Business benefits of leveraging predictive analytics in HR

The usage of predictive analytics is lifting its head in the HR area. The business benefits of using\npredictive analytics in sales are self-evident, but in HR the value is more difficult to prove due to\nnon-monetary and non-standardized measurements. As predictive analytics in general is not yet\nwidely used in Finland, the companies are cautious in taking the first steps towards this capability.\n\nThe purpose of this study is to explore and identify the possible business benefits of implementing\npredictive analytics into the HR area. The basic building blocks needed for predictive analytics are\nalso covered, as well as the main challenges companies identify, in order to understand what could\nbe hindering the analytics evolution in the HR area.\n\nWhereas descriptive analytics concentrates on creating reports and summaries of the past,\npredictive analytics aims to understand the past but also complements it by understanding the\ncorrelations of events, by estimating the future and by predicting probabilities for the whole\nemployee lifecycle; recruiting success, employee management risks and employee retention. The\nnew capabilities delivered though the predictive analytics are meant to help today's HR\nprofessionals in making better decisions related to HR activities, accelerating the processes and by\neliminating the error of the sole human interpretation.\n\nAs to the results of the study, the main benefits perceived were very company specific. However,\nall the companies saw the greatest value in using predictive analytics in the HR areas they identified\nto have the biggest business challenges in, or which were otherwise near their core business.\nAdditionally, the most value for predictive analytics was identified specifically in four HR functions;\nemployee acquisition, employee retention, employee engagement and employee well-being.\nPredictive analytics supports the HR activities, through which the benefits can be gained; increased\nemployee engagement and satisfaction and enhanced performance resulting in increased company\nperformance, customer satisfaction, sales and profitability increase and to cost reductions.\nRecommendation for each company is to start with quick predictive analytics trials in the areas they\nperceive as valuable.\n\nThe companies perceive their main challenges to rise from the lack of people who would\nunderstand both predictive analytics and HR business. Also the general level of the analytics\nmaturity and data harmonization and integration were seen as challenges. Some interviewed\ncompanies wanted to have the basic building blocks in place, such as improved data governance\nprocesses, data integrations and optimal data quality, before taking the next steps. However, this\nstudy encourages the companies to start with targeted actions and to tie the measurements to\nfinancial figures with predictive analytics, in order to reach the identified business opportunities.