Retain key talent through data insight
When the world of work finally emerges from COVID-19, attracting and retaining top talent while reducing operating costs is set to become of paramount importance.
Forward-looking companies are harnessing their global rewards data to generate insights and support evidence-based decision-making that can mitigate employee retention risk and unlock new advantages for the entire business.
Harnessing data to mitigate retention risk
As business leaders of today know, every voluntary employee departure is extremely costly to their organisation in terms of disruption caused, and the time and resources dedicated to recruiting, onboarding and retaining replacements.
Today, many companies continue to rely on traditional tools when designing long-term incentive compensation programmes and establishing award levels for employees, such as market surveys, benchmarking data, and annual performance reviews.
Unless an organisation is also tapping into the complete spectrum of employee – and business – data already available, it is not fully leveraging its potential predictive powers to enhance employee retention.
Adopting a data-driven approach allows businesses to deliver incentives and compensation specifically designed to retain high-performing employees who have the potential for future success and may otherwise be at risk of leaving the company.
The same analysis can also inform and enhance decision-making for programmes aimed at non-high performing individuals or those deemed to lack the potential to become high performers or future leaders.
While today’s global rewards programmes and practices often focus on retaining an organisation’s strongest performers, applying a data-driven lens on overall employee retention is an increasingly important challenge too.
Data-driven employee insights
Performing a retention risk analysis on your employees requires looking beyond the obvious. It should include historical data that the company holds both for the current population and employees who have left voluntarily.
Honing in on data to explore historical patterns and trends among voluntary departures can unlock characteristics applicable to a current workforce to help identify each employee’s risk level of leaving the organisation.
Using a statistical backed approach to determine the data points most impactful in predicting whether an employee will terminate, a retention risk analysis will calculate a score for each employee that represents their risk of voluntarily leaving the company.
Coupling an employee’s retention risk score with performance and career potential data allows businesses to classify each employee into one of four categories:
- High performers or high-potential employees who are at risk of leaving the company
- High performers or high-potential employees who are likely to remain with the organisation
- Other employees who are deemed to be at a high risk of leaving
- Relatively low performers who are adding limited value to the company, and not likely to leave on their own volition
Categorising employees in this manner enables a better understanding of each employee’s contribution to the organisation.
Armed with this information, an organisation is then better positioned to retain those employees who will likely provide the highest probability of achieving overall strategic and business objectives.
Taking a highly customised approach to data compilation and analysis is critical. There is no one-size-fits-all approach that can simply be applied to every business. Achieving optimal results requires using data to generate useful insights specific to each organisation, based on its culture, compensation policies, reward policies and more.
The business imperative
Data analytics can provide significant advantages over traditional methods when applied to risk assessments aimed at retaining an organisation’s most valuable employees, including:
- data-driven post COVID-19 talent planning strategies
- opportunities to target high-risk and high-performing employees for appropriate retention efforts
- evidence-based decision-making processes for bonus payment and equity grant allocations
- the ability to model share reserve levels
- closer involvement of the business or performance manager in the grant process
- facilitation of governance discussions at the compensation committee level
Access to and the strategic use of this information is critical in today’s rapidly evolving and highly competitive environment.
If your business is not taking advantage of the remarkable ability of data to generate competitive advantage, be assured that your competitors almost certainly will – and that a valuable employee and future leader could walk out the door because you failed to take the necessary steps to retain them appropriately.
Jennifer Link is managing director, tax global rewards services at KPMG in the US.