The Importance of Employee Data

What is employee data?

Employee data is every detail a company collects about its employees and encompasses both basic and specific information. Basic data, such as date of birth or ethnicity, helps human resources (HR) teams run demographic reports about the workforce as a whole, while specific data, such as workplace performance, informs decisions about promotions, training programs and more.

There are many types of employee data, including:

• Employment status (full-time, part-time, contract or freelance)
• How an employee gets to work (commuting time and method of transportation)
• Length of employment
• Attendance logs
• Compensation information and records
• Overall performance, including performance reviews
• Personal details, such as address and date of birth
• Recruitment or hiring details
• Certifications and training courses

Why collect employee data?

Employee data serves two purposes, according to Voyles. First, organizations can understand employees’ perspectives and anticipate employees’ reactions to new policies. Second, surveying employees gives them a voice and empowers them. “Together these benefits increase employee engagement and reduce potential negative reactions from employees,” Voyles said.

Here are a few specific reasons to collect and analyze employee data.

1. You’ll gain a more accurate picture of workforce trends.

From a demographic, psychographic and performance perspective, gathering employee data helps decision-makers and HR departments develop a holistic view of the workforce. Instead of focusing on one employee who may be an outlier, HR teams who look at the entire workforce can identify patterns, pull out insights and present the data to higher management to make a lasting impact on the company.

If a restaurant manager finds through employee data that all the female servers end their night shifts 10 to 15 minutes ahead of their scheduled clock-out time, for example, it’s reasonable to assume that something makes each server want to leave early. Perhaps the parking lot lights shut off before their clock-out times and they don’t want to walk alone in the dark to their cars. Identifying trends in data by using reputable HR software for restaurants can uncover a problem like that. Then the business can find a solution instead of ignoring the issue.

2. You can identify patterns of growth and loss.

Turnover is a hurdle every company faces, regardless of size or industry. If you analyze your employee data, however, you can control your turnover percentage to an extent. When employees leave your company, you can look at factors such as the average employment length and number of disciplinary actions received to find patterns that help you and your HR team understand why employees quit.

In addition, employee data, such as seasonal hiring dates, can help your HR team craft messages and time job postings to maximize the number of candidates who apply.

3. You can increase productivity and reduce turnover rates.

Similar to the benefits of human capital management software, employee data can reduce turnover rates and boost productivity when used effectively. If an entry-level or midlevel employee has completed numerous training programs, for example, you can investigate further to see if that person may be eligible for a promotion. That recognition and career development will likely motivate the employee to continue working hard and stay with the company.

The ways to leverage data are numerous, but here are two other examples:

• If managers see a dip in productivity in the middle of autumn when days get shorter, the employees could be suffering from seasonal affective disorder or have family obligations around the holidays. In either case, managers could have an honest one-on-one conversation with each employee and ask how to support them better.
• Perhaps a well-performing salesperson’s numbers have significantly decreased over the past three months. The manager also observes that they have changed their benefits policy and started staying later at night, which could signify a personal crisis. Managers can then take steps to support that employee’s needs. 

In each scenario, the company investigates and resolves the issue in a way that focuses on the employee. That way, the employee knows the company not only cares about their performance and values them as a team asset, but also has regard for their personal life and wants to support a healthy work-life balance.

What types of data should be included in an employee database? 

The details that belong in an employee database depend on the way you and your organization plan to use that information. Regardless of industry or company size, every database should include certain details:

• Identifying information. Basic identifying information includes name, age, race and/or ethnicity, and contact information.
• Workplace performance. An employee database is the ideal place to keep historical records and track employee performance through annual review documents, attendance logs, sales numbers, work projects and more.
• Benefits information. Even if you don’t offer an extensive healthcare policy or retirement plan, it’s important to track which benefits your employees receive or opt in to. Take a look at our top choices for employee retirement plans.
• Recruiting data. Collecting this information can help your company recruit top talent more efficiently given enough time. You can measure the time and cost to hire employees to determine your job acceptance rate, which can help you decide whether you should work with a staffing agency or build an internal recruiting team. 
• Educational and professional information. This includes academic qualifications, such as degrees and academic institutions, professional certifications and any previous work experience.
• Medical records. An employee database can be used to store and access employee sickness records, accommodations and details of any injuries received during work. 
• Attendance information. You can track an employee’s time-off requests and overtime along with attendance records, history and timesheets. That data reveals an employee’s punctuality, absences and leave patterns, and helps boost productivity by spotting issues such as lateness or excessive absenteeism.
• Time tracking. Time tracking documents the amount of time worked on a particular project or activity. That helps understand work allocation and project costs while ensuring employees are paid fairly for their time.
• Employee engagement. Gathering this data will help you gauge your employees’ commitment to the job and team. It helps enhance your employees’ experience while also detecting and addressing engagement issues early on. Employee engagement data additionally reveals job satisfaction and retention. 
• Exit records. This includes information gathered during exit interviews or termination documentation. You can also record the employee’s length of employment, as well as their final pay and list of benefits. 

How do you find and manage employee data?

By using the correct tools, you can efficiently manage employee data, which, in turn, can be used to propel your company forward. Here are a few common methods to consider.

Applicant tracking system (ATS)

An ATS is used before an employee is hired and collects specific information during the recruiting and hiring process. An ATS can collect applicants’ experiences, education levels, qualifications and information gathered during an interview. 

HR information system (HRIS)

An HRIS is the most basic solution for gathering employee-related data. Most include an employee self-service portal, which is an efficient way to gather basic information and update facts when necessary. For work performance data, salary and benefit information, a manager self-service portal — much like the employee one — is the most effective way to gather basic data and standardize input across an organization. 

HR management system (HRMS)

An HRMS is a more robust software solution that integrates other HR-related tasks, such as payroll and time and attendance. These solutions are generally more expensive, but they also allow businesses to collect larger data sets more efficiently. 

Conducting surveys and interviews

For more open-ended feedback, there are multiple ways employees can share their insights, such as anonymous surveys, direct emails or face-to-face conversations with their supervisors. During the collection process, communicate how responses will be used and then update employees on how the information was applied, Voyles said. 

“The ideal process for surveying employees and creating real changes involves administering an annual survey, identifying strengths and weaknesses, selecting and implementing an action plan, and then administering pulse surveys to monitor progress in key areas targeted by action plans,” she said.

Using HR software for employee data

One of the biggest hurdles HR teams face is employee distrust of HR systems. The most important priorities when picking an HR software to handle employee data are maintaining confidentiality and protecting important information.

The best HR software simplifies HR responsibilities, optimizes processes and improves productivity for your organization. It opens up an opportunity for collaboration between information and HR departments to ensure the HR software protects employee data.

Before choosing an employee database and tracking solution, make sure it offers a two-way flow that gives employees agency over the information they choose to share. The tool or software used to collect employee data shouldn’t infringe on privacy or leave employees with questions about how their data will be used. They should know explicitly that data collection and analysis will help your business build better company processes and work culture.

HR systems that can anonymize data using built-in analytics tools and still identify patterns in employee behavior are also great choices, especially for larger organizations. The employees not only feel their information is safe and confidential, but they also know their personal details aren’t identifiable by supervisors or co-workers.

Best practices for managing employee data

Follow these tips to remain compliant in your organization’s employee data management.

Obtain express consent

When gathering employee information, your organization must acquire explicit consent from employees in accordance with the General Data Protection Regulation. Consent must be obtained freely from the employee, with no threat of negative consequences. The employees must be informed, in writing, how the information will be used. If it is used for more than one purpose, the employee must give consent for each circumstance and be informed of their right to withdraw their consent.

All obtained consent must be unambiguously acquired and documented. That can be done by asking employees to check or initial permission boxes. Your organization must securely store the permissions documentation and be able to provide evidence of how and when the permission was received.

Practice good data hygiene

Due to the many state and federal laws guiding data collection and storage, it’s prudent that your organization collects only necessary data — especially when it comes to sensitive data. In addition, the data storage solution should be highly secure and encrypted, have proper backup measures in place and be accessible only by the appropriate personnel.

Your organization should also have a clear policy in place to manage how long the data is stored and how to properly dispose of the data at the end of its life cycle. 

Prioritize employee training

Onboarding should include educating employees on their rights, as well as company policies and practices around the use and storage of collected employee data. HR representatives should know the legal requirements and be able to answer any employee and management questions as they arise.

Your HR team should also stay apprised of any updates to the legal requirements around collecting and managing employee data. That will ensure that your organization remains compliant and facilitates training on updates as needed.

Develop an incident response plan

A clear plan for any data breaches or leaks is a key part of your organization’s transparency and ethics surrounding data management, and it should be included in training and adapted into company culture. All employees should know what actions to take and who receives data concern reports. 

Remember to ensure your incident response plan includes any legal requirements. The plan should be comprehensive, clear and well documented.

Assess and audit your systems regularly

Data management and incident report plans are not a one-and-done deal. The policies and processes need to be regularly audited for compliance with ever-evolving state and federal requirements. That includes routinely assessing the effectiveness, security and compliance status of your organization’s documentation and data storage systems. Training should be conducted annually, at minimum, to educate employees on any procedural changes.

Sean Peek contributed to the reporting and writing in this article. Source interviews were conducted for a previous version of this article.