EMSI works with labor market data, which is essentially Big Data on jobs and the economy, with the goal of helping clients turn this data into better results. Why? Because we know that simply having the data is not the point. The data (and the accompanying technology) are just tools: they’re helpful only if they actually produce better results for real people that face real problems.
For the past 10-plus years, people have been using our data to improve (1) educational programs so they are more responsive to student outcomes (see here and here), (2) workforce investment for the sake of communities and jobseekers (see here and here), and (3) how regional economies build policies to strengthen and nurture local industry (see here and here). We’ve really enjoyed taking part in this success.
The new frontier for Big Data is workforce planning. Workforce planning is the use of data and analysis to make strategic decisions about the internal human capital needs of an organization or company. And because this is a new frontier, the rules haven’t been written yet. There is still a fair amount of rocky ground to till. However, lest you get discouraged, a recent HBR article offers some fantastic evidence that there are huge gains for those who put in the work and forge ahead in the data-informed direction.
The article, titled “What the Companies Winning at Big Data Do Differently,” discusses how companies like Netflix and Amazon have used data to improve their businesses. In this case, we aren’t so interested in what insights they have gained from the data as much as we are in the practical implications of applying data to making quicker, better decisions that lead to tangible results.
This key excerpt discusses some of the findings about companies that have adopted Big Data:
The Big Data wars are hardly limited to the media industry. In December 2012 and January of this year, Tata Consultancy Services surveyed 1,217 executives from large companies (revenue of more than $1 billion) in a dozen global industries in North America, Europe, Asia-Pacific, and Latin America. We found that companies with huge investments in Big Data are generating excess returns and gaining competitive advantages, putting companies without significant investments in Big Data at risk. The reason: There’s a big learning curve with Big Data, one that companies such as Netflix and Amazon had to embrace in the 1990s to deal with hundreds of millions of customer clicks.
It’s a learning curve that most other large companies have not yet faced. So what differentiated the companies with the greatest expected returns on Big Data for 2012 from those with the smallest? We categorized as “leaders” survey respondents that estimated a greater than 50% return on their Big Data investments last year (a number far above most companies’ hurdle rate). Although they tended to make much larger investments in Big Data, they also generated much higher returns on those investments than the laggards did. Higher spending correlates with more headroom for revenue growth.
This is a fascinating statement and one that we would certainly agree with. Let’s break it down and explore the potential benefits to workforce planning.
1. The Results
First, according to the excerpt above, “companies with huge investments in Big Data are generating excess returns and gaining competitive advantages, putting companies without significant investments in Big Data at risk.” This point is critical for workforce planners. The economy is still sputtering and companies are in fierce competition for talent that can make a difference to the bottom line. Data is a differentiator, and the regular use and application of data for strategic workforce planning will give companies a big advantage over companies that fail to use data.
Here is a quick example of how data can help speed up a decision for the sake of a better, more competitive result.
Let’s imagine we work for a big company in Indianapolis and we need to find qualified database administrators. This is a tough task. According to our labor market analysis (see the graphic on the left), Indy has a semi-unfavourable market for recruiting database administrators because wages are relatively high and there isn’t much workforce availability within the market to start with. So, what can we do?
Well, using this same labor market analysis, we can search for other cities where recruitment might be easier. This data helps us see labor markets where database administrators are more available from supply/demand framework and where wages are more competitive.
First, it is important to note that for an occupation like database administrator finding cities that have readily available talent isn’t going to be easy. However, our analysis does reveal three cities we should check out. Utica, N.Y., Destin, Fla., and Idaho Falls, Idaho, all have labor markets that are more favorable from a recruitment perspective.
This illustrates how data can get us started in the right direction. We were able to produce this in literally a few seconds. Imagine trying to pull all that data together just to find these three cities. How long do you think it would take?
That’s the point about using Big Data. There’s a lot of data out there; the key is bringing it together to answer a specific question quickly.
2. The Learning Curve
The second point, and the one that deserves the bulk of our attention here, is about the learning curve related to the investment in data. According to the article, “There’s a big learning curve with Big Data, one that companies such as Netflix and Amazon had to embrace in the 1990s to deal with hundreds of millions of customer clicks.” The companies that are using data successfully started as far back as the 1990s. They saw the potential and invested. Now they are gaining ground faster than others that didn’t. Success in these areas also didn’t necessarily happen overnight. They knew that there was a learning curve, they embraced it, and now they are reaping the reward.
We’ve seen this in our clients as well. We’ve been providing data for more than 10 years, and we know that at the outset, data can sometimes be intimidating. How am I going to use it? Is this just going to mean more work? What will it actually help me accomplish? Am I going to look like an idiot?
Thankfully, companies like EMSI are in a position to help. We have the data and the technology useful for accessing that data. But more importantly, we have the expertise to help workforce planners get the advice and education they need to use the data effectively. We are actively developing systems and programs to help shorten that learning curve so that people at companies who aren’t necessarily born with a spreadsheet in their hand (who is!?) can gain the insight and support they need to apply data in the right ways. Already, we have seen a handful of workforce planners, eager to embrace Big Data and improve their approach to workforce planning, take the steps in this direction.
So, yes, there is a learning curve, but don’t let that stop you. Once you learn it, you can also start to gain the benefits.
3. Quicker, Better Decisions
One final point here. In another recent article from HBR, author Nick Tasler discusses the decision paralysis that so often occurs in business. Decision paralysis is created by a number of things, but a big culprit is sheer data overload. How do you find the right info to make that “roughly right” decision soon instead of waiting months and years to make the “perfect” decision?
We strongly believe that the data we have and the approach we’ve developed will help workforce planners make good decisions faster. In the example with database administrators above, we were able to generate key, highly focused data in a matter of moments: the right data for the right decisions.
Here at EMSI, we understand that a skilled, well-prepared workforce drives economic prosperity. The successful development of that workforce requires the right training, recruiting, hiring, and planning. And these activities largely depend on our ability to process data that illuminates the many facets of employment and human capital. What do we need? The right data for the right decisions today, not tomorrow.
So, if you are sitting on the sideline or are feeling overwhelmed by everything, please give us a call. We are ready to help. We can show you data that might fit your needs and answer any questions you have. We can also teach you how labor market data works and how you can work to apply it to your workforce planning approach.