Predictive Analytics: What Big Data Means for the Future of HR

Screen-Shot-2014-04-22-at-15.53.47It’s only been fairly recently that human resources has even become codified as a profession. The Industrial Revolution and the subsequent manufacturing age at the dawn of the 2oth century signaled the desire of companies to focus on the concept of workforce productivity – essentially viewing their employees as merely the “labor” element required in the manufacturing process.

Fast forward a few decades, and a more human-focused approach to HR emerged once employers made the then revolutionary discovery that “happy” workers were satisfied workers, and that engagement and productivity were inexorably intertwined. Of course, the focus during the nascent days of people-centric HR was largely on industrial and labor relations with organized labor and the unions representing their workers.

The 21st century brought with it the concept of human capital management, an approach which informs much of our current thinking and tactics around human resources today, including, but not limited to, such employee lifecycle essentials as benefits administration, talent acquisition, employee engagement, employee development, rewards and recognition.

HR: A Function in Flux

Despite our current perceptions of HR, however, the future of human resources finds itself in flux – and poised for yet another major transition. As a profession, we’re at the pivotal point where employers must again learn how to adjust to a new brand of HR, driven by the growing importance (and influence) of globalization, the increasing pervasiveness of social and mobile technologies as well as the rise of “Big Data” and analytics.

The effects of globalization and social are already evident, allowing even smaller businesses and mom & pop shops to harness the power of a global workforce – one that’s available and connected 24/7, one that can collaborate across time zones and markets and one that can expand any company’s customer base beyond traditional borders.

Human resources has been directly affected by these changes, which have necessitated HR to activate increased strategic emphasis and dedicated initiatives targeting employee engagement, access to technologies and tools which enable collaboration and, of course, new ways of hiring, onboarding, training and developing talent.

Social remains a catalyst – and a solution – to both sides of this equation, as employee adoption of social networks as a means for internal communication and collaboration has enabled a smarter, more efficient and ultimately, more effective workforce.

Doing the Math: The Rise of Data Driven HR

2014-12-18_14-28-58Enter Big Data and analytics. We’re seeing how technological innovations like Watson Analytics here at IBM, for example, can transform the way organizations analyze and interpret vast amounts of data and apply actionable insights to effect real change.

It’s this sort of technology that, perhaps more than any other factor, is positioned at the forefront of the next transformation of the human resources function.

As Big Data and Analytics penetrates the entire organizational structure of any business looking for new ways to gain a competitive advantage, some companies have already realized that getting that edge over the competition really relies on analyzing and using this data as a driver for extremely precised, extremely informed decision making in areas like sourcing and recruiting, productivity, customer service, innovation, execution and the behaviors of individual employees and aggregate workforces alike.

In today’s constantly evolving, dynamic and technology-driven world of work, executive leaders and managers are increasingly pushing for operations and back office functions to contribute to improved business outcomes as much as, say, sales and marketing. That means it will become incumbent on traditional cost centers like IT, finance, and, yes, even HR, to demonstrate their direct impact on business growth and the bottom line. Simply doing enough maintenance to keep a business running is no longer enough – you’ve got to have the numbers to back up your worth.

As a result, HR professionals, who already have a pretty impressive portfolio of requisite professional skill sets, will soon add yet another responsibility to a list that’s already pretty lengthy: data analytics. Which isn’t as scary as it probably sounds – all it takes for HR professionals to acquire mad analytics skills and the ability to turn that data into fact-based recommendations to drive better business outcomes is the right technology.

The right technology, in turn, will come fully equipped with built-in cognitive capabilities (similar to those seen with IBM Watson) that are intuitive, easy to use and don’t require a ton of specialized knowledge, training or deep expertise in analytics in order for HR to glean the insights they need from the employee data they have.

This data-driven approach to human capital management will extend across all elements of the employee lifecycle, from sourcing and selection to performance evaluation and succession planning – ideally, in a language that both HR end users and key stakeholders, including their C-Suite counterparts, can understand and act on.

Building A Smarter Workforce With Big Data & Analytics

ibm-computer-replace-people-jeopardy-tv-ecards-someecardsEvery company’s workforce generates a massive amount of data every day – but it’s only right now that organizations are discovering the potential value of this human data goldmine that’s just waiting to be tapped. Early adopters have quickly realized the benefits of data-driven decision making and the improved business outcomes that data facilitates in very tangible ways.

Analytics tools and Big Data technologies act as a bridge to strengthen that connection between people results and business results. This means, for the first time, HR can easily discover and articulate their impact – and organizational value – in ways never before possible, like, say, how a specific skill set directly influences company profitability.

While this is just one real example of how organizations can link their line workers to line items on a P/L, when it comes to analytics, the possibilities for HR are endless. Imagine being able to tell your CFO how employee skills specifically drove revenue!

Talk about getting a seat at the table.

The HR department of the future will include experts solely dedicated to studying and implementing this new brand of data-driven human resource management. These workforce scientists will deftly blend disparate disciplines like behavioral science, statistics and psychology to improve both organizational and individual performance using predictive analytics, which will add a level of precision previously unseen in the space.

By applying an approach predicated on predictive analytics, companies will be able to understand how individual, job, team and organizational traits produce optimal performance, and enable them to adjust their current and future workforces accordingly.

This isn’t science fiction or futurism – it’s today’s reality, and the shift from HR as we know it into a more sophisticated, scientific and strategic function using a model driven by Big Data and analytics will provide a finger to the pulse of employers’ respective workforces and enable real decision making in real time while seeing how much headcount really counts.

Knowledge truly is power, and aphorisms aside, the companies with the foresight to take advantage of this next HR revolution will not only build a smarter workforce today – they’ll be armed with the insights and information required to beat the competition tomorrow.

12089505973_70106acf2d_mAbout the Author: Jonathan Ferrar is Vice President, HR, Workforce Analytics and is responsible for Strategy and Product Management for the Smarter Workforce business at IBM. Jonathan has over 20 years experience in HR at the executive management level, with a career that spans three major companies, including Andersen Consulting (now Accenture) and Lloyd’s Bank.

Jonathan is a Fellow of the Chartered Institute of Personnel & Development (CIPD) in the UK and has worked globally; he is currently based in New York. Jonathan has been recognized as one of the top HR Analytics Influencers in the world.

Follow Jonathan on Twitter @JAFerrar or connect with him on LinkedIn.




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