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