Consulting® JANUARY 2016 23
any traction with predictive analytics when they were
predicting how many prospects would “click”. They
needed to predict how many customers would buy.
MARKETING CRACKED THE CODE
Business wants to reliably predict how many people would
buy (not click) using this coupon vs. that one. When marketing predicted real business outcomes, resources, visibility and funding quickly became available.
When Marketing was able to show a predictive
project that could identify what offer to make so that
a customer bought and sales went up—business executives took notice. They took such close notice that
they highlighted what Marketing was able to do, they
gave Marketing more resources and funding and visibility. Important careers were made out of marketing
folks who were / are part of strategic predictive analytics projects that delivered real revenue and / or real
cost savings to the business’s bottom line. Marketing
stopped being “aligned” with the business, Marketing was the business. HR needs to do the same thing.
BEST APPROACH FOR SUCCESSFUL AND NOTEWORTHY
PREDICTIVE WORKFORCE PROJECTS
Many people get tangled up in definitions. Is it people
analytics, workforce analytics, talent analytics or something else? It doesn’t matter—the point is that predictive
workforce projects need to address and predict business
outcomes not HR outcomes. Like Marketing learned
over time, when HR begins predictive analytics projects,
they need to approach the business units they support
and ask them what kinds of challenges they are having
that might be affected by the workforce.
There are two critical categories for strategic predictive
workforce projects. Measurably reducing employee
turnover/attrition in a certain department or role; and
measurably increasing specific employee performance
in one role or department or another
I say “measurably” because to be credible, the predic-
tive workforce initiative needs to measure and show busi-
ness results both before and after the predictive model.
FOR GREATEST ROI: BUSINESSES MUST PREDICT
PERFORMANCE OR FLIGHT RISK PRE-HIRE
Once an employee is hired, the business begins pour-
ing 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 replace-
ment costs show us that even for very entry level
roles a conservative replacement estimate for a single
employee will be over $6,000.
A great example, is to consider the credit indus-
try. Imagine them extending credit to someone for
a mortgage—and then applying analytics after the
mortgage has been extended to predict which mort-
gage holders are a good credit risk. It’s preposterous.
Predicting 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 effi-
ciently—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 HR’S 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 realiza-tion that analytics is here to stay, HR should know that
there are some people with the natural mindset to “get”
and love analytics and some that don’t and won’t.
HIGH-VALUE PREDICTIVE PROJECTS DON’T DELIVER
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: 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.