May 21, 2014

From HR Executive Online

by Andrew McIlvaine

The Power And Peril of Predictive Analytics

According to a new study, a growing number of new hires -- as well as top-performing employees -- are choosing not to stick around for long.

The 2014 PwC Saratoga U.S. Human Capital Effectiveness Report, which is based on a survey of 375 employers, finds the percentage of employee headcount for new external hires increased by nearly 40 percent from 2010 to 2013. Unfortunately, more of those new hires are leaving before their one-year anniversary: The report finds that first-year-of-service turnover increased for the second consecutive year, from 22.6 percent in 2012 to 34.1 percent in 2013. It also finds the separation rate among high-performing employees has risen to its highest level in 10 years, from 5 percent in 2012 to 6 percent last year.

None of the three employment-law attorneys interviewed for this story knew of any current or recent employment-discrimination litigation concerning the use of predictive analytics for hiring. However, all agreed that the potential for adverse impact exists.

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

To stay out of trouble, she says, companies should first perform an "adverse impact analysis," or a statistical test, on the predictive analytics they use to determine whether it screens out particular groups.