4 min read

What's the difference between forecasting and predictive analytics?

Ever play with a Magic 8 Ball? Back in the day, you could ask it any question and get an answer in just a few seconds. And if you didn't like its response, you could just shake it again for a new prediction. So simple, so satisfying.

Today's HR teams and businesses obviously need more reliable ways of predicting outcomes and forecasting results than a Magic 8 Ball. But while forecasting and predicting sound similar, they're actually two different problem-solving techniques. Below, we'll go over both and explain what they're best suited for.

What is HR forecasting?

Remember the Magic 8 ball? At first glance, the Magic 8 ball "predicts" or "forecasts" an answer to your question. This is not how forecasting works (at least, for successful companies or HR departments).

Instead, HR forecasting is a process of predicting or estimating future events based on past and present data and most commonly by analysis of trends. "Guessing" doesn't cut it.

For example, we could use predictive forecasting to discover how many customer calls Phil, our product evangelist, is likely to receive in the next day. Or how many product demos he'll lead over the next week. The data from previous years is already available in our CRM, and it can help us accurately predict and anticipate future sales and marketing events where Phil may be needed. 

A forecast, unlike a prediction, must have logic to it. It must be defendable. This logic is what differentiates it from the Magic 8 ball's lucky guess.  After all, even a broken watch is right two times a day.

What is predictive analytics?

Predictive analytics is the practice of extracting information from existing data sets in order to determine patterns and trends that could potentially predict future outcomes. It doesn't tell you what will happen in the future, but rather, what might happen.

For example, predictive analytics could help identify customers who are likely to purchase our new One AI software over the next 90 days.

To do so, we could indicate a desired outcome (a purchase of our people analytics software solution) and work backwards to identify traits in customer data that have previously indicated they are ready to make a purchase soon. (For example, they might have the decision-making authority on their people analytics team, have an established budget for the project, completed a demo, and found Phil likeable and helpful.) Predictive modeling and analytics would run the data and establish which of these factors actually contributed to the sale.

Maybe we'd find out Phil's likability didn't matter because the software was so helpful that customers found value in it anyway. Either way, predictive analytics and predictive modeling would review the data and help us figure that out a far cry from our Magic 8 ball. 

Managing your people analytics data: how do you know know if you need to use forecasting vs. predictive analysis?

Interested in how forecasting and/or predictive modeling / predictive analytics can help grow your people analytics capabilities? Do you start with forecasting or predictive modeling? The infographic below (credit to Educba.com - thanks!) is a great place to compare your options:



Recap: Should you use forecasting or predictive analysis to solve your question?


Forecasting is a technique that takes data and predicts the future value of the data by looking at its unique trends. For example - predicting average annual company turnover based on data from 10+ years prior.

Predictive analysis factors in a variety of inputs and predicts future behavior - not just a number. For example - out of this same employee group, which of these employees are most likely to leave (turnover = the output), based on analyzing past employee data and identifying the indicators (input) that often proceed with the output?

In the first case, there is no separate input or output variable but in the second case, you use several input variables to arrive at an output variable.

While forecasting is insightful and certainly helpful, predictive analytics can provide you with some pretty helpful people analytics insights. People analytics leaders have definitely caught on.

blog - building blocks of people analytics

We can help you figure it out and get started.

Want to see how predictive modeling can help your team with its people analytics initiatives? We can jump-start your people analytics team with our Trailblazer quick-start package, which really changes the game by making predictive modeling agile and iterative process.

The best part? It allows you to start now and give your stakeholders a taste without breaking the bank, and it allows you to build your case and lay the groundwork for the larger scale predictive work you could continue in the future.


Want to learn more? Connect with Us.




Forecasting vs. Predictive Analysis: Other Relevant Terms

Machine Learning - machine learning is a branch of artificial intelligence (ai) where computers learn to act and adapt to new data without being programmed to do so. The computer is able to act independently of human interaction. Read Machine Learning Blog.

Data Science - data science is the study of big data that seeks to extract meaningful knowledge and insights from large amounts of complex data in various forms.

Data Mining - data mining is the process of discovering patterns in large data sets.

Big Data - big data is another term for a data set that's too large or complex for traditional data-processing software. Learn about our data warehouse.

Predictive Modeling - Predictive modeling is a form of artificial intelligence that uses data mining and probability to forecast or estimate more granular, specific outcomes. Learn more about predictive analytics.

Descriptive Analytics - Descriptive analytics is a type of post-mortem analysis in that it looks at past performance. It evaluates that performance by mining historical data to look for the reasons behind previous successes and failures.

Prescriptive Analytics - prescriptive analytics is an area of business analytics dedicated to finding the potential best course of action for a given situation.

Data Analytics - plain and simple, data analytics is the science of inspecting, cleansing, transforming, and modeling data in order to draw insights from raw information sources.

People Analytics - All these elements are important for people analytics. Need basics? Learn more about people analytics.

About One Model

One Model’s people analytics solutions help thriving companies make consistently great talent decisions at all levels of the organization. Large and rapidly-growing companies rely on our People Data Cloud™ people analytics platform because it takes all of the heavy lifting out of data extraction, cleansing, modeling, analytics, and reporting of enterprise workforce data. One Model pioneered people data orchestration, innovative visualizations, and flexible predictive models. HR and business teams trust its accurate reports and analyses. Data scientists, engineers, and people analytics professionals love the reduced technical burden. People Data Cloud is a uniquely transparent platform that drives ethical decisions and ensures the highest levels of security and privacy that human resource management demands.

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