Prescriptive analytics is an emerging and potentially the most valuable kind of analytics for HR to assist business with, according to Rob Wells, managing director of Workday, Australia and New Zealand.
There are three broad subsections of analytics: descriptive (which provides insights into what happened), predictive (which predicts what might happen in the future), and prescriptive (which delivers a recommended course of action to deliver optimal results).
It is the latter category – in which recommendations are provided as to what steps to take next – which is the newest and most advanced, and also the most interesting for business users, Wells said.
“Modern business solutions are combining all three, using advanced data science and machine learning algorithms to provide leaders with insights, predictions and recommendations, leading to smarter financial and workforce decisions,” he said.
“Prescriptive analytics analyse the data we already have and make recommendations on the best course of action.
“It’s like a partner for the HR manager, someone that can look into the future, review all the information and suggest the smartest way forward.
“Think of it like Netflix for business. It predicts a film based on what we’ve viewed in the past.”
“The stakes are much higher for analytics to answer questions that impact business survival”
While these smart analytics live behind many of interactions as consumers, it is not typical to have specific recommendations about business decisions delivered to us as business leaders from our enterprise applications.
“This may not be altogether surprising when considering that business challenges are much more complex than knowing which film you might want to watch next,” he said.
“The stakes are much higher for analytics to answer questions that impact business survival: How can we improve staff retention? How do we increase revenue?”
Business is now entering an era where the same approaches and ease-of-use can be applied to decision-making in the enterprise, according to Wells.
Where once these important decisions would have been based on limited information and general instinct, recommendations based on accurate and current data can help in making confident and informed decisions about how to grow a business.
“Think of it like Netflix for business. It predicts a film based on what we’ve viewed in the past”
“The future is prescriptive,” said Wells, who added that one of the biggest issues for businesses in 2016 will be staff retention.
“The most innovative companies are relying on analytics in their HR programs and those that are implementing prescriptive analytics will reap the biggest rewards,” he said.
Innovative solutions deliver interactive dashboards that enable businesses to quickly identify and understand retention risk for the organisation as a whole, through to specific lines of business or departments.
Metrics can include the number of top performers at high risk of leaving in the next twelve months, as well as the projected cost of replacing them, while Wells said data can also be used to define the top risk factors driving staff turnover, such as time spent in current role, number of job functions held, or time between promotions, as well as highlighting which departments, job types, or teams are at the highest risk of turnover.
“This insight is already here, but the next step is even more exciting: solutions will also offer actual recommendations based on data to ensure good business decisions that will help organisations to reach their goals,” he said.
“It may be recommending an internal transfer, a training program, an incentive package, but all focused on providing HR managers with insight and recommendations.
“And like the simplicity of Amazon or Netflix recommendations, all of these recommendations will be easily delivered to managers in a simple interface – without the assistance of IT or data analysts.”
Image source: iStock