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Giving context to HR Metrics with Labour Market data


Microeconomics 101 had taught me that enterprises require factors of production to create economic value; specifically, land, labour, capital and entrepreneurship.  These factors are utilized in various combinations to produce goods and services that are valuable to consumers, thereby creating economic value for the enterprise.  Each of these resources has unique characteristics and roles in the production process, and the efficiency with which they are used can significantly impact the productivity and profitability of a business.

Entrepreneurship set things in motion to procure and combine the factors of production to produce goods and services.  Land and capital once procured, belong to the organization to be deployed to what they deem fit to further organizational outcomes.  But labour, better known as human capital today, is different.  Unlike the other factors of production, human capital isn’t bought as much as rented.  Human capital is typically rented to enterprises during their term of employment; and employees may in time choose to work for someone else or not at all.  Even during employment, employees can choose to, or not to bring their talent to work; which is why employee engagement is so crucial.  The combination of factors is what makes workforce analytics both interesting and challenging at the same time.

Workforce Analytics practices today

 Workforce analytics is a powerful tool that leverages data to help organizations make informed decisions about their human capital management. This field primarily uses metrics such as employee turnover rates, absenteeism, productivity levels, and employee engagement scores to provide insights into workforce dynamics. Advanced analyses might include predictive modeling to forecast hiring needs or to identify factors that influence employee retention. However, a common pitfall in workforce analytics is its heavy reliance on internal data alone. While such data is invaluable, it often lacks external context, which can lead to skewed interpretations and missed strategic opportunities.

For example,

  • Turnover rates give a numerical indication of the percentage of the workforce that may/will leave within the year and the number of headcounts that may need replacing.

    • Organizations often focus on this HR metric as a KPI; where a high turnover is bad, and a low turnover is good/better.  How high must turnover rates be before it is “bad” and what range can turnover rates be under normal operating conditions?

    • Labour market data and industry benchmarks provide the necessary context.  If an organization’s turnover rate is similar to the industry, then it is simply par for the course; but if the turnover rate is higher than the industry, then there might be cause for concern.

  • Employee engagement refers to the level of enthusiasm and commitment an employee feels toward their job and the company they work for. Think of it as the difference between someone who just shows up to work to collect a paycheck and someone who is genuinely invested in their role and the success of their organization. 

    • Typically measured through an employee survey which ask employees a series of questions about their experiences and feelings regarding their workplace, their roles, their relationships with managers and peers, and their overall satisfaction and commitment to the organization.  This is then summarised and expressed as a percentage of employees who are engaged or disengaged. 

    • The numbers are not very useful by themselves, since there is no context or comparison.  Engagement surveys are typically administered by consulting firms who also provide engagement benchmarks for comparable industries, cultures and/or organization sizes. A similar engagement score with the industry might indicate that engagement is typical for the industry; while a lower engagement score than the industry might suggest that organizational interventions are needed

The importance of External Labour Market Data

Unlike other factors of production, employees have a choice to work for the organization as well as a choice to bring their talent to work, or not.  These decisions are often predicated by their external options.  So, to truly harness the power of workforce analytics, it is crucial to integrate internal metrics with external labour market data, thereby enriching the insights and aiding in more balanced, informed decision-making processes.

Consider the following scenarios:

  • An IT organization is looking to grow substantially over the next 5 years and will need to hire many new IT graduates from Institutions of Higher Education (IHLs). The workforce plan may look sound based on the numbers alone; but it is less clear if the plan is practical or executable.

    • To assess the opportunities and risks of this HR strategy, it would be helpful to understand employment trend for the sector and possibly the number of IT graduates who would be joining the workforce over the next few years.  Did you know that:

      • IT workforce in Singapore is about 120,000 strong in 2021 and has been growing steadily for the last 20 years.

      • Roughly 1,600 IT professionals graduate from the local IHLs each year, making up about 6% of total graduates each year.   

    • Both these insights are publicly available without charge from the local Department of Statistics. Can you imagine the quality of decisions made with and without the context of external labour data?

  • A construction company is looking to expand their operations in the Singapore market and will likely need to hire more employees over time.  Given Asia’s comparatively dynamic and youthful workforce (compared with developed markets in the west), one cannot find fault with the workforce plan.

    • To better understand the risks and opportunities, an understanding of the construction labour market in Singapore is required.  Did you know that:

      • The resident construction workforce has remained relatively steady over the last 20 years at about 98,000-99,000 strong

      • The resident workforce in construction is made up largely by males.  Data suggests that it is rapidly ageing; where 50% are aged above 45 years and there are fewer young adults joining the sector.

      • Due to the small workforce, the Singapore construction sector relies heavily on foreign labour; the Ministry of Manpower has specified ratios to the number of foreign workers that any company can hire based on the number of residents in employment. 

    • Both these insights are publicly available without charge from the local Department of Statistics. Can you imagine the quality of decisions made with and without the context of external labour data?

For more information and details about the cited metrics, you can follow the link to FYT’s interactive dashboards.

Missed Opportunities

Organizations recognize the value of external benchmarks for specific HR analyses, and typically have budgets to purchase the requisite benchmarks such as compensation or engagement benchmarks.  Despite the availability of labour market data, many organizations overlook this resource, which is often free and accessible. This oversight represents a significant missed opportunity for enhancing workforce analytics. Utilizing this data can provide a more rounded and strategic view of your organization's position within the industry.

Integrating internal HR metrics with external labor market data is not just about collecting more data—it's about making smarter, context-aware decisions that drive organizational success. As we move towards a more data-driven approach in HR, the ability to blend these two data sources effectively will become a critical competency for HR professionals.  It is our hope that this article encourages HR professionals to start exploring public databases, interactive reports using public data to augment their workforce analytics.  And if you are looking for a place to start, check out FYTs collection of interactive dashboards.

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