Workforce analytics: Types, examples, and tips

Every company wants to make smarter decisions about its workforce. But it's tough to do that without hard data to guide the way. How do you know if your recruitment campaigns are attracting quality hires? Which teams have the highest turnover risk? Are your diversity efforts actually moving the needle? That's where workforce analytics comes in.

Workforce analytics is the practice of collecting and analyzing data about employees to uncover insights that drive better decision-making. It helps HR move past guesswork and "gut feeling" to leverage concrete metrics on recruitment, retention, performance, engagement, and more. The end result? People strategies that are grounded in facts, not hunches. 

So whether you're an HR director looking to retain top talent or a recruiting leader aiming to fill the pipeline, workforce analytics needs to be in your toolkit. In this article, we'll unpack what workforce analytics is, why it matters, and must-have metrics—along with top tools—for streamlined reporting.

What is workforce analytics?

In a nutshell, workforce analytics is the practice of gathering and analyzing data about employees to glean actionable insights that inform HR strategy and decisions. It's about moving past surface-level metrics to uncover the deeper trends shaping your workforce, and then leveraging those learnings to drive change.

Workforce analytics draws upon HR data across the employee lifecycle, such as:

• Candidate demographics, sourcing channels, interview scores from applicant tracking systems  
• Job details, performance ratings, compensation history from an HRIS
• Timesheet data, PTO balances, scheduling from time & attendance systems
• Employee survey responses, recognition moments, feedback from engagement platforms 
• Training completions, assessment scores, skill profiles from learning management systems

The goal is to connect the dots across all these disparate data points to paint a full picture of your workforce. Advanced analytics transform raw numbers into meaningful trends, forecasts and visualizations that highlight what's working, what's not, and where to focus limited talent resources.

4 types of workforce analytics

Not all workforce analytics are created equal in terms of the kinds of insights they surface. Let's take a closer look at four main types:

1. Descriptive analytics 

Descriptive analytics summarizes what's already happened in your workforce. It slices and dices HR data to highlight key trends and current state of affairs. A few common examples:

• Headcount reports by department and location
• Turnover rate and average tenure
• Employee engagement survey scores

Descriptive analytics is about getting that foundational read on your talent landscape. It helps you spot potential issues, like high turnover or low engagement, to investigate further.

2. Diagnostic analytics

Diagnostic analytics looks for the "why" behind your key workforce metrics, examining correlations and contributing factors to uncover root causes. Some examples:

• Analyzing turnover reasons from exit interviews
• Comparing pay and promotion rates across demographics
• Correlating engagement scores with manager effectiveness ratings

Diagnostic analytics gets under the hood of your people data to isolate the variables that matter most, which can pinpoint the levers to pull to fix stubborn problems.

3. Predictive analytics 

Predictive analytics uses historical data to forecast likely workforce outcomes. It leverages past patterns to anticipate future talent needs and risks. A few examples:

• Identifying employees at risk of leaving based on factors like pay and tenure
• Forecasting labor demand based on growth projections
• Predicting which high-potential employees are ready for leadership roles

Predictive analytics helps you get ahead of the curve on critical talent decisions. You can course-correct early and build bench strength proactively.

4. Prescriptive analytics

Prescriptive analytics goes beyond predicting outcomes to recommend the best actions to take. It uses advanced modeling to weigh trade-offs and identify the highest-impact solutions. Some examples:

• Determining the right mix of training and recruiting investments to close skills gaps
• Optimizing compensation budgets to maximize employee retention
• Recommending personalized learning and development plans

Prescriptive analytics takes the guesswork out of workforce planning. It illuminates the smartest moves to make to hit your talent goals.

The most effective HR teams use a combination of all four types of workforce analytics. Descriptive reporting sets the foundation, diagnostic insights uncover the "why", and predictive and prescriptive modeling chart the path forward. Together, they arm you with a comprehensive fact base to make data-driven talent decisions.

3 workforce analytics examples

Let's make workforce analytics more concrete with a few real-world examples. Imagine you're the HR director for a 500-person software company. A few ways you might tap HR analytics:

1. Recruitment analytics

You're getting feedback that candidates are dropping out of your interview process. By looking at your hiring data, you spot something interesting—when candidates wait too long between interviews, they're much more likely to withdraw their application. Even more telling, the best candidates tend to drop out first. After tightening up the interview scheduling and keeping the process shorter, your offer acceptance rate significantly improves and you're landing more of your top choices.

2. Talent management analytics

With the company growing fast, you need more team leads but can't keep hiring externally. Looking at your internal promotion data reveals something useful—engineers who've worked across multiple product teams are much more likely to succeed as leads. This insight helps you start a rotation program for promising engineers, giving them exposure to different teams before moving into leadership. Soon you're filling most lead positions internally, with better results than external hires.

3. Performance management analytics

Your managers are swamped with annual reviews, yet people complain they don't get enough feedback. The data tells an interesting story: teams doing quick weekly check-ins have much higher engagement scores than those doing traditional quarterly reviews. You shift to a lighter, more frequent feedback model. Before long, employee satisfaction with feedback improves dramatically, and managers actually spend less time on reviews.

5 benefits of workforce analytics for businesses

The adoption of analytics in HR brings far-reaching benefits. Leading organizations are discovering how data-driven insights can transform everything from recruitment to retention. Here's what they're finding:

1. Improved HR decision-making

Workforce analytics takes the guesswork out of HR strategy. Instead of relying on gut feel, you gain clear visibility into what's working and what isn't. Want to know if that new onboarding program is paying off? Or whether your compensation strategy is competitive? Data tells the story, helping you invest resources where they'll have the biggest impact.

2. Reduced employee turnover

With better insights come better employee retention strategies. Analytics helps spot early warning signs of disengagement before valued employees head for the door. Maybe it's a department with unusually high turnover, or a pattern of exits after promotion cycles. Once you understand these patterns, you can take targeted action to keep your best people engaged and growing with the company.

3. Enhanced understanding of future workforce needs

Looking ahead becomes clearer with analytics in your toolkit. You can spot emerging skill gaps before they become critical, understand which roles will be most important for future growth, and identify where your talent pipeline needs strengthening. This foresight helps you develop people strategically rather than scrambling to fill sudden gaps.

4. Reduced labor costs

Better workforce planning and analytics naturally leads to smarter spending. Analytics helps you optimize your mix of full-time employees and contractors, ensure teams are the right size for their workload, and invest in development programs that deliver real returns. You can trim costs without compromising on the talent you need to drive business success.

5. Stronger employer brand and talent attraction

All these improvements add up to a more compelling employer brand. With analytics, you can see which job posts attract the best candidates, which interview questions predict success, and what convinces top candidates to join. Armed with these insights, you can refine your recruitment approach. The result? More of the right people applying, interviewing, and accepting offers.

5 key workforce analytics metrics to keep an eye on

When it comes to workforce analytics, not all metrics are created equal. To maximize insight, look to go beyond basic demographics and capture data across the full employee lifecycle. Here are a few foundational figures to track:

1. Employee turnover rate

This is often where companies start their analytics journey, and for good reason. Turnover rate tells you how many people are leaving and why. Are they being let go, or choosing to leave? Are certain departments or managers seeing more exits than others? A spike in resignations often reveals deeper issues like career growth concerns or culture problems that need addressing.

2. Average tenure

Tenure naturally connects to turnover, but adds important context. It helps you understand if people are staying long enough to make your investment in them worthwhile. Short tenures in key roles might signal hiring mistakes or development gaps, because early departures of high-potentials mean losing their peak productivity before recouping talent investments.

3. Cost per hire

Cost per hire measures your total recruitment costs—from advertising to agency fees to referral bonuses—divided by the number of hires in a given time period. An abnormally high cost per hire can point to inefficiencies in your talent acquisition process, like running too many interviews per candidate, or relying too heavily on expensive agencies. You need to track cost per hire over time to gauge the ROI of process improvements.

4. Absenteeism rate

Beyond hiring and retention, you need to know if your workforce is consistently present and engaged. Absenteeism patterns can reveal underlying issues with employee wellbeing or workplace satisfaction. High rates in specific teams might point to burnout or leadership challenges. Rising absence rates could signal the need for better work-life balance policies or wellness programs. Understanding these patterns helps you address problems before they impact both employee health and business performance.

5. Diversity mix

With a handle on how you're hiring and developing talent, you can focus on building the workforce you need for the future. Diversity metrics help you understand if you're drawing from the full talent pool available to you. Look at diversity across hiring, promotions, and departures to spot where you might be falling short. Then you can take targeted action to build a more inclusive workplace.

How to implement workforce analytics: 5 steps

Ready to put workforce analytics to work in your own organization? Here's a five-step roadmap:

Step 1: Understand and prioritize business goals

Start with the end in mind by outlining the key business questions HR needs to answer. What are leadership's top talent concerns? Which workforce risks pose the biggest threats to company goals? Collaborate with the executive team and lines of business to understand their pain points and aspirations. Then translate those into the specific analyses and data points needed.

Step 2: Define KPIs

 Armed with a clear sense of priorities, define the 5-10 KPIs that HR will commit to moving the needle on. These might include figures like:

• Turnover rate for critical roles
• Diversity of candidate slates
• Percent of top performers retained
• Revenue per FTE
• eNPS 

Keep the list focused on metrics the executive team will care about most. Set specific targets and build an initial dashboard to socialize goals and progress.

Step 3: Build a workforce analytics dashboard

A centralized, up-to-date dashboard is key to embedding HR analytics into business rhythms. Choose a visualization tool that integrates with your core HR systems and is intuitive for your team to maintain. Build views that align to your priority KPIs, with clear labels and benchmarks for context. Socialize it in executive meetings, and consider more focused dashboards for specific departments and roles.

Step 4: Gather data and analyze the results

With your core dashboard in place, establish a cadence for refreshing and analyzing the data—at least monthly if not more frequently. Schedule a recurring people analytics review with HR leadership to scrutinize the figures and workshop action plans. Gather qualitative feedback from the business on where they're seeing troubling patterns, and dig in with more granular cuts of the data. Treat your KPIs as a starting point for further investigation, not an end point.

4 workforce analytics software

The right technology can be a huge enabler for workforce analytics at scale. Some of the most popular analytics solutions on the market include:

Rippling

Rippling is a data-focused HR platform that unifies all workforce data into a single source of truth. The platform emphasizes making complex data accessible and actionable through intuitive analytics tools while maintaining strong security controls through role-based permissions.

Rippling's drag-and-drop dashboards allow HR teams to build and customize reports on any people data, across any Rippling module. So you can mash together KPIs on headcount and hiring with stats on payroll costs, IT spend, and more for 360-degree workforce insights. 

Features

• Point-and-click report builder with customizable templates
• Dynamic visualizations (bubble charts, scatter plots, pivot tables)
• Formula fields for custom calculations
• Role-based security controls for data access

Workday

Workday is an enterprise-level HCM platform that combines HR analytics with planning capabilities to help organizations make data-driven decisions. The platform uses AI and machine learning to transform workforce data into actionable insights.

Features

• Self-service dashboards and ad hoc analysis
• Multi-source data integration
• Role-based data security

ADP DataCloud

ADP DataCloud is an HR analytics platform that helps organizations understand their workforce trends through guided analytics experiences, benchmarking, and data visualization tools. The platform makes complex workforce data accessible for both analytics experts and non-experts.

Features

• Industry benchmarking
• DEI metrics and analysis
• Pay equity assessment tools

Oracle Cloud HCM

Oracle Cloud HCM is a comprehensive human capital management platform built natively for the cloud that combines HR processes, employee experience features, and analytics capabilities to help organizations manage their entire workforce. The platform emphasizes data-driven decision making through real-time insights.

Features

• Real-time operational dashboards and KPIs
• Pre-built HR analytics templates
• Global HR and payroll management

The key is to choose a tool that will make workforce analytics accessible for your HR team. Look for intuitive interfaces, pre-built metric libraries, and granular sharing controls to avoid endless back-and-forth with IT. The more naturally HR can leverage data for decisions, the bigger the business impact.

Rippling: Streamlined workforce analytics for your business

If you're looking for a simpler way to glean actionable workforce insights, Rippling is worth a serious look. Rippling is a unified workforce management platform that natively integrates core HR data with payroll, benefits, learning, and more in a single system. That means you can instantly analyze and visualize any people data, without the headache of cobbling together multiple tools.

Rippling's intuitive drag-and-drop dashboards let you mash up metrics across any module—from headcount and hiring to payroll costs, IT spend, and more. So you can finally get that holistic view of the business impact of your talent investments. 

Rippling's permissions engine makes it easy to securely share subsets of data and reports with different stakeholders, while powerful automation keeps your figures fresh with minimal effort. It's workforce analytics without the manual labor or IT overhead. 

Whether you're looking to combat turnover, ramp up productivity, or forecast future talent needs, Rippling gives you the data firepower to tackle any workforce challenge. Its analytics capabilities combined with fully integrated HR and IT tools make it a compelling choice for organizations looking to level up their people strategies.

Workforce analytics FAQs

What is the purpose of workforce data?

At its core, workforce data helps HR professionals and teams make smarter decisions about their people. It shows which recruiting sources bring in the best hires, which training programs actually work, how to plan for company growth, and why top performers might leave—all backed by real numbers instead of gut feelings.

How can HR managers ensure data privacy when using workforce analytics? 

Privacy starts with clear rules about who can see what data and when. Managers should only access information about their own teams, and sensitive details should be combined into group numbers rather than showing individual data. Everyone who works with the data needs proper training, and any outside vendors must have strong security measures.

What are the main challenges of implementing workforce analytics?

The biggest challenge is usually that employee data is scattered across different systems and spreadsheets. Many HR teams also lack experience working with data and analytics. It can be hard to get budget for new tools and training, especially when you're just starting out and can't yet prove the benefits. Fortunately, Rippling helps solve these challenges by connecting all your workforce data in one centralized platform.

How does workforce analytics contribute to DEI (Diversity, Equity, and Inclusion) initiatives?

Analytics gives you a clear picture of diversity in your company—from hiring to promotions to pay. You can spot where people might be treated unfairly in your hiring process or career paths. Instead of just talking about diversity goals, you can measure if your efforts are actually making things better over time.

This blog is based on information available to Rippling as of December 11, 2024.

Disclaimer: Rippling and its affiliates do not provide tax, accounting, or legal advice. This material has been prepared for informational purposes only, and is not intended to provide or be relied on for tax, accounting, or legal advice. You should consult your own tax, accounting, and legal advisors before engaging in any related activities or transactions.