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HR embraces predictive analytics to help people work together more effectively
HR leaders are taking greater advantage of predictive analytics to help teams and individuals function more effectively and to shape organizational culture, according to software vendors and independent experts.
So far, the practice is being used to the greatest extent at large organizations, experts say. But as computing power increases and becomes more affordable, smaller firms will find it attractive and in some cases essential to remain competitive. Said John Callery, global head of workforce strategy at financial giant BNY Mellon: "Organizations are definitely getting it—that this is something they should do. The marketplace is driving this. It's happening across all industries and sizes of organizations."
Predictive analytics has been used for many years to help companies solve problems. However, as more employers become aware of its potential, its use is being driven deeper into organizations. "It's a field that is expanding very fast," stated Chinmay Nanda, CEO of HappyOffice, an employee engagement analytics firm based in Chicago and Hyderabad, India.
"Give us another 10 years. My suspicion is that it will catch on like wildfire," said Paolo Gaudiano, president and CTO of tech firm Icosystem in Cambridge, Mass. He said Icosystem's software can simulate the working of any organization by modeling the behaviors and interactions of employees and allowing companies to test how a change in one policy or procedure would affect other aspects of the organization.
Gaudiano said Icosystem typically follows these steps in working with an organization:
Test the simulation with "what ifs." For example: How would increasing the number of meetings affect productivity and morale?
"We may not know how an individual thinks. But computers can capture the behavior of individuals to a fairly high degree."
Data-driven approaches to improving processes and culture are also featured by Ultimate Software, said Brian Kelly, the company's senior director of strategy. He is based in the Philadelphia area.
"There is no way to 100 percent accurately predict the future," he pointed out. "We're talking about probabilities. There are limits in every model." However, he said, his company's software can help managers make much better-informed decisions. "Most successful companies use a blend of qualitative and quantitative factors," Kelly said.
One fascinating and potentially scary application of predictive analytics is forecasting the performance of individual employees. "We may not know how an individual thinks," said Gaudiano. "But computers can capture the behavior of individuals to a fairly high degree."
Kelly said his firm recently helped a client assign a score to every employee indicating his or her likelihood of leaving the company. Factors entering into the calculations included demographics, education and professional licenses. The results prompted recommendations to managers for mitigating the risk of losing valued workers.
Predictive analysis is used in different ways based on each organization's needs. "You can look at productivity costs and retention," Nanda said, adding "You can align your workplace culture with your mission."
Callery sees predictive analytics as helping employers answer the question: "Are you becoming the company you want to be?" The emphasis on data to drive culture is highly visible at Mellon, he said. "We're putting tools in the hands of our managers and employees to allow them to be successful. Our managers understand that it is a key part of our strategy."
However, "You have to be very careful with corporate culture" because it is misunderstood by some executives, managers and employees, said John Carrier, senior lecturer at the MIT Sloan School of Management. Executives might think that putting a foosball table in an employee lounge will change a company's culture, but it won't. Actions such as bringing in coaches to help workers improve at playing a game can make a difference, however, he said. In such a scenario, "Employees will say, 'We got better. This is different. Maybe we can get better at how we do things in our work,' " Carrier said.
He added that it's important to reduce the "hidden culture" that exists in each organization—the things that prevent people from working together freely. "Then the good part of the culture appears."
Kelly said use of predictive analytics is at a "tipping point" as more organizations discover how useful it can be. When organizations and managers make decisions based in large part on evidence, they tend to depart from behaviors such as rubber-stamping the recommendation of the top-level executive or loudest voice in the meeting room, he said. "It can change conversations within the organization," thereby improving culture.
Vijay Gurbaxani, director of the Center for Digital Transformation at the University of California Irvine, said that some U.S. businesses are not ready to take advantage of predictive analytics. "A lot of companies don't operate in a very analytic way because historically they haven't viewed data as a source of competitive advantage," he said. In addition, "People don't know where to start."
Gurbaxani sees a conundrum in the effort to use data to shift culture: "The more analytics you do, the more your culture will change. And you have to change your culture to do analytics."
But despite the headaches it can cause, "data" should not be considered a four-letter word, experts say. "Data's not going away," Kelly said. "It's how you use the data that matters."
Steve Bates is a freelance writer in the Washington, D.C., area and a former writer and editor for SHRM.
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