For the past few years, every HR related trends post included predictive analytics. So, what exactly are predictive analytics? I like to think of it this way: HR metrics tell you what happened in the past. For example, time to fill. Or they’re focused on cost-containment, such as cost per hire. Both of these metrics are valuable, but it’s not all the information we might need to make business decisions.
Predictive analytics offer insights into the future. It’s focused on probabilities and impact, so it provides flexibility to the organization’s needs. I know, that sounds like a tall order. I decided that I wanted to learn more about predictive analytics so I picked up a copy of the book “Predictive Analytics for Human Resources” by Jac Fitz-enz and John Mattox. (Fitz-enz’s book “How to Measure Human Resource Management” is my go-to book for HR metrics.)
Why should HR pay attention to predictive analytics?
There are times when today’s business environment is moving so quickly that we cannot always be focused on what’s happened in the past. We have to give equal time (and some might argue more time) to what we think is going to happen in the future and plan accordingly.
That’s where predictive analytics comes in because it’s what you do with the information you gather. Predictive analytics measures the three things business people talk about the most: efficiency, effectiveness, and outcomes.
- Efficiency measurements include some we already calculate such as average number of days to fill a requisition and cost per hire.
- Effectiveness measurements might contain new hire performance ratings, engagement survey results, and exit interview data.
- Outcomes measure profitability, productivity, and retention.
Predictive analytics is about the connection between these three types of measurement. Here are a few examples:
- Number of open hires (efficiency) – Quality of hire (effectiveness) – Length of employment (outcome)
- Average cost per hire (efficiency) – Cultural fit (effectiveness) – Contribution to product quality (outcome)
- Amount of training attended (efficiency) – Hi/lo potential status (effectiveness) – Increased profit margin (outcome)
HR metrics aren’t going away. Neither are predictive analytics.
A few months ago, I wrote a post about the need for HR pros to focus on their analytical abilities. If you’re looking for a way to increase your skills, wrapping your arms around predictive analytics might be a good place to start.
An increasing number of HR departments are designing analytical roles. If you’re looking for a job in human resources, knowing something about predictive analytics will be important.
HR wants to be on the front-end of this trend. Because it’s not going away anytime soon. If ever.
Image captured by Sharlyn Lauby near the Wynwood District in Miami, FL
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Richard Yarsley says
I really like this article, it makes it crystal clear the direction HR professionals should be moving to take advantage of predictive analytics.
I would just add that each practice center could on their own set of analytics. it would make them more credible with their colleagues and business partners.
twitter.com/Richard_Yarsley
Sanjana Singh says
Hello, Sharlyn Lauby
I really like this post, you give valuable knowledge about HR Predictive Analytics. I never expect this that HR takes advantages from analytics. Yes it take experience from colleagues
David says
Hi Sharlyn, fantastic post! As someone who works on the marketing side it’s fascinating learning how different groups are using predictive analytics – HR! In your experience how accurate is the “Contribution to product quality (outcome)” metric? Its an interesting concept!
Ben says
Can the HR predictive analytics also predict when an employee is about to leave the company?
claudia says
Great Article,
Sharlyn!
I love the article and would like to add my views that all the works of the HR and recruiting activities can be maintained easily using an ATS System that helps a lot in sourcing the candidates, publish jobs on job boards etc. It reduce the work burden and helps the organization to earn more profits.