding of human capital ROI can lead to initiatives that boost employee morale and engagement, as teams recognize their direct contributions to the company’s success.
  • Operational Efficiency: With a granular view of how human capital impacts the bottom line, operational inefficiencies can be identified and rectified, leading to streamlined processes and better resource allocation.
  • Data-Driven HR Decisions: Moving beyond instinctual or traditional HR practices, a clear focus on talent metrics provides the data necessary for HR to make informed, strategic decisions that align with overall business goals.

Embracing the strategic value of human capital allows organizations to place their people at the heart of their success strategy, driving sustainable growth and lasting competitive advantage.

Speaking of optimization, integrating your human capital and enterprise resource planning systems could catapult your ROI to new heights. How? The intertwining world of HCM and ERP systems has a ton of benefits awaiting your business if you know how to use them.

The Future of HR: The Importance of Human Capital ROI

As we continue to transition into an era dominated by data-driven decisions and an emphasis on human potential, human capital ROI stands out as a beacon of change for the HR industry. 

Recognizing the intrinsic link between workforce investments and overall business performance is crucial. Let’s delve into how this metric will shape the future of HR.

Linking Human Capital to Business Performance

Historically, HR was viewed largely as an administrative function. However, modern HR is about strategy and driving organizational growth. By emphasizing the connection between investments in human capital and tangible business outcomes, companies can better justify workforce initiatives, from training programs to wellness benefits. 

When HR initiatives directly correlate with improved business metrics, the entire organization takes notice, elevating the role of HR from support to strategic partner.

Role in Making Better Workforce Decisions

Decisions around hiring, training, and retention are no longer just about instincts or prevailing industry standards. Human capital ROI provides the data necessary for HR professionals to quantify the results of their decisions. 

When considering a new training program, for instance, HR can project potential ROI based on historical data. Similarly, when evaluating benefits packages, HR can assess how previous changes impacted both employee satisfaction and overall business profitability.

Workforce Productivity Benchmarking

In the competitive landscape, it’s not just about understanding your performance but also knowing where you stand relative to peers. Human capital ROI can be used for benchmarking, allowing businesses to compare their workforce productivity with industry standards. 

By understanding where they excel and where there’s room for improvement, organizations can strategically allocate resources, ensuring they remain industry leaders or close existing gaps.

Utilizing Human Capital ROI in Small Businesses

For small businesses, every dollar counts. Human capital ROI is especially valuable in such environments, where the impact of every team member is magnified. By focusing on this metric, small businesses can ensure that they’re getting the most out of their limited resources. 

Whether it’s determining which roles to prioritize when hiring or identifying the most cost-effective training programs, small businesses equipped with human capital insights can make decisions that yield significant returns, propelling growth even with smaller teams.


The realm of HR is undergoing a significant transformation, with human capital ROI playing a pivotal role. 

This metric does more than just quantify; it enlightens, guiding businesses of all sizes toward decisions that prioritize their most valuable asset: their people. 

As organizations look to the future, understanding and leveraging the power of human capital ROI will be paramount, ensuring that businesses aren’t just productive, but also sustainable, resilient, and primed for continuous growth.

Ready to maximize your human capital ROI? Find the best HCM software to capture, track, and report key metrics using our free HRIS matching tool!

Are You Leaving Unclaimed ERC Credits on the Table?

Business owners can still claim ERC credits.

When Stacy Wagner of Metropolitan Ministries initially considered the possibility of claiming ERC credits, she didn’t think her company would qualify. Metropolitan Ministries, an organization that offers services for at – risk and homeless families in underserved communities, had received a PPP loan during the pandemic, and Stacy was hesitant about whether they could also receive credits from the ERC program.

“I was initially hesitant because we had previously been granted a PPP loan,” said Wagner. “Nevertheless, I was willing to explore this opportunity with the chance that we would be awarded additional funds to support our ministry.”

After speaking with American Incentive Advisors (AIA) representative Mike Simpson, Wagner researched AIA and received positive feedback from board members, previous clients, and the Better Business Bureau. Within two weeks of submitting her company’s information to AIA, Wagner learned that Metropolitan Ministries qualified for over $2 million in additional ERC credits.

That’s not an unusual story for AIA at all. In fact, they have filed over 3,000 ERC claims since the program first launched, accessing $1.5 billion in ERC refunds for their clients.

However, the window for filing is quickly coming to a close.

“The ERC tax credits are a once in a lifetime opportunity,” said Mike Simpson. “With 2020 eligibility running out in 2024 and 2021 eligibility running out in 2025, the urgency to file your claim is real.”

Why Clients May Hesitate to Claim ERC Credits

Like Stacy Wagner, many of the companies Mike speaks with are initially hesitant. There are three reasons this is often the case:

  • They have never heard of the ERC program
    Some companies are unaware that the program is available to them. In these cases, it’s important to understand that the ERC credit is not a loan that must be paid back, and there is no cost to exploring your eligibility. AIA only gets paid if your claim is successful.

  • They have been told by a CPA or advisor that they don’t qualify.
    The process of successfully filing for the ERC tax credit is complex, and qualifications have changed since the program first became available. Not all financial advisors have expertise in the new laws and tax codes related to filing. If you are unsure, AIA can run a free ERC audit report on your 2019, 2020, and 2021 tax documents to determine eligibility.

  • They applied for the ERC already.
    Many of AIA’s clients have already applied for the ERC credit early on, but they may have left money on the table with the new changes to the program. If that’s you, AIA can assist you in claiming additional credits and filing your amended tax documents.

Client Stories: How AIA Has Helped Real Companies Claim Millions

AIA assists a broad spectrum of clients with the complex ERC filing process, including business owners, independent schools, and non-profits. Each client’s circumstances are unique, and the qualification process may look different depending on how they were impacted during the pandemic. AIA works on behalf of these clients to assess eligibility, prepare documents, and file your claim.

Here are just a few of their recent client success stories.

William Monroe Rowlett Academy for Arts and Communication

Rowlett Academies CPA D. Edward Daugherty was initially skeptical about whether the school would qualify. After speaking with Mike Simpson, Daugherty gathered the necessary information and submitted it to AIA for analysis. Within a couple of weeks, Rowlett Academies received a report that showed they qualified for a credit of $1.6 million.

ERC Credits Claimed: $1.6 million

Admiral Farragut Academy, Inc.

Admiral Farragut Academy initially applied for ERC credits through their payroll company and received 1 quarter of the possible 6. AIA reviewed their information and learned that they qualified for an additional 3 quarters, resulting in $1.6 million in credits, even after receiving two forgiven PPP loans totaling 2.4 million.

ERC Credits Claimed: $1.6 million

Metropolitan Ministries, Inc.

Metropolitan Ministries thought they wouldn’t qualify for the ERC credit because they had received a PPP loan. Mike Simpson worked with them to assess eligibility, and helped them claim an additional $2 million in credits spreading over 2 quarters.

ERC Credits Claimed: $2 million

How to Claim Your ERC Credits

You can still claim ERC credits for 2020 and 2021, but the window of opportunity is closing. The deadlines for filing amended returns are:

  • Filing for Q2, Q3, and Q4 of 2020: April 15, 2024
  • Filing for all 2021 quarters: April 15, 2025

AIA performs complex ERC tax credit analysis on your behalf, helping you determine eligibility and claim the full extent of funds available to you. AIA will also amend your tax documents, file your claim, and respond to any IRS inquiry on your behalf.

Schedule a call with Mike Simpson at AIA today to get your free ERC Eligibility Report!

What is People Analytics? Your Guide to a More Engaged Workforce

Guest post by Nan Parrish, Surety Systems

It’s no secret that a company’s people are their most important asset, and that means people analytics can provide valuable information about how to improve your business outcomes.

From prescriptive analytics to predictive analytics, people analytics functions have transformed to meet the needs of growing and changing workforces. Today’s tools help organizations find the most efficient ways to manage employee data and keep employees satisfied in the process.

Here’s how people analytics helps organizations better understand and manage the data, processes, challenges, insights, and opportunities associated with their people.

“We hear a lot of our clients talk about how vital people analytics is to their talent acquisition plan. It allows them to identify the right talent from the get-go and provide better engagement opportunities to retain those employees in the long run. Companies that aren’t leveraging this information are at a competitive disadvantage versus others in their industry.”

– Tim Hiller, Senior Manager, Surety Systems

What Does People Analytics Involve?

People analytics involves the collection of data that helps companies analyze, manage, and optimize core people processes, opportunities, challenges, and other functions. This data is used to increase workforce quality and improve decision-making processes for business leaders.

Leveraging people analytics tools to develop data driven insights involves:

  • Assessing current business processes and data analysis functions to properly outline KPIs and plan operational tasks accordingly across business units.
  • Applying talent data and predictive analytics to HR, leadership, and organizational management functionality to create well-defined plans of action.
  • Finding the balance between people and processes with better HR data and more informed workforce analytics throughout your organization.
  • Building an intuitive, measurable HR business strategy to avoid functional silos and optimize workforce processes.
  • Leveraging modern HR technology tools to improve data quality, accessibility, and visibility for HR leaders and other employees.

The Seven Pillars of People Analytics

1. Organizational Structure

A modern people analytics solution allows companies to collect, manage, and analyze people data. This provides better insights into employee behaviors and motivations and offers concrete data points to identify areas of alignment or misalignment across the organization.

With better employee data and dynamic analysis tools, organizations are better able to:

  • Facilitate communication and collaboration between teams
  • Understand business processes that support core cultural values and initiatives across business units
  • Improve employee retention and satisfaction across the board

2. Leadership Roles and Responsibilities

People analytics helps companies identify effective leaders. Data-based insights support employee performance analysis, improvement of critical talent and business outcomes, and implementation of objectives that drive employee engagement and retention.

By leveraging a functional people analytics tool to assess real-time data and create a data-driven culture, organizations can:

  • Assess the effectiveness of their current leadership development programs
  • Determine areas of improvement
  • Develop more effective approaches to communication and collaboration between employees, managers, and company leaders

3. Workforce Planning

People analytics helps companies gain valuable insight into the current and future needs of their organization. This makes it easier for HR professionals in any organization to collect and analyze data concerning the employee demographics and performance level needed to support business operations across the board.

By improving workforce management strategies through advanced people analytics tools, companies are better prepared for employee turnover. With this information, they can take the necessary steps to improve employee retention and reduce the amount of turnover in the long run.

4. Talent Management

People analytics (also known as talent analytics) provides the tools needed to help companies collect and assess workforce data including employee engagement, performance, and development. Organizations can use these insights to improve critical talent management practices within their HR team and beyond.

A well-defined people analytics strategy also provides opportunities for employees to engage in cross-functional learning and more accurately targeted employee development plans. This enables company leaders to identify areas of improvement and assess the core attributes that contribute to improved business outcomes.

5. Performance Management

By using people analytics to gain better performance insights, companies can:

  • Identify employee performance trends across business unit
  • Leverage relevant data to set more realistic goals for each employee
  • Tailor performance review methods to better meet the needs of employees

People analytics also helps HR leaders assess employee feedback to create more effective performance management plans and build a balanced, well-prepared workforce.

6. Learning and Development

People analytics gives companies the opportunity to identify skills gaps across departments. Managers can use that information to improve the effectiveness of learning and development plans across the organization, design targeted learning programs for specific skills, and ensure employees have the knowledge and resources to succeed.

Company leaders can also leverage core people analytics functions to analyze employee participation and engagement throughout the entire employee lifecycle. They can use this information to determine areas for improvement and identify the most effective learning and development strategies for employees across the organization.

7. Employee Engagement

People analytics allows organizations to collect data on employee behaviors, attitudes, and satisfaction. They can also gain insights into specific initiatives and programs that facilitate employee engagement and create a more positive, engaging workforce.

People analytics also helps companies assess the effectiveness of current employee engagement objectives and leverage data on employee satisfaction and retention. These insights can be used to outline plans to improve engagement strategies in the future.

What Are the Top Trends in the People Analytics Market?

Optimized people analytics practices can improve data collection and management for core employee information like demographics and performance. They can also promote stronger connections between HR departments and their internal employees.

Here are a few of the top trends that are shaping the way companies use people analytics and how it interacts with other widespread business functions.

Transforming HR Processes

People analytics changes the way the recruitment process is conducted as well as overall recruiting efficiency. It also improves employee performance measurement and reward strategies, and supports more effective creation, management, and maintainenance of employee learning and development plans.

With the ever-evolving needs of HR departments, people analytics platforms offer intuitive, flexible tools to support talent needs. This enables organizations to structure core business processes more efficiently and keep up with business needs and industry benchmarks.

Improving HR-Employee Relationships

People analytics gives HR leaders more relevant data points and in-depth insights into employee engagement, performance, and satisfaction. This helps them gain a better understanding of interactions between employees and assess the effectiveness of their people strategy.

With better people insights, HR leaders and related data scientists can outline plans to improve the relationship between employees and the internal HR department. They can also augment the perception of HR as “just a function” to more of a “support system” for employees.

Enhancing HR Analytics and Interactions

To optimize efficiency, HR leaders and other key stakeholders throughout the company must place a greater emphasis on data transparency and promote better collaboration between teams and business units.

People analytics offers the tools needed to assess people data more efficiently and leverage actionable insights. Leaders can use these insights to provide recommendations and best practices for strategic planning, management, and execution functions for employees across the organization.

What Are the Advantages of Using People Analytics?

Managing the flow of information between employees and areas of your organization plays a key role in the efficiency of your systems and the satisfaction of your internal teams. Luckily for you, people analytics simplifies this.

Let’s take a closer look at a few of the key benefits of understanding your people data.

More Informed HR Decisions

People analytics gives HR professionals data-driven insights about core HR practices, including talent acquisition, performance management, evident skill gaps, and employee development.

With more comprehensive insights about their most valuable resource (i.e., people), organizations can make more informed decisions about creating or updating HR functions. Better data can also drive better business outcomes across the board.

Improved Engagement and Retention

People analytics provides the data needed to understand the most important factors that drive employee retention and engagement. It also identifies the core workforce processes that help leaders reduce poor performance and manage disengaged employees.

Enhanced Productivity

Understanding the factors that drive performance and productivity across your organization is critical for:

  • Identifying the most effective HR management processes
  • Allocating resources properly across business units
  • Outlining HR practices that support better productivity, engagement, and collaboration for employees

Transparent Financial Insights

Predictive people analytics enables teams to gain more comprehensive view of their key talent and performance metrics. This gives business leaders a better opportunity to streamline data collection, management, and sharing functions across departments.

With these insights, HR and finance functions can interact with one another in the same system. This frees HR leaders to spend more time building relationships with their people rather than trying to navigate complex data interactions and management functions across each team.

How is HR Technology Transforming People Analytics?

HR technology is a critical investment for companies that want to improve business outcomes and workforce experiences through people analytics. Here are just a few things you can accomplish with the right tech tools.

  • Predictive Analytics: HR technology (and related algorithms) can provide the tools needed to identify future trends in employee turnover and predict the nature of workforce processes in the future.
  • Intuitive User Dashboards: With HR technology functions, employees can build and use intuitive user dashboards and other data visualization tools to improve their own data management processes and facilitate communication between other users.
  • Employee Enablement: HR technology offers advanced self-service opportunities for employees to access and manage their own information. This reduces the workload for HR leaders, leading to better employee empowerment and engagement across the board.
  • Streamlined HR Processes: By leveraging HR technology functions across business units, companies can automate manual processes. This saves valuable time and improves the efficiency and productivity of internal HR teams.
  • More Accurate People Data: With automated and streamlined data management processes, employees have access to more timely and accurate data. They can use that data to analyze trends, patterns, and insights for better decision-making from HR leaders and company executives.

Now that you understand more about people analytics are you ready to develop data driven insights, improve employee retention, and optimize business outcomes in the long run?

Build a Positive Workplace Culture with These HR Technology Tools

Positive Workplace Culture

Workplace culture is a key component of talent retention in today’s market. Whether your employees are mostly together in one physical location or working in remote or hybrid scenarios, culture matters. Workplace culture tends to be hard to define, but employees and leaders usually know when the culture is not what they are looking for.

Many Human Resources Information Systems (HRIS) and the Software as a Service (SaaS) applications that integrate with them can be vital tools for shaping employee culture. These tools cannot decide for you what your core values are, but they can help you communicate and demonstrate those core values to your employees in meaningful ways. They can help change employee attitudes and engagement levels, and give employees greater job satisfaction along the way.

Business culture includes core values, written rules, employee attitudes, and even unwritten assumptions. But how can leaders shape the culture that they want to see within their company?

Elements of a Positive Workplace Culture

Company culture impacts employee satisfaction and retention, because top performers are seeking a workplace environment that gives them purpose. That’s especially true since COVID, as increased remote work opportunities have expanded opportunities for many workers beyond their geographic area.

With these considerations in mind, how can you leverage HR technology to develop a positive culture that attracts top talent in your workplace? First, let’s take a look at what constitutes a positive employee experience.

  • Communication – Employees have an outlet to communicate with leadership about questions or concerns, and communication comes back to them in a meaningful way. For example, managers may provide an anonymous way for employees to submit questions and feedback, and send answers back. The anonymous feedback and responses can be posted on the internal company website.
  • Collaboration – Demand for collaborative technology experienced a huge surge when the pandemic forced many white collar workers to work remotely for a time. A collaborative environment encourages connection among colleagues, which is a key component of workplace satisfaction. It also provides a sense of purpose by helping each employee understand how their work contributes to the overall mission of the team or organization.
  • Recognition – A workforce that expresses gratitude to each other for efforts and results contributes to each employee’s sense of happiness and well-being. If you can get employees to tie recognition to your company’s core values, the impact on culture will be even more profound.
  • Goal-Setting – Employees and managers both need to know what goals the employee is working toward so that performance evaluations are tied to specific and measurable results.
  • Responding to Employee Feedback – Employees need a way to anonymously ask questions and voice concerns. Even more, they need to see that you will respond to their feedback in a meaningful way. Technology enables the “suggestion box” concept to impact your culture more profoundly.
  • Learning Enablement – Employees need to know that they have opportunities to learn and grow in their career. They also need to take ownership of their own career path for growth. Employees who are enabled to do so are more engaged at work and will stay with a company longer.

4 HR Tech Tools to Shape Your Culture

As you invest in building a positive company culture that includes the elements above, technology can help you implement your strategy. Here are four kinds of tools to consider:

  1. HRIS – An HRIS like UKG can house performance evaluations, integrate with a learning platform, and enable career interest and development tracking. These are all important elements of a culture of feedback and engagement. UKG can also connect employees to internal job opportunities for career development and growth.
  2. Employee Recognition Tools – HR technology tools like Achievers help companies enable a culture of appreciation among employees. Such SaaS tools should integrate seamlessly with your HRIS to ensure that employee data is up to date. Whether your teams work together or remotely, they can recognize each other for a job well done or for someone going beyond his role to help out. These programs also enable employees to download a copy of their own recognitions from others to use in performance evaluations.
  3. Collaboration Software – Collaboration software like Microsoft Teams allows employees to share files, carry on conversations in chat, and post to different groups and channels to interact with each other about projects. Microsoft Teams integrates with Outlook as well as your HRIS to import employee information, and it links to One Drive to house files in the cloud. Teams is also a video-calling platform where employees can interact with one another or with people leaders for more in-depth conversations.
  4. Learning Platforms – It is great to be able to recruit top talent, but you also need to invest in building the talent you need in the people you have. Learning platforms like Degreed are essential to keep employees developing skills and taking ownership of their own career growth. Degreed allows people leaders to build custom pathways so employees get the right learning resources at the right time, from onboarding to continuing education and skill development.

Culture is essential to creating positive employee experiences that keep your workforce engaged and satisfied in their roles. That’s why it pays to invest in HR technology tools that will make a significant impact on improving your company culture. Choose your HRIS and SaaS tools wisely with a specific thought toward how they will enhance your culture once implemented.

Need help finding the right HRIS for your company? Start with our HRIS Comparison Tool! Spend just twenty minutes choosing your requirements and receive a ranked report of vendors and platforms that meet your needs!

HRIS Comparison Tool

5 HR Tech Tools to Support Labor and Demand Forecasting

Labor and Demand ForecastingTalent is in high demand these days. It’s also scarce. That’s a simple recipe for talent shortages in any labor climate, but it’s an even bigger problem in the wake of the pandemic and the Great Resignation.

According to SHRM, companies across the spectrum are investing more in hiring and recruiting this year as they aim to develop a reliable pipeline of candidates to fill open roles. At the same time, workers want jobs that offer more flexibility, competitive pay, and professional development. Employees are also increasingly looking for jobs outside their immediate geographic area as more companies fill roles with remote workers.

All of this means that the talent landscape is undergoing a massive shift. To keep pace, companies will need more sophisticated recruiting methodologies and tools to support labor and demand forecasting, succession planning, and talent management.

That starts with an effective HR planning process that helps you identify gaps and project future needs. If you need help with this, the folks over at Creately have put together a useful HR planning guide that walks you step-by-step through the process.

To implement your process, however, you’ll need a well-structured HR technology platform and accompanying tools that will give you the most bang for your talent buck.

HR Tech Tools to Tip the Scales in Your Favor

The time needed for recruiting, evaluating, and training employees can be lengthy, particularly for highly skilled or managerial positions. Timing these factors to align well with planned and unplanned changes within the company can be one of the most difficult aspects of labor forecasting. That’s why it’s essential to have the right tools to help you stay on top of demand.

Here are 5 ways your HRIS can help.

Succession Planning

Succession planning isn’t just for the executive suite. A well-developed succession plan can strengthen your organization at all levels, enabling you to identify critical positions that impact productivity and profitability. Predictive analytics based on your people data will give you a good basis for skills and competencies that will be needed to fill particular roles.

Once you have those guidelines in place, you can use a tool like PDS Vista‘s succession planning dashboard to identify candidates based on job qualifications and skills. You can also manage succession planning on an individual level with qualifications, rankings, skills, manager notes, and action items. 

Candidate Pipelines

Labor forecasting is often broken up into short, intermediate, and long-term needs. Still, making sure that qualified employees are available at the right time can be easier said than done. You’ll need time to recruit, evaluate, train, and onboard employees, and you’ll need to align the timing of these steps with planned and unplanned talent changes. 

Creating a reliable candidate pipeline to fill positions that typically have faster turnover can be a good solution to maintain productivity. Your HCMS may have recruitment tools built in to assist you with this. If it doesn’t, consider investing in an ATS or working with an outsourced recruitment firm that will manage this aspect for you. 

Here’s an example from Ceridian that includes candidate skills, job descriptions, application status, candidate scoring, and other options for ranking and filtering candidates:

Ceridian Talent Management module

As you determine your labor needs, consider any upcoming changes to company structure, release of new products or services, elimination of products and services, and price increases or decreases. 

People Analytics

People analytics includes all of the HR metrics associated with your workforce. Tracking these metrics can help you manage talent more effectively and create better outcomes such as:

  • Recruitment cost savings
  • Lower turnover
  • Better retention
  • Improved diversity, equality, and inclusion
  • Hiring for cultural fit
  • Improved efficiency
  • Skills gap identification

Most HRIS platforms have data tracking and analysis capabilities, although they will differ in complexity and depth. If your current software doesn’t have the depth of capabilities you’re looking for, it may be time to invest in a platform with more sophisticated functionality. 

UKG‘s People Analytics module, for example, makes tracking the right metrics easy with built-in and custom reports, real-time dashboards, integration with external data sources, and email alerts for key business intelligence data.

UKG People Analytics

Position Budgeting

Position budgeting enables you to to efficiently plan your workforce for the next fiscal year by budgeting for new and existing positions throughout the organization. This gives you a clear financial picture of the organization from a hierarchical perspective, and makes it easier to keep tabs on budgeted vs actual statistics. With the right tech tools, you can streamline and automate this process so you have all the necessary information at your fingertips

PDS Vista’s position budgeting tools, for example, allow you to track job and position data such as qualifications, applicants, position history, salaries, and more. You can also define number of positions and full-time equivalents for each role, as well as associated salary amounts.

PDS Vista position budgeting tool

Machine Learning

Machine learning combines the power of data with predictive analysis to identify trends and forecast future labor needs. It’s still an evolving area of technology, and there are a wide range of tools on the market to help you automate and streamline labor forecasting processes.

One of these is WorkForce Software, which combines multiple data input streams to deliver more accurate analyses. The goal is to get more mileage out of your data with deeper insights that help you control costs and optimize both labor allocation and productivity.

Plan for Success

An effective labor forecast will use current information, past experience, and future possibilities to form an intelligent and flexible plan that grows with the company. It’s a complex process that requires good data, well-structured technology, and precise analysis. 

If your HRIS doesn’t have the tools you need to get the job done, consider investing in a software upgrade. You can find a full list of software requirements and modules in our comprehensive HRIS Comparison Tool. It’s a great first step for determining what you need and narrowing down the vendors who will be a good match. 

HRIS Comparison Tool