Mining the gold: gain competitive advantage through HR data analysis - HR Technology - first of two part series

HR Magazine, Sept, 2003 by Beth Patterson, Steve Lindsey

* In 1984, 51.8 percent of registered nurses (RNs) were under the age of 40. In 2000, that number dropped to 31.7 percent.

* With a current average RN age of 45 and a high burnout rate, the RN ranks will thin considerably over the next five to 10 years.

* Since 1995, enrollment in U.S. nursing schools has declined steadily. Since 1993, enrollment has decreased 22 percent.

As HR professionals in health care begin to understand the talent supply market drivers for nurses, they are better able to position retention-focused initiatives within their organizations. Simply placing an advertisement for an RN is no longer an answer in this scarce talent environment. The focus must shift to retaining the talent already existing within the organization in addition to creative recruiting strategies.

While turnover is a continuous cycle in any business, it is costly and disruptive and can have a significant impact on an organization's ability to compete, especially when specific skill sets are involved. For example, a health care organization with 1,000 RNs on staff with a turnover rate of 26 percent will spend $23 million annually due to RN turnover. Even a 1 percent decrease in RN turnover will result in an approximate annual savings of $1 million. Not only will the organization gain a competitive cost advantage, but also by understanding and reducing turnover it will be able to maintain superior patient service by offering the skills necessary to deliver quality health care.

To begin a turnover analysis, HR professionals should ask these questions:

* Are particular areas of the organization turning over more employees than others?

* Are particular geographic regions more susceptible to seasonal turnover than others?

* Can trends be identified that will help to streamline sourcing, hiring and retention practices?

Identify and Analyze Trends

A key component to turnover analysis is the ability to identify trends and to understand the reasons behind them. Perhaps external market factors are at work, prompting employees to leave one company for another. Or, perhaps internal challenges are leading to increased turnover within a particular business unit. By combining turnover trend data with data gathered from existing HR practices--such as exit interviews--turnover analysis can either validate or invalidate an organization's assumptions regarding turnover drivers. Analyzing key turnover statistics--including total company turnover, turnover by position, turnover by particular geographic region and turnover within a particular function--can help to identify critical drivers.

In addition, other key details, such as workforce demographics--age, race, gender and average length of service--can be analyzed to assess any potential diversity issue within the organization. Turnover trend data can also be compared to national and local employment statistics to accurately gauge whether the turnover is comparable with the current employment market. Continually analyzing turnover trends enables an organization to understand and respond to issues prior to their becoming a disruption to achieve business objectives.