Amanda Groves

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Predictive analytics are used in all kinds of industries to, as their name implies, make predictions based on available data. In the banking industry, for example, they can be used to decide whether or not to grant loans to certain types of customers, while in marketing they’re used to decide how to best allocate promotional dollars. Simply put, rather than rely on gut instinct, with predictive analytics you’re using data and models to develop a scientific approach to decision-making.

Of course, predictive analytics (or “people analytics” as they’re sometimes referred to in HR) have the potential to transform HR operations, while boosting business outcomes. To see a great example of how, check out this post on how Bank of America used them. And while just about every HR leader wants to be able to benefit from predictive analytics, the reality is that only one in three has the access to them to do so. So while they’re getting a lot of hype, few organizations are actually in a position to apply them to their business.

Nevertheless, predictive analytics is a growing trend that can’t be ignored. In fact, those who fail to get on board and start adopting them risk not only getting left behind, but of being at a distinct disadvantage.

When HR and predictive analytics converge

Given the vast quantities of data that HR has access to, it’s a natural candidate for predictive analytics. In particular, predictive analytics can be used for all aspects of workforce planning, talent management, and operational improvement. HR departments can use them to drive measurable business outcomes from turnover modeling to talent forecasting. Recruitment is another prime use case, along with performance measurement, compensation, workforce planning, and retention. Interestingly, among those companies that have invested in data-driven HR technologies, almost half use them to make better hiring decisions, while 17 percent use them to reduce employee turnover.

In recruiting, analytics can help predict response to job advertisements and identify the most successful recruitment channels and the best prospects. It can also help predict which new hires are likely to outperform at your company. In addition, turnover modeling can help predict the future needs of the business by looking at everything from performance and commute time to time spent in a role. Collectively, this data can be used to reduce the time required to fill positions, reduce panic hiring, and minimize any loss of knowledge. Retention, which is another big issue, can be targeted by identifying which employees are at risk of abandoning ship and directing retention efforts to them.

What the future holds

Despite the growing belief in the importance of analytics in HR, it hasn’t yet been matched with a corresponding investment in, and deployment of, the technology. While 71 percent of companies rate it as a high priority in their organizations, only eight percent report having usable data.

However, Deloitte predicts that data sources will continue to rise, leading to an integration of external and internal data that predicts employee behavior, and delivers increasingly personalized recommendations. “Eventually, people analytics will be fully integrated into systems and always in the background, rather than a separate source of information,” the report says. This is why mastering predictive analytics and demonstrating successful implementation is so important. If HR professionals want to get on board, they have to persuade those with the purse strings that the technology is worth the investment, not just for HR, but for the business as a whole.

A new way of working

Predictive analytics in HR can produce incredible results and is indicative of the wider trend of HR being considered a strategic partner in business, rather than simply a necessary function. Employed correctly, it’s a powerful new tool that human resources teams can deploy to drive better business outcomes. It’s really only a question of time until every business buys in on people analytics, so if you want to get ahead of the curve, it’s a topic worth looking into more.

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