Glossary of Human Resources Management and Employee Benefit Terms
What Is Utilization Analysis in HRM?
A utilization analysis, also referred to as a workforce utilization review, is an analysis of a workforce’s demographics. The purpose is to assess whether an organization employs a specific group (e.g. women, minorities, etc.) at a rate that is aligned with workforce availability or (the estimated number of people in designated groups who are available for work).
Why Is Utilization Analysis Important?
Utilization analysis is essential because it ensures equal access and equal opportunities for employees. Not to mention, it encourages organizations to stay on top of their diversity and inclusion efforts based on the rules and regulations administered by the Equal Employment Opportunity Commission (EEOC).
The EEOC is responsible for enforcing federal anti-discrimination laws. They ensure the following types of discrimination are addressed in the workplace:
Age (The Age Discrimination Act of 1975)
Disability (Americans with Disabilities Act)
Ethnicity (Civil Rights Act of 1965)
Sexual orientation (Civil Rights Act of 1965)
Gender (Civil Rights Act of 1965)
Therefore, conducting a utilization analysis can help organizations:
Assess which demographic groups are being underutilized
Identify the types of changes the company needs to spearhead (e.g. hiring practices, networking, mentoring, etc.)
Make data-driven decisions
Overall, if utilization analysis is done right, it can help employers establish a safer, happier, and more diverse workplace.
How Do You Conduct a Utilization Analysis?
Conducting a utilization analysis requires three key steps:
Place employees into job groups: This involves aggregating job titles into job groups (e.g. management professionals, support professionals, specialized professionals, etc.). Employers must also calculate the percentage of women and minority employees in each job group at their organization.
Determine workforce availability of women and minorities: This requires finding out the percentage of women and minorities in a reasonable recruitment area who possess the skills to fulfill the job groups specified in step one. Employers should tap into the most current data available to gatherin the relevant workforce numbers. These resources may include census data and/or data from colleges and training institutions.
Look at incumbency vs. availability: Using the two percentages from the steps above, you can compare values to see if the number of minorities or women in a job group at your organization is less than what would reasonably be expected according to their availability in your recruitment area. If this is the case, this would be called underutilization. Your team can take this information and build necessary goals to help drive better diversity and inclusion initiatives.
How Do You Track Employee Utilization at Your Company?
Based on the results from your utilization analysis, you can establish a goal and relevant KPIs for each job group.
For example, if your analysis illustrates you are underutilizing female managers, you may want to refocus your hiring efforts by:
Partnering with women in leadership organizations
Reassessing your job descriptions and interview questions
Tracking the entire recruiting funnel (e.g. ratio of men and women applicants, shortlisted candidates, etc.)
Tracking utilization will help your team stay on track with diversity, equity, and inclusion initiatives that ensure equal access and equal opportunities for all workers.