The Beginners Guide to Predictive Workforce Analytics
Under increasing pressure and facing unique challenges, Human Resources departments are turning to analytics to improve their business practices. Learn what HR needs to be focused on, and what pitfalls they need to avoid.
Once an employee is hired, the business begins pouring significant cost into the employee typically made up of a) their salary and benefits b) training time while they ramp up to speed and deliver little to no value. Our analytics work measuring true replacement costs show us that even for very entry level roles a conservative replacement estimate for a single employee (Call Center Rep, Bank Teller and the like) will be over $6,000.
A great example, is to consider the credit industry. Imagine them extending credit to someone for a mortgage - and then applying analytics after the mortgage has been extended to predict which mortgage holders are a good credit risk. It's preposterous.
They only thing the creditor can do after the relationship has begun is to try to coach, train, encourage, change the payment plan and the like. It's too late after the relationship has begun.
Predicting credit risk (who will pay their bills) - is predicting human behavior. Predicting who will make their sales quota, who will make happy customers, who will make mistakes, who will drive their truck efficiently - also is predicting human behavior.
HR needs to realize that predicting human behavior is a mature domain with decades of experience and time to hone approaches, algorithms and sensitivity to private data.
What is Human Resources' Role in Predictive Analytics Projects?
The great news is that typically the Human Resources Department will already be aware of both of these business challenges. They just hadn't considered that Human Resources could be a part of helping to solve these challenges using predictive analytics.
Many articles discuss how Human Resources needs to be an analytics culture, and that all Human Resources employees need to learn analytics. Though I appreciate the realization that analytics is here to stay, Human Resources of all people should know that there are some people with the natural mindset to "get" and love analytics and there are some that don't and won't.
As I speak around the world and talk to folks in HR, I can feel the fear felt today by people in HR who have little interest in this space. My recommendation would be to breathe, take a step back and realize that not everyone needs to know how to perform predictive analytics. Realize there are many traditional HR functions that need to be accomplished. We recommend a best practice approach of identifying who does have the mindset and interest in the analytics space and let them partner with someone who is a true predictive analyst.
For those who know they are not cut out to be the person doing the predictive analytics there are still many roles where they can be incredibly useful in the predictive process. Perhaps they could identify problem areas that predictive analytics can solve, or perhaps they could be the person doing more of the traditional Human Resources work. I find this "analytics fear" paralyzes and demoralizes employees and people in general.
Loosely Identified, but Important Roles on a Predictive Workforce Analytics Project
- Someone to identify high turnover roles in the lines of business, or identify where there are a lot of employees not performing very well in their jobs
- A liaison: Someone to introduce the HR predictive analytics team to the lines of business with turnover or business performance challenges
- Someone to help find and access the data to support the predictive project
- Someone to actually "do" the predictive analytics work (the workforce analyst or data scientist)
- Someone who creates a final business report to show the results of the work (both positive and negative)
- Someone who presents the final business report
- A high level project manager to help keep the project moving along
- The business and HR experts that understand how things work and need to be consulted all along the way
The important thing to realize is there are several non analytics roles inside of predictive projects. Not every role in a predictive project requires a predictive specialist or even an analytics savvy person.
High Value Predictive Projects Don't Deliver HR Answers
We recommend, no. At least not to begin with. We started by describing how business leaders are pressuring Human Resources to do predictive analytics projects. There is often little or no guidance given to HR about what predictive projects to do.
Here is my prediction and you can take it to the bank. I've seen it happen over and over again. When HR departments use predictive analytics to solve real, Line of Business challenges that are driven by the workforce, HR becomes an instant hero. These Human Resources Departments are given more resources, their projects are funded, they receive more headcount for their analytics projects - and like Marketing, they will turn into one of the most strategic departments of the entire company.
Feeling Pressure to Get Started with Predictive?
If you're feeling pressure from your executives to start using predictive analytics strategically and have a high volume role like sales or customer service you'd like to optimize, get in touch.
Want to see more examples of "real" predictive workforce business outcomes? Attend Predictive Analytics World for Workforce in San Francisco, April 3-6, 2016.
Greta Roberts is the CEO & Co-founder of Talent Analytics, Corp. She is the Program Chair of Predictive Analytics World for Workforce and a Faculty member of the International Institute for Analytics. Follow her on twitter @gretaroberts.