What is utilization analysis?

Utilization analysis is a process used to compare the demographics of an organization’s workforce with the availability of qualified individuals in the labor market.

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It helps HR teams identify underrepresentation of certain groups, such as women or minorities, in specific job categories. This analysis is a core requirement under affirmative action planning and is often used to promote fair hiring and diversity goals.

Unlike traditional headcount reporting, utilization analysis digs deeper. It doesn’t just look at how many employees you have:it asks: Are you employing a workforce that reflects the qualified talent available in your industry and geography? HBR’s workforce diversity and utilization research

Utilization analysis example

Let’s say your company employs 200 people in a metropolitan area where the labor market consists of 60% men and 40% women in a specific profession, like engineering.

After reviewing your internal data, you find that only 10% of your engineering team are women. This indicates underutilization, and it becomes a data point for you to address through targeted hiring or development programs.

Another practical example:

Job category: Software Developers
Qualified available women in the labor market: 35%
Current women employed by the company: 15%
Utilization gap: -20% (underutilization of women in this job group)

This gap could be addressed by revisiting hiring sources, promotion practices, or internal development efforts.

Utilization analysis in an affirmative action plan

In affirmative action planning (AAP), utilization analysis is non-negotiable. It forms the backbone of identifying disparities between what your workforce looks like versus what it should look like based on availability data.

Core steps include:

Identifying job groups by department, role, or function.
Gathering demographic availability data (gender, ethnicity, etc.) from sources like the U.S. Census or EEOC.
Comparing current workforce data with market availability to find underrepresentation.
Setting specific, measurable goals to bridge gaps, without enforcing quotas.

This analysis is essential for federal contractors under Executive Order 11246 and ensures compliance with the Office of Federal Contract Compliance Programs (OFCCP).

How do you conduct a utilization analysis?

Here’s a simplified step-by-step approach:

Define job groups: Categorize employees into job groups with similar roles and qualifications.
Collect internal data: Gather demographic data (e.g., gender, race) of current employees in each group.
Obtain availability data: Use external sources like census data or local labor market reports.
Calculate utilization rates: Compare the proportion of minority/female employees in each job group to their availability in the market.
Identify gaps: Highlight areas where your workforce significantly underrepresents available talent pools.
Create action items: Design outreach, training, or recruitment strategies to improve representation.

This can be done manually in Excel or through HR analytics software or compliance platforms that automatically map these figures.

How do you track employee utilization at your company?

Tracking employee utilization isn’t just about headcount:it’s about understanding how your people are being allocated, where their time goes, and if their skills are being fully used.

Tools you can use:

HRIS systems with time-tracking and reporting features.
Project management tools (like Jira or Trello) for role-specific utilization.
Workforce analytics dashboards that show team and individual workload distribution.

What to track:

Billable vs. non-billable hours (especially in consulting, law, or agency work).
Time spent on core responsibilities vs. admin or low-value tasks.
Skill vs. role alignment to avoid overqualification or skill underuse.

This kind of tracking goes hand-in-hand with performance management and workforce planning.

The importance of utilization analysis

Here’s why this analysis isn’t just a compliance formality:it’s a strategic advantage:

Improves diversity metrics by highlighting underrepresentation.
Reveals hidden biases in hiring or promotions.
Supports data-driven decisions in workforce planning.
Fulfills legal obligations for organizations with affirmative action requirements.

It’s also about fairness. Employees want to feel represented, valued, and seen:and this process helps employers identify where they’re falling short.

Benefits of utilization analysis

Utilization analysis isn’t just about numbers; it brings real operational value.

Key benefits include:

Informed hiring: Guides recruitment efforts toward underrepresented demographics.
Fair workplace culture: Promotes inclusion by ensuring everyone has a seat at the table.
Compliance made easier: Simplifies EEOC reporting and affirmative action audits.
Improved talent strategy: Aligns roles with skills, reducing mismatch and turnover.

It also helps leaders pinpoint which departments are performing well in terms of representation and where intervention is needed. SHRM’s utilization analysis guidance

Utilization analysis is an OFCCP compliance requirement for federal contractors : and a valuable diagnostic tool for any organization committed to workforce equity. Using objective assessments and a structured hiring plan drives improvement, helping organizations attract and retain top talent.

Frequently asked questions

Utilization analysis is a statistical comparison of the demographics of an employer’s current workforce in specific job groups against the demographics of qualified available workers in the relevant labor market. It identifies whether women and minorities are ‘underutilized’ (employed at lower rates than their availability would predict) in specific job categories : a key component of affirmative action plan (AAP) development required of federal contractors.

Federal contractors and subcontractors subject to OFCCP (Office of Federal Contract Compliance Programs) regulations with: federal contracts of $50,000+ and 50+ employees must prepare written AAPs including utilization analysis. Contractors with $10M+ in federal contracts face additional AAP requirements. The OFCCP conducts compliance reviews and can audit AAPs and underlying utilization data. Non-contractors may conduct utilization analysis voluntarily as a DEI diagnostic tool.

Comparison dimensions: for each job group (defined by the employer), compare the percentage of women and minorities in the workforce to their percentage in the relevant labor pool. The ‘availability’ factor considers: the percentage of qualified women/minorities in the surrounding labor market (using census data, BLS statistics), the percentage of qualified women/minorities promotable from within the organization, the percentage who could be recruited within a reasonable recruitment area, and training availability. If workforce percentage is significantly below availability, underutilization exists.

Underutilization is generally found when the representation in a job group falls below 80% of the availability figure (the four-fifths/80% rule) : though there is no single statutory threshold. For example, if women comprise 40% of available qualified workers but only 20% of employees in a job group, there is likely underutilization. Finding underutilization triggers an obligation to establish placement goals and good-faith efforts to increase representation : not a quota requirement.

OFCCP placement goals are targets, not quotas : they express aspirations to increase representation to match availability. Contractors must make good-faith efforts to reach goals but are not required to hire a specific percentage of women or minorities, nor to hire unqualified candidates. The difference: quotas would require a specific number of hires from a group regardless of qualifications (illegal under Title VII); placement goals require good-faith effort toward increasing qualified representation in underutilized job groups.

Voluntary use: any organization can compare its workforce demographics to relevant labor market availability to identify potential equity gaps. This proactive analysis: identifies where representation lags the available talent pool, informs targeted recruiting and development investments, supports pay equity analysis (when combined with compensation data), provides documentation of good-faith DEI efforts, and helps organizations avoid the disparate impact claims that arise when workforce demographics significantly diverge from qualified labor market availability.