22 JANUARY 2016 Consulting
Today’s business executives are increasingly apply- ing pressure to their Human Resources depart- ments to “use predictive analytics.” This pressure
isn’t unique to Human Resources as these same business
leaders are similarly pressuring Sales, Customer Service,
IT, Finance and every other line of business (LOB) leader,
to do something predictive or analytical.
HUMAN RESOURCES DEPARTMENTS HAVE A
When Human Resources analysts begin a predictive analytics initiative, what we see mirrors what
every other line of business does. Somehow for HR,
instead of having a great outcome it can be potentially devastating. Unless the unique challenge HR
faces is understood, it can trip up an HR organization for a long time, cause them to lose analytics
project resources and funding, and continue to perplex HR as they have no idea how they missed the
goal of the predictive initiative so badly.
HUMAN RESOURCES’ TRADITIONAL APPROACH TO
Talent Analytics’ experience has been that (like all
other lines of business) when Human Resources
focuses on predictive analytics projects, they look
around for interesting HR problems to solve; that is,
problems inside of the Human Resources departments.
They’d like to know if employee engagement predicts
anything, or if they can use predictive work somehow
with their diversity challenges, or predict a flight risk
score that is tied to how much training or promotions
someone has, or see if the kind of onboarding someone
has relates to how long they last in a role. Though these
projects have tentative ties to other lines of business,
these projects are driven from an HR need or curiosity.
HR NEEDS TO AVOID THE “WIKIPEDIA APPROACH”
Our firm is often asked if we can “explore the data in the
HR systems” to see if we can find anything useful. We
recommend avoiding this approach as it is exactly the
same as reading Wikipedia starting from the beginning
(like a book) hoping to find something useful. When
exploring HR data without a question, what you’ll find are
factoids that will be “interesting but not actionable”. They
will make people say: “really, I never knew that,” but
nothing will result. You’ll pay an external consultant a lot
of money to do this, or have a precious internal resource
do this—only to gain little value without any strategic
impact. Avoid using the Wikipedia Approach. Start with a
question to solve. Don’t start with a dataset.
HR PREDICTIVE PROJECT RESULTS ARE OFTEN
MET WITH LITTLE ENTHUSIASM
Like all other Lines of Business, HR is excited to
show results of their HR focused predictive projects.
The important disconnect. HR shows results that are
meaningful to HR only. Perhaps there is a prediction
that ties the number of training classes to attrition,
or correlates performance review ratings with how
long someone would last in their role. This is interesting information to HR but not to the business.
BUSINESS OUTCOMES MATTER. HR OUTCOMES DON’T.
Human Resources departments can learn from the
Marketing Department who came before them on
the predictive analytics journey. Today’s Marketing
Departments, that are using predictive analytics successfully, are arguably one of the strongest and most
strategic departments of the entire company.
Today’s Marketing leaders predict customers who
will generate the most revenue (have high customer
lifetime value). Marketing Departments did not gain