Predictive analytics a potentially powerful HR tool, but caution is necessary

Predictive analytics a potentially powerful HR tool, but caution is necessary

on Jun 11, 14 • by Chris Bubinas • with No Comments

Predictive analytics has quickly become a key asset for HR professionals, and has the potential to prove even more valuable when best practices are applied. However, firms must be careful to avoid legal pitfalls when using these solutions...

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Predictive analytics has, in the course of just a few years, become a relatively mainstream data-based tool for companies in every sector. With these solutions, firms can examine raw information and discern insight in numerous areas.

One key area is human resources. Predictive analytics has quickly become a key asset for HR professionals, and has the potential to prove even more valuable when best practices are applied, as HC Online recently reported. However, firms must be careful to avoid legal pitfalls when using these solutions. 

Predictive analytics in the HR department
Speaking to the news source, Janette Coulton, deputy director of human resources for Raytheon, emphasized the need for HR personnel to understand how to interpret analytics reports to forecast future trends. Through data mining, she explained, HR workers can "identify key activities that might have impacted on a termination." With this information in hand, HR personnel can gain greater foresight as to who may be in danger of termination and what steps should be taken as a result.

Such knowledge can prove invaluable for the company as a whole, Coulton explained.

"If you're in a growth industry and you're looking to increase your market share in a particular area or go into a new market area, you want to make sure that you're able to hold on to particular skill sets," she noted, the news source reported.

Beyond helping companies hold on to current employees, predictive analytics can also play a critical role by enabling firms to identify what factors affect industry professionals' career choices. Harnessing this information can then allow businesses to make their job openings more appealing to the most promising up-and-coming workers in the market.

Specificity is key
Coulton argued that in order to gain the most useful insight from predictive analytics programs, specificity is crucial.

"Sometimes with HR it is about that marketing mindset of segmenting your market, and the workforce is just a market that HR needs to understand," said Coulton, the news source reported. "Segment it and analyze those segmentations if you truly want to make a difference to preparing for things like future growth."

Predictive analytics moving forward
Critically, Coulton argued that predictive analytics can be utilized by any HR professionals, including those without a thorough grounding in mathematics or statistics. Such knowledge, while potentially very helpful, is not necessary for individuals to thoroughly segment and analyze a company's HR information, gaining invaluable insight in the process.

"There are lot of tools that are readily available and a lot of training that is easily accessible that can get a HR professional started on that pathway of predictive analytics," Coulton said, according to the news source.

Serious pitfalls to avoid
However, as companies increasingly turn to predictive analytics within their HR departments, they must be wary of a number of legal issues, as Human Resources Executive Online reported.

Speaking to the source, David Walton, vice chair of Cozen O'Connor's labor and employment group, echoed Coulton, noting that predictive analytics is becoming more and more popular as a means of improving job candidate selection.

"The use of big data such as predictive analytics can be very powerful in terms of predicting what someone's going to do," said Walton, the source noted.

Yet Walton and other experts also emphasized the possibility that predictive analytics could lead to discrimination if not wielded properly.

"Organizations need to be very careful in how they're using this software," said Ranjan Dutta, a director of PricewaterhouseCoopers Saratoga, HRE Online reported. "You don't want to end up with a model that tells you not to hire people of certain ethnicities, for example."

"I absolutely think it's a legitimate concern," agreed Erin Schilling, a shareholder at the Polsinelli law firm in Kansas City, according to the news source. "[The use of predictive analytics] could have a disparate impact on minorities, women or any different kind of class of worker."

Peter Gillespie, an employment attorney with Fisher & Phillips in Chicago, told the news source that predictive analytics efforts carry the risk of testing bias entering into the hiring decision-making process.

Such issues are avoidable, however, so long as HR personnel exercise caution and utilize both best practices and the ideal tools when pursuing these strategies.

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