Big Data Isn't a Human Capital Strategy
Monday, July 6th, 2015
Welcome to the XQ age of hiring. According to a recent Time cover story, "Questions to Answer in the Age of Optimized Hiring," the term "XQ" refers to "X quotient," and it is the indispensable -- and pretty much indescribable -- factor that employers are looking to pinpoint in today's job candidates. In their pursuit of this mysterious metric, companies are increasingly turning to personality tests, or -- as Gallup likes to call them -- "talent-based assessments," to find the best fit.
While personality testing is nothing new, the latest push has been fueled largely by the emergence of big data and predictive analytics. Many companies believe data science can do a better job of finding their next great salesperson, accountant or manager than a traditional face-to-face interview. I tend to agree with them. Day in and day out, I work with companies to help them hire top talent for a wide variety of roles. I believe in the value of predictive analytics and using assessments to identify the right fit. An assessment can be a powerful tool in raising an organization's level of talent and, therefore, its performance.
But I also believe companies are losing sight of the bigger picture. Analytics in and of itself is not the cure-all for workplace woes. The Time article brought to mind three common traps I see companies falling into when they embrace a data-driven hiring strategy:
Getting caught up in the data movement. There is growing interest in the use of big data to inform hiring decisions. This enthusiasm makes sense -- it's easier these days to collect, store and analyze large amounts of data from a variety of sources. Analytics is no longer a niche occupation, and if a company doesn't have someone in-house who understands how to interact with data, it can certainly outsource the job.
But accessibility and affordability don't make data useful. While data collection is important, what the company does with the information is considerably more important. The single greatest challenge I see companies facing over and over again is how to make their data actionable.
Focusing only on the assessment. Developing a great assessment is a science and an art. But a great assessment gets a company only so far. These tests can be effective at helping organizations hire employees with great potential, but they do nothing to engage or develop those employees -- that's the manager's job. As Gallup has found, managers account for at least 70% of the variance in employee engagement scores. If companies don't have the right managers in place, then their newly hired, highly talented employees are unlikely to live up to their full potential and, our experience suggests, may be even more likely to leave than less talented employees who have fewer options.
Companies also need the right attraction and recruiting strategies to find talented employees. No assessment can take people with average talent and magically make them great in a role. Organizations tend to focus most of their energy on the hiring phase and far less energy on the attraction and recruiting phases. They should be looking at their employee value proposition, messaging, recruiting talent and sourcing strategies to determine the best approach for drawing top talent.
Ignoring the potential pitfalls. In a 1989 article for Harper's, author Erik Larson wrote, "The keepers of big data say they do it for the consumer's benefit. But data have a way of being used for purposes other than originally intended." He was referring to junk mail and direct marketers, but the sentiment applies to the current conversation as well. Big data brings a certain set of challenges related to ethics, privacy and security. Because of this, employers have to be diligent in how they collect and use all of that information.
Cyberattacks and privacy violations are legitimate concerns in the digital age, and organizations need to safeguard against them, but they also need to consider the implications of how their data-driven strategies affect employee behavior. Some organizations are collecting real-time data about employees, asking their coworkers to submit immediate and constant feedback. This type of environment may inadvertently lead employees to engage in undesirable or inauthentic behavior.
Gallup knows a thing or two about assessments. We created the Clifton StrengthsFinder, an online assessment that helps people identify their areas of greatest potential. As mentioned in Time and originally reported in the Wall Street Journal, 457 of the Fortune 500 use the Clifton StrengthsFinder. We hope that all 500 will use it one day soon. The use of employee assessments, among other forms of big data analytics, is a superb way for any company to improve its human capital practices. However, data science must be applied correctly to maximize the benefits while minimizing unintended and unwanted consequences.