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"People Analytics": Big Data Hits Hiring

  |  January 29, 2014   |  Comments

Big Data and "People Analytics" are making their way into the human resources department, and changing the way companies hire new employees.

We've been hearing a lot these days about how Big Data will change business. Its impact on the marketing and media world is being felt throughout the industry. Data collection and predictive analytics are being used for everything from hyper-local targeting to drafting baseball players. That's old news.

What's new is the impact of Big Data on hiring and recruiting. For most media companies, human capital is the biggest expense -- and the most competitive asset. Estimates put the human capital costs in the U.S. at $1 trillion a year. "People Analytics" holds that making the best possible personnel decisions are among the most important issues a company faces. I'm not just talking about head count here, but hiring, evaluation, promotion, retention, and corporate culture. In today's competitive market, your managers need to be making the best possible decisions on their human capital deployment. Every decision in your company -- including R&D, finance, and technology --is made by an employee. It's not just PowerPoints or pie charts, but people making these decisions. People Analytics are seen as the way to help inform that decision-making process by using data and algorithms.

For many, the term HR conjures up 20th-century practices, of bureaucracy, ironclad procedures, the place you learn about benefits and legal compliance. HR was seen as old-school and risk-adverse. This is not the image of innovators in business.

From the technology side, the HR market is exploding with new tech and SaaS products promoting the latest trend in data analysis. The past few years have seen major tech players -- IBM, Oracle, SAP -- move beyond attendance and payroll software. The same data collection and analysis principles we use in our professional endeavors are now hitting HR. Small firms are touting everything from video interviews to video games as predictive tools. A recent article in The New York Times knocked "Knack," which uses its "Wasabi Waiter" game to assess an applicant's multitasking and decision-making skills. It's one of many new start-ups purporting to use video games as a hiring tool.

Google and Apple have been seen as leaders in People Analytics. Their "People Operations" department, aka human resources, has taken the evidence-based decision model and applied it to all aspects of employee hiring, training, evaluation, and retention. Google's approach is "All people decisions at Google are based on data and analytics." Initial results are positive but time will tell.

Big Data has influenced job specifications. It's an easy jump from measuring current employees' success to using that as the criteria for your next hire. Quite compelling, isn't it? It reinforces the idea that hiring is scientific, like the previous fads of skills tests, psychometrics, and personality tests. These technologies share a common approach: that analyzing the past successes and failures will predict success in the future. Some have questioned that correlation, pointing to the subjective bias that has been found in many supposedly objective tests. We all know that what gets measured gets done -- and choosing what to measure is in itself a statement. The research on People Analytics is just unfolding now, and the ultimate model has not yet been proven conclusively.

One bit of "collateral damage" from the People Analytics model: some applicants who have gone through such data-driven interview processes have been turned off by the process. The interviews can feel mechanical, like taking a computerized test. For jobs that involve soft skills, like sales and some marketing, the personal touch is seen as the competitive edge. Top employees want to be more than a cog in the wheel. For now, humans are still better at computers in detecting the interpersonal components, the soft skills.

A current TV commercial depicts an applicant showing off his school socks, as he realizes the interviewer went to the same school. A nice edge up in on the old-school hiring approach. But in the People Analytics approach, it's more about whether alumni of that particular school have performed well for that company in the past.

People Analytics has propelled HR to the forefront of today's management and marketplace. HR used to be seen as a cost center. These days, it's the strategic heart of the company -- and data-driven decision making is taking its place at the table. No one can afford a bad hire.


Alan Cutter

In the jungle of recruiting, Alan Cutter is the lion. Alan is Founder and CEO of AC Lion International

Prior to AC Lion, Alan was senior manager at OTEC and played an integral part in the company's evolution into HotJobs.com. 

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