#7 Unlocking the Power of Predictive Analytics in HR

 Predictive Analytics for Human Resources

Predictive analytics is an upcoming trend in Human Resources (HR). Recruitment tools predict high performers, and increasingly companies are able to predict which employee is likely to leave. In this article, we will explain what HR predictive analytics are and how they can be a real game-changer for HR departments.

What is Predictive Analytics in HR?

Before we discuss everything, let’s first define exactly what predictive analytics for HR.

• Predictive analytics for HR is a powerful tool that has made Human Resources professionals crucial players in determining the direction of an organization’s growth

• Predictive HR analytics software can be used to make talent decisions, reduce attrition rates, increase hiring accuracy, and improve employee engagement levels

• A predictive HR analytics platform helps companies identify performance gaps before they become larger problems by identifying areas where employees are struggling or could have more room for improvement. This information can then help identify potential training programs or other interventions that may be needed to address these gaps. It also provides data on which employees are likely to excel at their jobs and which employees may be better suited for different positions

• Predictive HR Analytics software is also a useful tool for businesses because it can help companies reduce their attrition rates by identifying the conditions that lead to high turnover. By finding patterns in data related to employee turnover, organizations can determine how to retain their best employees, as well as the steps that they can take to prevent turnover

• Predictive analytics software for HR allows HR departments to forecast attrition rates for employees across their organizations, monitor the effectiveness of compensation and benefits programs, determine who has strong potential for advancement within an organization, etc.

Why should HR leaders care about predictive HR analytics?

Predictive HR analytics has many benefits. It can help you:

1. Improve recruitment practices
2. Reduce voluntary turnover rates
3. Achieve optimal performance
4. Reduce costs that come from resignations and new hires, or human errors
5. Create an employee profile that will show you who will thrive in your company and who won’t

With standard analytics, you’re looking at past problems. You’re analyzing them in an attempt to fix them and avoid them in the future.

With predictive analytics, you’re taking a more proactive approach. You’re analysing data to understand where problems may appear in the future. You’re attempting to correct things before these problems materialize.

How can I apply predictive HR analytics?

Predictive HR analytics has many benefits, but how does it work in practice? Each company has a lot of HR data. The bigger the company, the more data there is. But research shows only about 17% of organizations worldwide use HR data to optimize their processes. That sounds like a pretty big waste, wouldn’t you agree?

With predictive analysis, you use this data in an effective way. HR can create predictive models that can be then used to make data-driven decisions. It will no longer operate on instinct, soft science, or lessons learned from past mistakes. 

Along with people analytics or HR metrics, predictive analytics allows HR to take the best decisions that reduce turnover, improve employee engagement, and more. 

Despite the myths, predictive analysis does not replace human intervention, and it’s not all about predicting the future. It is also about how people interact with the company, or how ready they are to promote versus the time they wait for a promotion. 

Let’s look at a few examples.

Real-life examples of predictive analytics in HR

Predictive analytics in employee retention

Predictive HR analytics play a critical role in retention and turnover, starting with identifying potential turnover risks. For instance, predictive analytics can analyse recent engagement surveys and project shifts in turnover. But this predictive approach goes further. By changing variables, you can run many scenarios to see the range of outcomes for employee turnover. 

If employees who haven’t received a promotion or raise recently are at the highest risk of turnover, for instance, how do the projected trends change if you make career progression easier?

Predictive analytics can also analyse employee engagement strategies and forecast how they’ll affect different groups of employees. HR leaders want to offer tailored retention strategies but often are unsure how to proceed. Predictive HR analytics helps these leaders solve for the needs and preferences of each employee type. The prospect of a promotion won’t motivate everyone, for example, while some employees will stay (or go) because of your company culture or benefits package. 

Predictive analytics in recruitment and hiring

Predictive analytics supports better recruitment and hiring in two crucial ways. 

First, this approach makes predictions based on the hiring data you collect every day. For example, you can use predictive HR analytics to examine trends in high-demand skills and workforce learning and development. You might then compare those findings to your workforce’s skills inventory. By anticipating your organization’s future skills needs, you can make a more informed plan to hire and upskill in those areas.

Second, you can apply predictive analytics to assess the process itself. For instance, you might input data illustrating what good hires look like, then use predictive analytics to gauge your ability to attract and hire ideal candidates, given current sourcing tactics. By changing the variables, you can identify which process changes would deliver the most positive changes.

Predicting revenue with engagement data

Engagement is a magic word for business success. Engaged employees perform better, have lower absenteeism and turnover rates, and are happier at their jobs.

With that in mind, you can use engagement data to predict your revenue. Look at how employee engagement is impacting your sales. From there, you can use this data to estimate your future revenue.

Depending on the type of company, it may be easier to use engagement data to predict performance and productivity. Regardless of what you are tracking, the result is more or less the same. Predictive analytics will allow you to forecast how well your business will do within a specific timeframe.

Learning and development

Predictive analytics can help you enhance the learning and development of your employees. You can use data from surveys, assessments, and feedback to understand the skills, interests, and goals of your employees. Then, you can use this information to create personalized learning paths and recommendations that align with their needs and aspirations. You can also use predictive analytics to measure the impact and ROI of your learning and development programs. This can help you evaluate the effectiveness, efficiency, and relevance of your courses and interventions.

Performance and productivity

Predictive analytics can help you improve the performance and productivity of your employees. You can use data from tasks, projects, and outcomes to evaluate the strengths, weaknesses, and potential of your employees. Then, you can use this information to set realistic and challenging goals, provide constructive feedback, and coach your employees to achieve their best. You can also use predictive analytics to identify the factors that influence the performance and productivity of your employees, such as motivation, collaboration, and well-being. This can help you create a positive and supportive work environment that fosters excellence and innovation.

predictive analytics can improve your HR strategy

Predictive analytics can help improve your HR strategy in a variety of ways, including: 

01. Creating a more effective payroll system

02. Enabling better risk management

03. Improving retention strategies

04. Reducing post-turnover problems

Here’s how. 

Create a more effective payroll system

Payroll systems can sometimes get unnecessarily complicated. Ineffective bonus strategies or issues with employees can create problems. 

A simple, yet effective predictive analysis can help prevent these issues. It can make the payroll system more effective, thus saving resources and revenue.

Better risk management

Any business faces certain risks. How you manage them can make the difference between success and failure. Whether we’re talking about security risks, external, or internal threats, you need to be one step ahead. 

Predictive HR analytics may not address all the risks you face. It might not tell you when and where a hacker will strike. But it can help address many other risks.

For instance, you can forecast when and which employees will need training. By predicting a critical situation so that you can avoid it altogether.

Improved retention strategies

We already mentioned how important it is to reduce voluntary turnover rates. Retention strategies are how you achieve that. But they aren’t always the easiest to craft. With the correct data at hand, the HR team can revise its retention strategies. They can choose those methods that will keep all employees happy and will minimize turnover.

Reduce post-turnover problems

No matter how good your retention strategies are, you will sometimes have employees who resign. 

Maybe it’s for reasons that have nothing to do with your company, like moving to a different city or country. Or maybe they simply want something different. 

Whatever the reason, turnover will not make you happy. Plus, replacing the lost employees will cost you money. 

Since you can’t always prevent turnover, the best you can do is to mitigate the problems it comes with. A data-driven approach through predictive analytics can help. With a predictive model, you can filter data like employee engagement, commute time, performance, and more.

This can help human resources better understand which employees are more likely to quit and when, and what variables (preventable or unpreventable) cause that attrition. By knowing that, you can avoid situations when you need to hire fast and in a panic.

Conclusion

Predictive HR analytics offers immense potential for organizations to make more informed and data-driven decisions related to their human resources functions. Through the use of advanced statistical modelling, machine learning algorithms, and data analysis techniques, predictive HR analytics enables businesses to anticipate future trends, identify potential challenges, and optimize their HR strategies.