Why you should apply analytics to your HR strategy

Why you should apply analytics to your HR strategy

The human resources department is still struggling to assert its authority although tremendous progress has been made. Its biggest challenge is the inability to show its value through objective evidence. The key question always is how human resources practices are impacting positively on the business. While the human resources profession has tried to get representation at the highest level, it is still struggling to justify this high-level representation.   Human resources as a profession have not managed to attract, in sufficient numbers, people with the high numerical ability to work out the numbers for it. Most worrying has been its inability or accommodate people from other professions to do the numbers for it.

Over the past three years, I have been doing a lot of work in people analytics naturally because of my background as an Occupational Psychologist. At the masters level, occupational psychologists have to pass advanced statistics because work in this specialised field needs people to under the numbers at the highest level.

Below I outline why I think people analytics is the future of human resources. This is precisely the case because of the amount of business value generated through people analytics. No analytics project must start without defining what business problem it will address.

Hiring the Right People–   With people analytics, you can predict with a high degree of accuracy which employees will perform well and in what role.  The process requires you to collect enough data about your current employees and new employees joining your organisation.  This data includes demographic data (although this does not predict performance) and the major predictors of job performance such as cognitive ability scores, personality variables, integrity, performance on situational judgment tests and work sample tests.  With this kind of data, you will be able to predict with a high degree of accuracy which employees will perform before you hire them.  This way, you save the business lots of money by avoiding wrong hires.  Each analysis will give you the probability of each potential candidate excelling in the target role.

Turnover Prediction – Major predictors of staff turnover are demographic variables.  You already have enough data within your organisation to run a turnover prediction model. With this data, you can predict which employee is likely to leave your organisation and when.

Absenteeism – Here again using demographic data in your system you will be able to predict which employees are likely to be absent from work and how frequently. This type of prediction together with turnover prediction can be done before the employees even joins your organisation (at the recruitment level).

Proneness to Accidents – Using a driver simulation test in one of the assignments we have done we managed to predict which drivers have a higher chance of being involved in an accident. Most of the predictors are related to their personality and driving habits. Surprisingly defensive driving, which some people are advocating to be made mandatory, has no influence on the number of accidents or individual proneness to accidents. The model is over 80% accurate.

Sales Performance – In another study, we did in the FMCG we developed a prediction model that was able to identify which factors drive sales. Surprisingly, we observed that the presence of merchandisers in shops has much more impact on sales than the number of sales representatives. Using similar prediction models we were able to predict which employees will sell more and by how much before hiring them. Just look at the amount of value the business will generate from such a prediction model.

Sick Leave – Using demographic variables it is possible to build a model that will predict which employees will take more sick leave and what average days per year before you hire the employees.  Remember predictions of this nature can be done on your current employees as well.

With all the above predictions I strongly believe people analytics is the future of Human Resources. Any organisation that is not harnessing people analytics and not building this capacity will lose out.

Memory Nguwi is an Occupational Psychologist, Data Scientist, Speaker, & Managing Consultant – Industrial Psychology Consultants (Pvt) Ltd a management and human resources consulting firm. https://www.linkedin.com/in/memorynguwi/ Phone 481946-48/481950/2900276/2900966 or email: mnguwi@ipcconsultants.com or visit our website at www.ipcconsultants.com

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