Leveraging Alternative Data to Improve Resource Planning

Misha Ghosh, DVP & General Manager; ADP Ventures
Misha Ghosh, DVP & General Manager; ADP Ventures

Misha Ghosh, DVP & General Manager; ADP Ventures

Why is it that a decision maker’s “gut instincts” are so often cited in success?  What’s in his or her “gut” that overpowers everything else? We say that intuition comes from the gut in the same way that love comes from the heart – that’s where it physically hits us. What is it really, though? It’s pattern recognition and the ability to act. 

Resource Planning with Alternative Data

We have the tools and data to improve resource planning. These newly created tools are replacing guesswork and intuition with hard data. Using aggregated, anonymized data, specifically the pay-stub data of more than 30 million US workers whose pay is processed by ADP®, the People Flow income migration tool opens new doors for strategic planning. HR practitioners have the ability not just to use their own company’s data to aid in their decision making, but an analysis of the broader economy.

Using income at employer and employee levels, alternative data helps users understand the pay expectations, talent concentration and flight risk of employees down to the neighborhood block level. Without revealing any personalized information, we can understand where employees are located, the type of jobs they perform, the industries they work in, how much they earn and how their pay has changed within a given timeframe.

Want to know how much an accountant is paid in South Dakota or in San Francisco? Want to understand from where lawyers from Northeast Washington D.C. are commuting to work?  Want to understand if your regional manager is a flight risk due to their compensation package relative to their neighbors? You can do that.  And more.

That’s not looking at trends, though. If you want to get the most out of the data, start using data-driven insights to reveal changes that will strategically influence decision-making before they materialize. 

Ask questions like these:

•  How many employees moved from one zip code to another within the last quarter? 

•  Where are they migrating to?

•  In what industries do they work?

•  Is the migration of employees to and from an area resulting in a higher or lower median income?

To discover insights like these:

•  Are high-income workers leaving the suburbs to be closer to their jobs in the city? 

•  Does that mean that you should make your commuter benefits package more compelling as fewer employees drive to work and want to leverage public transit? 

•  Does it mean that your overall compensation package must be increased to maintain the edge as your key competitors are recruiting from the same talent pool with a newly increased cost of living?

You can drill deeper into the potential and risk presented by virtually any geographical area of interest and answer important questions that may affect existing or prospective resource management.

  It’s not just the volume of data that informs your decision making, it’s the freshness 

While this article is about how HR practitioners will benefit from tools that leverage this alternative data to map employees and income to work and home locations, the applications extend far beyond human capital management. Other industries and organizations will be able to leverage this data for new insights. Firms that rely on economic research for portfolio monitoring, and producers of retail consumer goods who want fresh data to define better targeting, market appeal, and sales potential are just a couple of examples.  With the right data source, the applications are limitless.

Fresh, Fresh, Fresh

It’s not just the volume of data that informs your decision making, it’s the freshness. Government research from 2010 isn’t going to help you very much.  “Legacy” data sources lose their value both because they age like anything else, but also because they capture a single view at a single time. Data that is frequently repeated, monthly or even bimonthly as pay stubs are is not only fresher but provides a continuous data set with trends that can be examined and insights generated. 

Every decision maker wants the most relevant data, and that means fresh and continuous. We all want a dynamic solution – nothing stagnant or static.

Data and Insights are Tools, not Decision Makers

The best tool in the world isn’t going to replace a decision maker.  No one can turn to a piece of software to make decisions about their business. What it can do is give you the information and the insight to spot the trends, advise your business leaders and drive your company’s success.