HR Analytics: Choose Data or Die. It’s That Simple.

May 6th, 2015

Jacqueline Lee

Hiring, Metrics & Analytics, News

post 16 Once considered a progressive “nice-to-have,” HR Analytics has become a critical business imperative.Transparency Market Research forecasts that the market for predictive analytics software will reach $6.5 billion by 2019. Accenture reports that two-third of firms have hired a Chief Data Officer within the past two years. According to analysis from Bain & Company, businesses that use analytics are:

  • 5x more likely to make decisions faster than their competitors
  • 3x more likely to execute decisions as planned
  • 2x more likely to have top-quartile financial performance
  • 2x as likely to use it very frequently when making business decisions

Business intelligence analytics look backward, drawing conclusions about what happened in the past and giving a snapshot of what’s true now. Predictive analytics uses internal data, along with a world of external unstructured data, to predict the probabilities that certain events will happen in the future.

HR: The Ship is Sailing. Are You In or Out?

Businesses in every industry are tapping predictive data analytics to accelerate productivity, boost operating efficiencies, and strengthen the customer experience. And every function is getting on board:

  • Marketing is embracing predictive analytics to identify their most profitable customers, anticipate their needs, and proactively predict the best leads.
  • Sales is tapping predictive analytics to anticipate sales outcomes and improve forecasting accuracy.
  • Service organizations are using predictive analytics to preempt customer issues before they happen and enable intelligent self-service at scale.
  • Operation experts are using predictive analytics across the entire supply chain to further boost efficiency and mitigate variance.

But what about human resource professionals? Quite simply, HR lags behind, and the day of reckoning is coming. Only 14 percent of HR departments have run business intelligence analysis on their own internal data. Even worse—only 4 percent of HR departments have started using predictive analytics. So why should HR adopt predictive analytics? Here are a few reasons:

  • To get some respect. Finally. Steve Jobs famously said that he’d never met an HR person who didn’t suck. Well, guess what? HR departments that use predictive analytics are four times as likely to be respected by other departments within their companies.
  • To become better recruiters. HR departments that use predictive analytics are twice as likely to demonstrate effective recruiting.
  • To build a leadership talent pipeline. When measuring the leadership talent benches of HR predictive analytics adopters, Deloitte found that they were 2.5 times as likely to have good candidates lined up for leadership vacancies.
  • To make more money. Companies whose HR departments use predictive analytics have 30 percent higher stock market returns than the S&P 500. It’s impossible to say that predictive analytics caused higher returns—correlation doesn’t equal causation— but companies that use predictive analytics seem to be doing things right.

How Others Have Gotten on Board

Gild, a technology recruiting firm, discovered that for every single developer pursued by traditional recruiting routes, there were 100 equally talented developers outside of traditional pipelines. Based on the prediction that self-taught, self-starting software engineers had a high probability of being successful, Gild now mines open-source code archives to find hidden talent outside of traditional sources. U.S. Special Forces, through data mining, has determined which qualities have made Green Berets most successful in the past. Using their profile, they’ve created an algorithm that predicts which new candidates are most likely to succeed. The algorithm balances the success profile against what the Special Forces call “acceptable tradeoffs.” In other words, predictive analytics can forecast success based on a candidate’s combination of qualities, both positive and negative.

How Big Data Can Save HR From Drowning

HR has only begun to tap into the power of predictive analytics. By mining profile data along with analyzing interactions—audio, video, and word usage—predictive analytics can truly predict which candidates will become your next top performers. Check out this webinar to see how Chipotle has transformed its hiring process using predictive analytics to realize the power of big data. Ultimately, HR departments that use predictive analytics will get the best candidates. Everyone else will be left behind. Which will you choose?