If your leaders had all the time in the world, they would tackle every problem in your organization, whether that’s turnover, employee engagement, or the employee experience. If they could, they’d meet with every employee in person, address their grievances, reward them for their good work, and ask questions to understand what matters most to them.
But your leaders are people. People with limited time. So you need to highlight opportunities for them to have the most impact. Unfortunately, most organizations don’t have the ability to quantify leadership effectiveness or determine the return on investment of the actions their leaders take.
That’s where predictive HR analytics comes in.
With predictive HR analytics, you can turn employee engagement surveys, pulse surveys, 1-on-1s, and other data points into patterns HR can use to help leaders have the most impact. For HR teams growing into strategic roles, rather than pure administrative positions, predictive analytics gives them the information and the language they need to address problems and capitalize on positive trends.
Here’s how.
Key Takeaways:
- Predictive HR analytics transforms performance management from reactive to proactive
- Leadership impact directly influences engagement, retention, and productivity
- Predictive analytics in HR enables organizations to measure and forecast leadership effectiveness
- Data-driven insights improve coaching, decision-making, and team outcomes
- Organizations that leverage predictive people analytics gain a competitive advantage
- Platforms like 15Five Perform make it easier to operationalize predictive insights at scale
What are predictive analytics in HR? A foundational overview
Predictive analytics uses historical data and statistical models to forecast potential future scenarios. In finance, for example, predictive analytics allows past financial performance to serve as the foundation for potential future revenue. This allows finance leaders to make better investments or cut costs, as appropriate.
In HR, predictive analytics can use data around turnover, employee engagement, and more to build similar scenarios, plan initiatives, and chart the impact of leadership decisions. Most HR teams already use some data to evaluate the success of their initiatives; predictive data takes that into the future.
It’s important to differentiate predictive analytics from other types of analytics:
- Predictive analytics forecast what will happen in the future, based on past trends.
- Descriptive analytics highlight what has already happened, turning disparate data points into trends you can analyze.
- Diagnostic analytics tell HR teams why something happened. They might link increased turnover with a return-to-office mandate, for example.
Predictive analytics typically requires three elements.
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HR data analytics: Typically provided in dedicated HR or performance management platforms.
- Machine learning models: AI technology that streamlines data analysis and automatically makes recommendations.
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Historical performance and engagement data: The raw data your analysis will use to surface trends.
- The link between leadership and performance management ROI
Performance management is a practice that allows HR to identify top performers, support all employees in reaching their performance goals, and align their work with the organization’s broader strategy. Performance management ROI (return on investment) allows HR to link performance management outcomes (e.g., increased performance, reduced turnover) with their efforts (e.g., increased training, stronger incentives).
Leadership behaviors and actions have a direct impact on the performance management metrics HR cares about, including engagement, productivity, and retention. But traditional performance management methods don’t actually measure this impact, because they don’t draw a causal link between performance outcomes and leadership.
Your leaders can have the most outsized impact on the people throughout your organization, but they rarely know where they can have that impact. Predictive analytics gives HR teams the tools to draw that link.
How predictive HR analytics measures leadership impact
With predictive HR analytics, you can surface conclusive relationships between the actions your leaders take and the outcomes that move the needle for your organization—greater employee engagement, a better employee experience, and increased productivity.
Key data inputs that matter
Predictive analytics needs a broad set of data to be effective. Here’s what you should be looking for.
- Performance review data: Performance reviews aren’t just for alignment between employees and their managers. They can give you insights on how performance improves or declines across the organization at large. You can even drill down on performance by team, role, or department.
- Employee engagement surveys: The employee engagement survey is one of the best tools for measuring issues that affect engagement. But the metrics in these surveys are also effective for measuring leadership ROI.
- Feedback and recognition: If feedback and recognition are given in public forums, they can become valuable data points for measuring a leader’s impact. If the feedback they get improves (or employees get more recognition) you can usually identify successful initiatives.
- Goal completion metrics: Performance management should allow more and more employees to reach their goals. Tracking this progress gives you valuable data.
Predictive models and insights
There are a variety of data models you can use to get insights from your performance and employee engagement data. Most HR teams now use AI models to streamline and automate this aspect of predictive HR analytics, like decision tree logic (which splits attributes into possible outcomes) or regression models (fitting a curve through past data points to model the relationship between them).
Insights you’ll glean from these models can include finding high-performing managers more effectively, forecasting performance outcomes, and predicting turnover risks based on leadership behaviors.
Real-world use cases
IBM recently implemented AI predictive analytics to catch the signs of turnover across 350,000 employees. The result? $300 million in saved retention costs and a 20% increase in employee engagement across the board.
Evergas, a transporter of liquified natural gas and petrochemical gases, used HR analytics to improve employee engagement and retention in a competitive labor market. They transitioned away from traditional engagement surveys towards more frequent, in-depth surveys that precisely target elements of the employee experience. That resulted in improved transparency, faster response to engagement issues, and improved team morale.
Key metrics that demonstrate performance management ROI
No matter which tools or models you use, you should be targeting the following metrics:
- Engagement scores and trends
- Employee retention and turnover rates
- Goal achievement rates
- Productivity and output metrics
- Internal mobility and promotion rates
Through predictive analytics, you can map these metrics to leadership actions, demonstrating their ROI. For example, say you’re planning a return-to-office mandate, but are unsure how many days of in-office work a week you should require. You might start with just a few days, then measure the outcomes of employee engagement surveys over the following months. An improvement or decrease in employee engagement would tell you that your mandate isn’t quite right, and you can modify it and measure again as needed.
Just remember the difference between causation and correlation. Some leadership decisions directly cause changes in these metrics. Others just happen to coincide with these changes. That’s why relying on data analysts or AI models is important; it can prevent you from seeing trends where there are none.
Benefits of using predictive HR analytics for leadership decisions
Predictive analytics can support leaders, HR, and employees alike by highlighting the links between leadership decisions, performance, and engagement. Here’s how.
Proactive decision-making
Too many HR teams (and their leaders) are stuck in a reactive pattern. Employee engagement numbers decline, so they plan initiatives to get it back up. But predictive analytics allow you to forecast these potential declines and plan your initiatives before they happen.
Data-driven leadership development
Supporting leaders and managers is a difficult task. There are so many areas where leaders can improve their organization that finding the right skill-building approach can feel like a guessing game. With predictive analytics, you can model out what leadership skills or actions will have the best impact on the metrics that matter to you.
Improved employee experience
Forecasting potential impacts on employee engagement and performance directly contributes to a more positive employee experience. It allows you to get in front of problems before they can worsen, potentially creating resentment.
Stronger business outcomes
Improvements to employee engagement, performance, and the employee experience lead to stronger outcomes in business metrics like revenue per employee.
How 15Five Perform enables predictive HR analysis
A dedicated performance management platform can give your HR team the predictive analytics it needs to make better data-driven decisions and tie leadership actions to actual outcomes. Too many HR teams use a stack of disjointed tools to do this, leading to difficult data acquisition, management, and usage. That’s where 15Five Perform comes in.
The AI-powered tools in 15Five Perform allow HR teams to make performance management into a strategic advantage, create dashboards for leaders and other stakeholders, and more. This platform can enable:
- Continuous feedback loops
- Real-time performance tracking
- Manager effectiveness insights
- Predictive analytics.
Having a single, centralized platform for managing these streamlines HR analytics, since all your data ends up in one place. This gives you a clearer picture of how leaders can impact your organization at scale.
Want to know more? Find out how 15Five Perform can transform the way you analyze people data.
Getting started with predictive HR analytics in your organization
This quick step-by-step framework will give you a head start in deploying predictive HR analytics within your organization.
Step 1: Start with a clear goal
While you might eventually want to apply predictive analytics to all HR priorities, it’s best to start with one clear goal. This will reduce the number of variables that could impact your results, giving you a clearer picture of how effective your tools and processes are as you deploy them.
Step 2: Audit existing HR data sources
You need to know where your HR data is coming from before you can start to analyze it. Review and list the places where that data lives, such as your employee engagement tools, performance reviews, and even relevant spreadsheets.
Step 3: Implement the right tools
Not all HR tools support predictive analytics. You may need to review the tools you’re currently using or research new tools for your stack. Implementing new tools can be risky, so ensure you have the right help, and that you start with a small pilot project rather than a broad deployment.
Step 4: Train HR teams and leaders on data literacy
You might not have data experts in your team, but everyone should have a basic level of data literacy to make the most of your predictive analytics and the results it generates.
Step 5: Refine models based on outcomes
AI models used for predictive analytics improve with more data.. As you start to see results from your predictive analytics strategy, feed your tools that data to improve the way you work.
Turn data science into sustained performance
Leaders need to know where they can have the most impact and data is the best way to do that. Traditional HR data is reactive, allowing leaders to act on historical trends, but that doesn’t quite cut it. Predictive analytics give you the information you need to plan ahead and take action before a burgeoning trend becomes a bigger problem.
Making the shift from instinct-driven leadership to data-driven decisions means you need data that looks ahead, not just backward.
Explore how 15Five Perform can help your organization harness predictive HR analytics to improve leadership impact and performance outcomes
