Predictive analytics – a ‘game changer’ for HR

læsetid 5 min

What is the cost of losing an employee?

If you’re asking this question, you’re not alone.

There is a really good reason to worry about this particular question – from the perspectives of both top management, HR and management.

First, it is crucial for the financial health of companies to be able to attract and retain talent.

Several substantial surveys such as MIT’s newest ‘Toxic Culture Is Driving The Great Resignation’ reveal that currently more than 40% of all employees are contemplating leaving their job.

Between April and September 2021, 24 million Americans left their job under the so called – ‘The Great Resignation’ – a phenomenon which has also started to reach Danish companies.

Losing an employee comes with consequences for the workplace – both financially, culturally, socially and therefore for the entire work environment.

The largest direct financial costs can be traced to the loss of production, recruitment and training of new staff in order to cover the human loss.

Still, it is difficult to ascertain the exact loss. But some studies point out that every time a workplace loses a full-time employee, the cost is an average of 50% of the employee’s annual salary.

However, this is merely the directly measurable costs. If you count the indirect costs in the form of lost production, cooperation difficulties and similar issues, the picture appears much scarier!

Having worked as HR Director for many years, I can say that, in HR, we know that losing an employee isn’t only about the money! Losing a great talent cannot only be traced in an Excel sheet, but has substantial consequences for the unity of the team in terms of cooperation, broken friendships and a psychologically bad work environment.

 

The most important metric for HR: employee turnover rate

In this connection, one metric speaks its own clear language when we want to know about employees’ well-being; the employee turnover rate – or simply: How many employees leave the company, and how quickly do they leave?

The most crucial metric for HR. Because it is costly to lose one’s employees. No question about it.

The employee turnover rate – or in other words attrition rate – of course varies from industry to industry. After The Great Resignation we call them the blue-collar and white-collar sector. Blue collar industries are some of the hardest industries to retain employees – retail, fast food and apparel. Where fx management consulting has one of the highest attrition rates.
However there is rarely a focus on what could be done to lose fewer employees. Even in companies with an employee churn in excess of 25%, information like this does not give rise to making a special effort.

And why is that? There are often two reasons.

One is that it doesn’t hurt enough.

The company and its employees manage to compensate for the large employee turn-over rate and reach their goals nonetheless.
It is off, all right, but not sufficiently off.

Another reason is that something inadvertently happens when you dive into the numbers. The focus of the discussion then shifts from a number reflecting a problem for the whole company to the individual employee.

”Hanne left, yes. But she had worked here for a long time…”

”So Peter left. But maybe it was time for him to try his hand at something new…”

”Well, Jakob left. He wasn’t exactly cut out for the job…”

The logic I have often witnessed is that it does not make sense to make company-related initiatives because the problem is the individual employee – not the company culture.

Recognisable?

But from my perspective, unwanted staff departure may be first and foremost an overlooked and expensive problem.
Luckily companies have an opportunity to measure the root causes of their employee turnover rates and forecast their top predictors before it happens. Let’s take a closer look.

 

How to make the change

And what does it take to change this individual and reactive approach?
This is my suggestion: Take action in tree areas.

Use the employee engagement pulse surveys to measure the root causes of employee turnover rates

Find a digital system that can translate employee feedback into a forecast of your top predictors of employee turnover

Translate the results into action as fast as possible

This applies regardless of whether we are talking about the mandatory health and safety risk assessment, the employee engagement survey or the leadership evaluation.

It is important to find a digital solution which doesn’t merely deliver data, but also gives you an idea of what the data means, and what actions you can take to proactively prevent loss of key employees.

If you receive data only, much too often the result is talk and good intentions, without any real action or change.
It is also important not to play with closed cards within a narrow group consisting of HR and the company’s top management when it comes to data and insights from the measurements.

If HR wants to create real change, the results must be put to work in all the company layers.

For these reasons, the best solutions go one step further and offer some good advice and recommendations as to how you may work with the work environment and employee engagement on the basis of the feedback from the surveys.

And the action plans must be implemented in all layers of the company – at the level of the employees, the teams, the management and the top management – so that you may work with prevention as a joint effort for the whole company.
Predictive analytics – tomorrow’s HR

The few – but grey – hairs on my head may reveal that I have worked in the HR business for an unsaid number of years now. And, until recently, we have primarily worked reactively with our employee feedback.

Typically, the process has been like this:
Problems arise…..We collect feedback and discover the problems over several months.…We then correct the problems (mostly).
Our HR method has therefore been to look back at the data and feedback from various employee engagement surveys. In other words, we have had our backs against the future.

But what if we could look forward, having a sneak peek into the future – and predict employee turnover that hasn’t happened yet?

We can actually do this today using the ‘predictive people analytics’.

As the name suggests, ’predictive analytics’ uses machine learning to predict the development and future results with the help of historic data.

This gives HR and managers a real possibility of looking into the future where they can identify risks and prevent problems that haven’t happened yet – but will happen if we sit on our hands.

The companies are simply given the ability to foresee potential problems and the loss of key employees before these problems arise.

And if you want to reach the very premier league of HR, there is no way around this.
’Predictive analytics’ is a big deal in HR data. And the possibility of putting it to work isn’t just a distant dream anymore, but the new reality that has come to stay.

In just five years, the number of HR professionals skilled at data analytics has risen 242% (LinkedIn 2020 Global Talent Trends).

And I am certain that ‘predictive people analytics’ will become a significant game changer for the whole of the HR industry, which will transform the way in which we work with employee turnover and attrition rates in HR.
A game changer in the sense that it will enable HR to quantify the effects of their efforts! HR will find themselves able to deliver quantifiable financial gains from their employee engagement strategies with a whole new level of precision and speed than previously seen.

If HR succeeds in making this paradigmshift, companies will not only save an unimaginable amount of money – but will also save an incomprehensible number of people from losing their ability to work.
And that change is worth fighting for!
If you wish to learn more about the possibility of implementing ‘predictive people analytics’ with Woba, please contact me.

Woba newsletter sign-up

Relaterede artikler

Employee assessment concept vector illustration.
Advice for the good, motivating Employee Development Interview

‘The Great Resignation’ is upon us – and more than 40% of all employees are currently considering quitting their jobs. Even if they don’t have a new one in sight. These are tough times for companies. Because a turnover costs a lot on any financial bottom line. So, what can you do?

 

Employee Development Interview – part of the great engagement work

The employee development interview is your planned and close conversation with your employees. According to Krifa, 85% of Danish companies hold annual employee development interviews. And it’s a good idea, as these conversations are an important part of the big, essential well-being work. Well-being and daily job satisfaction can change relatively quickly for the individual employee – Therefore hold the interview at least once a year to be sure that you keep up to date with the individual’s well-being, expectations and job satisfaction. Employee development interview is an important tool in the whole great well-being work. It cannot stand alone, because of course you also have to run workplace assessment and engagement surveys on an ongoing basis, but the employee development interview is definitely a crucial part.

Coach speaking before audience
What is a work environment adviser and why you should choose a solution that includes it?

Having an effective engagement platform implemented to maintain and increase the entire working environment and employee well-being is an extremely important decision. But if you have to go all out and ring the big, solid well-being bell, then you should consider getting a certified working environment advisor on board in the process.

 

Which question frame should be used?

Well, it probably goes without saying that the question frame is crucial for your engagement measurements. The questions MUST reflect the company’s framework and be decidedly industry-specific. Otherwise, you might get an answer in the West, even if you ask in the East – and that doesn’t add much value in the end. So, it is a good idea to get expert guidance from someone who has carried out a lot of well-being surveys and who has knowledge of the various industries and from there can put together the right questionnaire for the company.

A small side note here is that Woba.io actually offers (as one of the few providers) the possibility to design a completely specific and self-selected question frame for the individual measurement – and in this way it is ensured that the frames are not standardized, but on the contrary tailored for both industry, employees and company.

mads_kamp_3135_10x15-300x300
Mads Kamp
Strategist, CEO, founder, board member in Woba

Relaterede artikler

Employee assessment concept vector illustration.
Advice for the good, motivating Employee Development Interview

‘The Great Resignation’ is upon us – and more than 40% of all employees are currently considering quitting their jobs. Even if they don’t have a new one in sight. These are tough times for companies. Because a turnover costs a lot on any financial bottom line. So, what can you do?

 

Employee Development Interview – part of the great engagement work

The employee development interview is your planned and close conversation with your employees. According to Krifa, 85% of Danish companies hold annual employee development interviews. And it’s a good idea, as these conversations are an important part of the big, essential well-being work. Well-being and daily job satisfaction can change relatively quickly for the individual employee – Therefore hold the interview at least once a year to be sure that you keep up to date with the individual’s well-being, expectations and job satisfaction. Employee development interview is an important tool in the whole great well-being work. It cannot stand alone, because of course you also have to run workplace assessment and engagement surveys on an ongoing basis, but the employee development interview is definitely a crucial part.

AF Louise Aarkrog
Coach speaking before audience
What is a work environment adviser and why you should choose a solution that includes it?

Having an effective engagement platform implemented to maintain and increase the entire working environment and employee well-being is an extremely important decision. But if you have to go all out and ring the big, solid well-being bell, then you should consider getting a certified working environment advisor on board in the process.

 

Which question frame should be used?

Well, it probably goes without saying that the question frame is crucial for your engagement measurements. The questions MUST reflect the company’s framework and be decidedly industry-specific. Otherwise, you might get an answer in the West, even if you ask in the East – and that doesn’t add much value in the end. So, it is a good idea to get expert guidance from someone who has carried out a lot of well-being surveys and who has knowledge of the various industries and from there can put together the right questionnaire for the company.

A small side note here is that Woba.io actually offers (as one of the few providers) the possibility to design a completely specific and self-selected question frame for the individual measurement – and in this way it is ensured that the frames are not standardized, but on the contrary tailored for both industry, employees and company.

AF Louise Aarkrog
BlogPost_Problem-tabu
Normalize the taboo - All companies have problem areas. Without exception!

Uh, we don’t really want to say that out loud!

– we often hear company owners, HR directors or working environment representatives say when we ask if we should tell the outside world about their effective well-being work and increase in employee satisfaction after using Woba.

And here, of course, it’s not the great results that they don’t want to share.

No, these are the original risk areas that are found at the starting point for their completed surveys – i.e. the problems that come to light via Woba’s well-being platform.

The reasons for this can be many.

But our experience tells us that it basically deals with vulnerability and “brand image”.

AF Louise Aarkrog