Leading HR Toward Predictive Analytics
If data analysis is to deliver predictive insights that affect the bottom line, the executive team must set the tone for HR.
Why do psychics, fortune tellers, astrology, and time-travel tales keep going strong even into the 21st century? Simple: We want to know the future. Just as everyday folk want to know if their current love interest is the one or if they should take that new job, business folks want to know what’s coming down the pike.
The C-suite wants fact-based forecasting that can help the business achieve its goals and capitalize on new market opportunities. Accurate forecasting, though not foolproof, provides a tremendous opportunity for competitive advantage.
Proof of this lies in The Aberdeen Group’s recently released research report, The Executive’s Guide to Effective Analytics, which looked at the impact of business analytics from the perspective of executives worldwide. Aberdeen found that the best-performing companies have strong levels of satisfaction in all three requirements for an effective analytical environment: easy access to necessary data, timely delivery of information, and the existence of easy-to-use tools. In addition to being satisfied, they also made more money: 27% of those from the top-performing group reported growth in operating profit, compared to only 4% of their peers.
The business benefits of analytics are clear. HR now has tools at its disposal to provide this advantage. Except there’s a small problem. According to data on HR analytics from Bersin, only 14% of organizations were engaged in strategic or predictive analytics, where the needed business insights occur. The level of predictive analytics is where HR develops predictive models and integrates with the organization’s strategic planning. The majority of organizations, however, are not doing this, yet. The overarching point of the Aberdeen study is that executive attitudes toward and promotion of an analytical mindset are what creates an environment where data analytics flourish.
Given that organizations with good analytical processes in place are seven times more likely to report operating profit growth, it behooves executives to form an analytics alliance with HR leaders. Data-dreading HR staff will need assurances, though, that they won’t be expected to become data scientists. What they do need to do is understand their organization’s goals, HR’s role in achieving them, and how to put analytic insights into practical action.
Himanshu Tambe and Omesh Saraf recount a tale of such practical action in their Baseline article. They tell the story of a life insurance company that was experiencing 100% turnover among managers at its affiliated agency locations. The company’s outsourcing provider used analytics to determine the actual predictors of success — i.e. predictive analytics — in terms of performance and retention of these workers. The company changed its hiring profile in light of this new information, and six months later new-hire attrition decreased by 50%, and its new-hire performance rose by more than 100%.
Big data startup Evolv has gotten a lot of press for its predictive capabilities, and rightfully so. As Don Peck details in his aptly-named article, They’re Watching You at Work, Evolv creates online tests that capture data about everyone who applies for a job with one of their clients, and everyone who is hired. This volume of data enables Evolv to pinpoint which characteristics determine success for various job roles, such as call center workers or retail sales associates. The company is now working with at least one client to monitor the entire employee life cycle, collecting data from pre-hire assessments and post-hire data with the intent of being able to predict performance and longevity.
As these examples clearly show, predictive analytics offer HR an unprecedented opportunity to bring substantive value to the C-suite. Reduced turnover, increased performance, higher profit, and so many other benefits await companies that embrace an analytic mindset. Everyone wants to know the future, and HR is no exception. But this soft-skills function needs to partner with executives who, as the Aberdeen study showed, will boldly lead the charge into this brave new world of evidence-based talent acquisition.