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Predictive Analytics in HR: The Game Changer

Simply put, HR analytics is the data-driven approach to strategic planning by the Human Resources function.

By collecting data and analysing it for the purpose of monitoring and improving business operations, leaders are able to turn HR data into information and use that information to add strategic value to the organisation.

HR departments have been gathering and storing large amounts of HR data for years as part of a tick box exercise, which means that more often than not the data is not utilised how it could be and that is where HR analytics decided to come in. Being able to provide this level of insight really boosts the image of the HR function and shows they do add real value to a company.

“HR analytics in the systematic identification and quantification of the people drivers of business.”

– Heuvel & Bondarouk, 2016

But analysing data any old way is not the answer. For HR analytics to be utilised properly, you should try following these simple steps for a start:

#1.  Figure out the business questions that need answering

Don’t just analyse data for the sake of implementing HR analytics in your business.  It’s all well and good analysing employee turnover, for example, but if you are a small company and know turnover isn’t a problem, why waste your time in that area?

It’s important to choose and monitor HR metrics that are important to the goals of your business.  If you are new to HR analytics, make a start by tackling the more standard business questions, such as measuring absence and sickness leave, performance issues, training spend.  From there, you can choose a suitable time period to measure the data, such as quarterly, half yearly or annually to get a good amount of information to see any emerging patterns or trends.

#2. Identify the data needed and where to source that data

Some of the time, data isn’t stored neatly in one place.  Organisations store data in numerous places, whether it be paper based or a mixture of different online platforms or within different departments within the organisation which can make the analysing process difficult.

To ensure your analysis runs smoothly, you will need to firstly identify which data is needed and then gather all of the data from the different sources so it can be merged together in a single location.  That way you can extract the information quickly and accurately.  This process could either be done manually into an Excel spreadsheet or by using HR software designed for this purpose.  If you are dealing with really huge amounts of data, recruiting skilled analysts to manage the process could be a good idea, but bear in mind it’s all relative to the resources, funds and goals your organisation has.

#3.  Make solid connections between HR data and business objectives

In order to get the best return on investment from the analysed data, HR need to use the data as evidence that there is a connection between the patterns or trends highlighted and issues in business operations to be able to improve processes in line with the business objectives.

Then, to measure whether the data analysed has delivered accurate results, it’s important to perform the analysis on a regular basis and translate that data into an easily understandable format which can be presented and understood by anyone in the business if need be.

#4.  Integrate HR analytics across the whole business

It’s easy to see why people mistake HR analytics to be the sole responsibility of the HR function, but as the results can have a huge impact on the entire organisation, the data and analysis should not be kept in HR isolation.

Combining HR data with data gathered from other areas of the business (that are relevant), such as finance and payroll, can open up further insights which may otherwise have been overlooked.

Conducting an analysis on different sets of data altogether, benefits HR and the company as a whole and will also produce more accurate results.

With HR now understanding the importance of data and metrics, businesses are able to get answers to some all important questions, such as, how many people exited the organisation this year and why?  What patterns and trends have emerged and why?

By analysing big data and measuring every aspect of the employee life cycle, HR leaders are given the opportunity to put strategies in place that will improve any issues to meet organisational goals.

But if you are ready to take your data to the next level, then it’s time to adopt the predictive analytics in HR approach.

Predictive Analytics in HR

Predictive analytics in HR is considered a game changer in the industry, as it can greatly improve the employer-employee interactions before it even becomes a problem.  It can take unprocessed data and extract actionable insights which can be applied to everyday processes and operations.

Organisations are finally catching up with this trend and realising the benefits to improve their business potential.

Back in 2016, only 32% of employers were ready to build a predictive analytics management model but 2018 has already seen that figure rise to 69% with companies actively taking steps to improve the way they view people data.

Predictive analytics gives leaders in the organisation the insight to be able to make evidence based decisions from previous data.  The process of analysing existing data can enable business leaders to learn from previous experiences and forecast future outcomes.

But what other benefits can be gained from implementing a predictive analytics in HR model?

Improved Turnover 

By using prediction methods, leaders are able to see possible future turnover the business, even whittled down to specific functions or geographical areas.  Predictive analytics can look at data such as commute time, performance issues, role changes and engagement rates.

Hiring process

With predictive analytics, you can see which past advertising campaigns produced the best response and which on-boarding techniques showed a pattern of higher retention and engagement rates.

Targeted retention

Predictive analytics in HR can help employers suss out which types of employees are at a higher risk of turnover in the future.  With that information to hand, retention methods can be re-designed specifically to focus on those groups of people in a bid to keep them happy, engaged and wanting to remain within the company.

Risk Management

Predictive analytics can forecast risks to the business such as poor performance and conduct and linking the issues to a specific factor, such as management or training.  Then the best found approaches to manage the situation can be applied which could significantly reduce the risk of a legal battle or high cost to the business.

Talent Forecasting

Being able to predict which new hires are likely to be a success from reviewing factors such as cultural fit, background experience and skills etc. and have been found to do well within the company previously means you can focus the efforts on finding and retaining these types of talent going forward.

Have you applied predictive analytics within your organisation? And if so, what has the outcome been?  I would love to hear from you!

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Written by Norberts

Co-founder of HR software company CakeHR, that streamlines attendance and performance management for customers worldwide. Keeping a sharp eye on HR, marketing, business, finance, science, technology and the connections between them.

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