If you work in HR for a federal contractor, you know compliance is part of your everyday duties and tasks. With changing regulations and increased scrutiny around reporting, keeping up is definitely a challenge. Transparency, equity and accountability are now front and center, with workforce analytics an essential tool to manage those expectations.
Let’s break down how workforce analytics can not only keep you organized and save you time and resources but can also be your best friend in navigating the “ins and outs” of federal contract compliance.
Here’s three key takeaways you’ll learn in this article:
- What is meant by workforce analytics and how it can be used to measure various HR functions.
- Several key regulations that rely on workforce analytics to support compliance requirements.
- Best practices and additional tips for HR when using workforce analytics.
Compliance Is Changing Fast
In recent years, we’ve seen federal contractor requirements change to demand not only policy but supporting documentation and proof. Regulators aren’t just asking whether your organization supports equality, they want to see the data.
From the Equal Employment Opportunity Commission (EEOC) to state-level agencies, and now with the new Executive Order 14173, contractors are under more scrutiny than ever. The message is clear that transparency isn’t optional anymore, and compliance can't be passive.
To manage this, HR teams need tools that don’t just store data but make sense of it. And a bonus if the data can be easily pulled and manipulated to meet the reporting requirements federal contractors are required to maintain. That’s where workforce analytics comes in.
What Are Workforce Analytics?
Great question, so glad you asked!
Workforce analytics is essentially both the art and science of using employee data to make informed decisions. Think of it as turning your HRIS system and spreadsheets into actionable insight. It helps you understand what's really happening across your workforce, which is especially critical for compliance.
Here are just a few of the areas workforce analytics can help highlight:
- Demographics: Who makes up your workforce? Is your workforce non-discriminatory?
- Pay equity: Are employees being compensated fairly regardless of race, gender, or veteran status? Do you have significant gender pay gaps?
- Promotions: Who’s advancing in your organization—and who’s not? Are promotions based on merit?
- Hiring trends: Are you attracting candidates from various demographics (e.g., race, gender, age, socioeconomic background)?
And you don’t need to be a data scientist to get started. Many HR platforms now include dashboards, reporting tools, and predictive analytics built right in. If you're using a modern HRIS like Workday, UKG, or ADP, chances are you already have access to some powerful workforce metrics and analytics—you just need to know where to look and how to use them strategically.
OutSolve also can help you manage your workforce analytics for certifications and reporting pay or demographic data. We can help you analyze your workforce for trends you may not know are happening and correct any pay gaps before they get too large.
Key Regulations That Rely on Workforce Analytics
Here’s a quick summary of the major federal contractor requirements that make workforce data essential:
- EEO-1 Component 1 Reporting: Every year, many of us prepare or outsource this detailed demographic report, breaking down race, ethnicity, and gender across job categories in our workforces. Workforce analytics makes compiling and reviewing this data far easier, and lets you do more than just file it. Once the data has been pulled, you can examine your workforce to see if there is any discrimination present and to ensure your promotions and hiring decisions are all based on merit.
- State Pay Data Reports: States like California and Illinois have taken it a step further. They want pay data by demographic group, job category, and more. That means you’ll need clean, accurate compensation data and an easy way to segment it. Analytics can quickly flag pay disparities so you can address them before you submit. The goal of these state pay data reports is to close gender pay gaps by offering a transparent look at your data. Oftentimes, it can be eye opening, and employers realized pay discrimination may exist without them knowing.
- Executive Order 11246 (Now Rescinded) & the Rise of EO 14173: For years, EO 11246 required federal contractors to create affirmative action programs and regularly analyze their workforce for diversity and equity. While EO 11246 is now rescinded, don’t think for a moment that data analysis is off the table.
Under Executive Order 14173, issued in January 2025, federal contractors will need to certify that their DEI programs don’t cross into unlawful territory. While the specifics are still being finalized, it’s expected that some form of documentation, or even a workforce analysis, may be required to prove your organization isn’t engaging in discriminatory practices under the guise of DEI. After all, who can certify something if you haven’t done the analysis to prove it?
This puts HR leaders in a tricky spot. Workforce analytics helps navigate situations like this by giving you the facts: not just what your DEI programs intend to do, but what they’re actually doing.
- VEVRAA and Section 503: These regulations cover veterans and individuals with disabilities. They require data tracking on hiring, outreach, and accommodations. Analytics allows you to not only comply but improve your efforts, especially when it comes to hiring benchmarks and inclusive recruitment strategies.
Download our HR Compliance Checklist to ensure you are staying compliant with federal regulations.
How Workforce Analytics Keeps You in Compliance (and Out of Trouble)
Let’s be honest compliance isn’t just about avoiding fines or failing an audit. It’s about building trust and doing right by your employees.
Workforce analytics plays a huge role in:
- Collecting and Reporting Data Accurately: Say goodbye to the frustration and long hours deciphering spreadsheets. With the right analytics tools, you can easily pull the reports you need, when you need them.
- Spotting Disparities Early: Whether it’s a pay gap or a promotion imbalance, analytics helps you catch issues before regulators or lawsuits catch it first.
- Staying Ahead of Risk: Proactive risk assessments are possible when you have real-time data. Waiting for your annual audit to uncover a problem? That’s a thing of the past.
- Supporting Annual Certifications: More and more, contractors are being asked to certify compliance with anti-discrimination laws. Workforce analytics gives you the confidence to sign those forms, knowing your data backs you up.
Avoiding Risk with Workforce Analytics
When it comes to federal contract compliance, honesty is truly the best policy, but so is having the receipts to prove it.
Why This Matters:
- False Claims Act (FCA) Liability: Submitting inaccurate data or misleading certifications can land your organization in serious legal trouble. The Department of Justice is already eyeing DEI-related misreporting as a potential area for enforcement.
- Defensible Documentation: If your practices are challenged—by regulators, employees, or the media—you’ll want clear, data-backed documentation to support your case.
Analytics gives you exactly that. It helps you move from “we think” to “we know”—and that’s a powerful shift.
Best Practices for Using Workforce Analytics in HR Compliance
Okay, so we’ve made the case for why workforce analytics is essential. Now let’s talk about how to actually integrate it into your compliance strategy.
- Make It a Daily Habit, Not an Annual Event: Don’t wait for EEO-1 season to check your demographics. Continuous monitoring lets you catch problems and opportunities year-round.
- Use It to Strengthen Compensation Structures: Go beyond minimum wage laws. Use analytics to understand pay compression, equity gaps, and retention risks.
- Get HR, Legal, and IT on the Same Page: Your analytics are only as good as the data they pull from. HR, Legal, and IT need to align on systems, definitions, and reporting protocols to make the most of your data.
- Tell a Story with the Data: Numbers are great but narrative matters. Use visuals and context to explain what’s happening in your workforce and what you’re doing about it.
- Be Careful of Garbage in, Garbage Out: Related to #3, it can’t be stressed enough that accurate data must be entered into any HR system you have. If there are any errors, then those errors will be incorporated into any reporting or summary data which can potentially cause serious issues, both internally and with external agencies. Make sure you know how data is being input and consider having a process of “checks and balances” to ensure data accuracy and integrity.
What Workforce Analytics Means for Your Organization
At the end of the day, workforce analytics isn’t just a compliance tool, it’s a strategy. It helps you create a more inclusive, transparent, and fair workplace while staying up-to-date with changing and new federal contractor requirements. It also helps keep you organized as you won’t be manually preparing all your reports, and it will undoubtedly save you time and resources.
The sooner you invest in smart, consistent workforce metrics and analytics, the better positioned your organization will be. It’s an investment in time and money that has positive long-term benefits for your company. Don’t wait for enforcement actions or regulatory changes to catch you off guard. Use your data to get ahead, stay compliant, and build a workforce that tells your company’s story.
OutSolve offers many services that manipulate your workforce analytics data into required federal contractor reports like EEO-1, VETS-4212, and our anti-discrimination analysis services.