SAS defines predictive analytics as “the use of data, statistical algorithms and machine learning techniques to identify the likelihood of future outcomes based on historical data. The goal is to go beyond knowing what has happened to providing a best assessment of what will happen in the future.”
This data-driven approach to strategic planning is used in nearly every major industry and in nearly every business function. A 2018 report by Oracle revealed that HR uses predictive analytics more than any other vertical, including finance, a field that is synonymous with analytics. Leading organizations are combining scientific and human approaches to HR to improve the most important functions of an organization, from talent acquisition and retention to performance improvement and succession planning. They are organizing and analyzing data to extract actionable insights that can be applied to everyday operations in order to improve management and labor relations and organizational performance.
Here are five ways in which predictive analytics can help you manage your talent more effectively and demonstrate that HR continues to add strategic value to your organization:
- Integrating HR Analytics Across the Business
In order to accurately assess human resources patterns, including how many people left the organization and why, layers of context must be integrated. In high performing organizations, HR professionals are taking an organizational leadership role in combining HR data with data gathered from other business functions, including payroll and finance. They are also collaborating with business leaders to determine the data that needs to be collected across the business, and the metrics to be used. This is helping them to understand the employee life cycle and to make correlations and connections that aren’t possible when HR functions in a silo.
- Talent Acquisition
Many of the larger organizations in DFW are actively engaged in using predictive analytics in their hiring processes. They are using it to determine which job posting platforms produce the best response, and ultimately result in the longest tenures. They are becoming more sophisticated in mapping skill sets to company strategy, and even employing skill, personality, and behavioral testing to predict the best fits by position and in the company culture. HR information systems (HRIS) automate and expedite these processes, and perform many aspects more precisely than humans alone would be capable.
- Driving Engagement and Performance
Predictive analytics tools like Gusto are able to leverage disparate pieces of data to form an intelligible understanding of employees’ happiness and desire to stay with an organization. Tools like this help HR to assess trends in company wide morale, and to dive deeply into the individual motivational needs that affect engagement. This provides leaders and managers with actionable insights for driving engagement on organizational and individual levels. It informs the development of employee experience programs that target the specific motivations behind engagement.
Similarly, predictive analytics helps boost performance by identifying early signs and triggers of lagging performance, so that management can address them with employees before the trend worsens.
High turnover is one of the greatest problems predictive analytics can help to solve. It is used to drive engagement, which directly boosts retention. Because employees tend to stay when they feel challenged, recognized, and rewarded, analytics helps to optimize the investments organizations make in order to cost-effectively boost retention of the most talented employees. Predictive analytics helps to calibrate salaries so that talent is retained without overspending, and it helps to determine how to allocate benefits spending. Perhaps most critically, PA identifies the factors that influence employee flight risk, and the timely actions most likely to assist in retention.
- Professional Development
Technology is accelerating the need for professional development and upskilling of the workforce. But decisions have to be made in a timely, cost-effective manner. Predictive analytics factors in macroeconomic variables to understand supply and demand of skills. It helps to identify skill gaps within organizations and provide direction in acquiring needed skills, whether externally through new hires and outsourcing, or by investing in upskilling the workforce.
This isn’t an exhaustive list by any means; we are seeing new applications of predictive analytics emerging each month, and many of DFW’s best employers are on the vanguard of these practices. Never before in the history of business has HR been so empowered to become a strategic partner with business leaders.