How is Predictive Analytics Shaping the Future of HR?
If we look back at the history of HR, we can see that the field has come a long way. From the 19th century, the Industrial Revolution era, when HR was primarily focused on administrative and clerical tasks, to the present day, where HR is an integral part of the strategic business planning process - the field has seen significant advancements.
The Evolution of the HR Data
One of the most extraordinary things that have helped to drive the change in HR analytics is the emergence of HR technology. With the increasing adoption of HR technology, such as employee engagement software, payroll and workforce management tools, HR can create more business value than ever before. But it's not just what these tools can do that is changing the landscape of HR - it's what you can do with the data generated by these tools that are truly shaping the future of HR.
That's where predictive HR analytics comes in. Predictive analytics is a powerful tool that allows HR and people analytics professionals to use present and historical data, such as employee performance and engagement metrics, to make accurate predictions about what could happen in the future.
These analytics enables HR professionals to analyse potential risks and opportunities and determine organisational development needs. For example, suppose an HR team wants to improve employee retention. In that case, they could analyse employee retention data per manager, employee engagement rates, and demographic data to identify patterns and determine the issue's root causes. These are just some of HR metrics which could enable greater insight for important business decisions within talent management.
Based on this analysis, the HR department might determine that geographic location is one of the most significant factors influencing employee turnover. Armed with this information, they can tailor their recruitment strategy or relocation policies accordingly - ultimately helping them achieve their goal of improving employee retention in the organisation and shaping their future success.
Moving Past Outdated HR Methods
Aerospace, manufacturing, and financial services companies have used predictive analytics for years to forecast product defects, anticipate demand, and optimise pricing. On the other hand, HR has traditionally been slower to adopt these practices.
And while our recent Insight 222 People Analytics Trends report: Impacting Business Value research has found that the people analytics function has grown in importance over the past few years, many HR functions are still to benefit from the transformative potential of predictive analytics.
This is largely because many HR professionals need more confidence in their abilities to leverage analytics for decision-making. As a result, they tend to rely on outdated methods, such as intuition, gut instinct, and descriptive analytics.
Fig 1: A sample custom turnover dashboard built for XYZ Inc.
And while descriptive analytics is great for surfacing insights on what has already happened, there are more effective tools for predicting what could happen in the future. For HR to harness the power of data and become a true strategic partner to business leaders, they need to look beyond old, outdated ways of working and embrace new methods, such as predictive analytics.
One great example in which predictive analytics can deliver tangible business value is when HR professionals address the needs for talent acquisition. Predictive algorithms, combined with big data collected on previous hires, can help HR teams to anticipate solutions for reducing the cost to hire, time to fill, and time wasted on unsuitable candidates.
On the Digital HR Leaders podcast, Kevin Wheeler made a brilliant point on why HR needs to be more data-driven to stay ahead of the curve.
"Most hiring managers just want to hire a full-time person, even though they may not need a full-time person, but nobody really challenges them on that, or suggest that they bring in a consultant or a contractor to do that."
With predictive analytics, HR professionals can ensure that their hiring decisions are based on data and evidence. And with skills-based organisations on the rise, predictive analytics will be a crucial component of their success.
Predictive analytics can also help HR explore scenarios for future staffing needs, identify trends within existing business data and patterns in job postings and candidate suitability, and optimise their recruitment process to attract top talent.
And with the rise of predictive analytics software, HR professionals can be something other than statisticians to leverage the power of data in shaping the future of recruitment. These tools make it easy to analyse large datasets and uncover valuable insights without spending weeks on end doing manual data analysis.
For example, predictive analytics software can help HR leaders evaluate potential paths for future growth and development. It can also identify areas of high turnover risk or low employee engagement and determine which employee training programs or talent development initiatives are most likely to yield positive results. But this is only the case if they know how to interpret and use the data to tell a story.
How To Understand What Your People Analytics Data Is Telling You About The Future
Predictive analytics software can help you easily and quickly analyse your data, uncover valuable insights, and make informed decisions based on evidence. But to truly benefit from this technology, you need to understand at least what your data is telling you.
Here are some important questions to ask to gain insight from your data:
Look for Trends and Patterns.
Are there specific factors or variables that consistently positively or negatively impact your outcomes? Are there particular regions or teams that experience higher levels of turnover risk? By understanding these trends and patterns, you can better target areas for improvement.
What Metrics are Most Useful in Driving Organisational Decisions?
Metrics like attrition rate or employee engagement may be more important for specific business functions than others. What insights can your data tell you about these metrics? Which ones should you focus on to drive better business results?
By gaining a deeper understanding of your PA data and leveraging the power of predictive analytics in your HR functions, you can help ensure that your organisation is well-positioned to stay ahead of the curve and shape the future of HR tomorrow.
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Nevertheless, a key aspect that is crucial to the success of your PA efforts is the democratisation of your data. By making your data accessible to all stakeholders and allowing them to play an active role in analysis and decision-making, you can harness the power of people analytics for a brighter future.
This means creating a culture that encourages open and continuous sharing of insights across departments, breaking down silos between different stakeholders, and upskilling HR professionals to analyse and use data in their work effectively.
If you're ready to embrace the future of HR and make predictive analytics an integral part of your talent strategies, then start by creating a robust people analytics culture. From there, make sure to ask the crucial questions that can help your HR team members and the business become more agile in a constantly changing business landscape. Remember HR analytics measure more than simple data, it can mean the difference between delivering real business value or falling behind in a hyper-competitive economy.
ABOUT THE AUTHOR
Jasmine Panayides is a seasoned HR Writer and Editorial Lead on the Digital HR Leaders podcast. She writes about all things HR, from recruitment, HR tech, L&D, to people analytics. Jasmine holds qualifications in psychology and HR, and has a wealth of experience in the field. She is a firm believer in the power of data, and is passionate about educating and inspiring her audience to think differently about the future of work.
Our hybrid, cohort-based learning program supports HR professionals build advanced capabilities in data-driven skills. By combining digital learning with our interactive bootcamps we are able to provide you with an engaging experience that brings your learning to life. Our bootcamps provide you with practical case studies to explore and experiment with data in a safe environment that empowers you to turn theory into practice and apply your learning immediately on the job.