In the last few years, there has been a rise in conversations about predictive analytics and human resource management. What is predictive analytics? They can be viewed this way: HR metrics show you the past. You might see the time it takes to fill a job or the cost per hire. These metrics can be valuable but may not give us all the information we need to make informed business decisions.
Predictive analytics provides insight into the future. Predictive analytics is based on probabilities and impacts, allowing flexibility to meet an organization’s needs. It sounds daunting, I know. It’s important to know the difference, so I bought a copy of ” Predictive analytics for Human Resources” by Jac Mattox and John Mattox. (P.S. Fitz-Lenz’s book How To Measure Human Resource Management is my favourite book on HR metrics.
Predictive analytics is something HR professionals should be aware of. Today’s business environment is so fast that it’s difficult to focus on the past. It is important to plan for the future with equal attention (some might argue that we should give more) and to think about what will happen in the future.
Predictive analytics is where it all comes in. It’s what you do with the data you collect. Predictive analytics measures three things businesspeople love to discuss: efficiency, effectiveness and outcomes.
- Efficiency Measurements include things we already calculated, such as the average time it takes to complete a requisition or the cost per hire.
- Effectiveness measures might include new hire performance ratings and engagement survey results.
- Measure results such as profitability, productivity, and retention.
Predictive analytics focuses on the relationship between these three types. Here are some examples:
- Efficiency – Number of open jobs (efficiency) – Quality of hire (effectiveness). – Duration of employment (outcome).
- Average cost per hire (efficiency). – Cultural fit (effectiveness). – Contribution towards product quality (outcome).
- Training attended (efficiency) – High/low performance potential (effectiveness). – Higher profit margin (outcome).
Don’t worry; HR metrics won’t disappear. Predictive analytics is also important. Human resources professionals need to keep improving their analytical skills. This is not an HR “thing”. Predictive analysis is becoming an integral part of every department of the organization. Everybody will want to know how predictive analytics can be used in their work.
An increasing number of HR departments are creating analytical roles. Predictive analytics is a key skill if you are looking for a job as a human resource professional. This is a growing trend that you need to keep up with. It’s not going away anytime soon.