Just because everyone else is doing it doesn’t make it right…

When I first started working as a consultant, advising employers on their pension schemes and benefit programmes, we would regularly be asked what everyone else was doing, what decisions they were taking, and the changes they were introducing. This herd mentality approach was safe. Nobody ever got fired for doing the same as everyone else and, for the most part, the actions taken were suitably generic and low-impact. It is truly questionable just how effective any of it really was. We know that one size doesn’t fit all. Straying from the pack, however, was expensive in terms of laborious deep dives into manual data analysis and considered risky, particularly if there was nothing substantial to show for the spend.

Now, though, with the growth of easy-to-use and powerful data analytics and visualisation tools, HR teams – like so many other areas of modern businesses – are making decisions based on data from within their own workforces. It is now widely accepted that data analytics is one of the best ways, if not the best way, to identify any problems and opportunities that may exist and put strategies to address them in place.

Google, perhaps unsurprisingly, is a business that some time ago pledged to make all decisions based on data. For example, the HR team there used data gathered to identify that employees with good managers are better performers and stay in the business longer. It didn’t end there. Google then took this information and used it to identify the characteristics of a good manager and also where their weaknesses might be. They introduced the ‘Great Managers Award,’ along with regular monitoring of the identified traits of a good manager, to give them the confidence that their people were being led by the best available. Such an approach is great if you have the infrastructure that Google does, but not every business, even with the best available technology, is ready for this.

One area where all employers, not just the very largest, can benefit greatly from data-driven decision-making is around employee benefits. After salary, benefits will usually account for the second largest expense a business has, and so understanding how they are utilised (and therefore valued) by the employees they are provided for can be invaluable. Considering benefit trends alongside joiner and/or leaver data can provide insights into what resonates with a workforce. This could be by geographical location (for example, a retailer who wants to look at store-by-store, as well as regional and national behaviours), business line, or indeed any people aspect of a business where employee categorisation can be identified.

Using data to drive decision-making allows an organisation to verify and quantify any decisions it takes, because its dealing in fact rather than supposition. As a result, any organisation using data to drive decision-making will, on the whole, make confident decisions that will be clear in their intent and with a well-defined benchmark by which to measure their success. For example, an employer who understands the retirement readiness of its workforce can implement a strategy to achieve a desired level of employee retirement saving, and continue to measure that into the future.

Using data analytics also means that organisations can be proactive rather than reactive. In employee benefits, this might mean targeted communications to different geographies, business lines or demographics, perhaps using different media for each. For example, benefit interaction might vary greatly from location to location. Knowing this, an employer can question why that is; is it the cost of the benefit? Employees understanding? Their trust in it to pay out? Measures can then be put in place to address the problem.

Finally, underpinning decision-making with data allows an organisation to be consistent and clear in its approach. By making decisions based on fact, an organisation will increase its efficiency and productivity. If followed through and repeated, a culture of continuous improvement can be created.

Hopefully, all those organisations that followed the group in the past are now making confident, informed, and targeted decisions for their people based on real facts, unique to them. When it comes to making the right decisions for your organisation, following the herd is no longer the safest approach to take.

Ed Smithson - Principal, Employee Benefits & Head of Client Technology