New technologies and the massive shifts towards the digital economy are causing a change in all business models and departments – HR included. We can see this in the companies’ efforts in HR and people analytics to keep up with the technology-driven transformation. Data-driven HR enables organisations to layer data on top of traditional decision-making models; to put gut and heart decisions aside, and focus on what the data says.
HR departments are under pressure to change, so they don’t end up like one of the disciplines of corporate organisations that are left behind, asserted Marcus Mossberger from Infor at the Nordic People Analytics Summit.
However, how much data-driven and digitalised can we become without the fear of overlooking the human element in HR? After all, the role of HR is to manage the people of the company and needs to maintain some core values like empathy and humanity.
A perfect solution is a balancing act between data and discernment, which we are going to look into below. But first, we’ll explore the reasons why HR departments need to embrace the change and how it can be beneficial both for HR and humans.
The changing workplace
As we’ve said previously, not just departments, but whole businesses and fields are changing. With that being said, every day, we are walking into a changing workplace. AI and automation is one reason for it. But despite the common notion that AI will take over our jobs, Marcus points out that technology has always created more jobs than it has destroyed. But the new jobs are different than before, which also changes the very nature of work.
In a way, our workplace reflects our world. It can be described with the term VUCA – volatility, uncertainty, complexity and ambiguity – four worlds that perfectly depict it. Moreover, as Millenials and Gen Z are entering the workforce, they impose their expectations of what work should look like. As Marcus says, they don’t want jobs, they want experiences.
Millennials and Gen Z’s don’t want jobs, they want experiences.
Luckily, by relying on some basic principles of human behaviour, HR professionals can understand and influence their behaviour, and meet people’s expectations of a workplace. Thanks to the data we have available for our people, we have an opportunity to make data-driven and informed decisions about and for them, declares Marcus. This is something that traditional HR wasn’t accustomed to previously.
“Historically, the HR department has been like the referee of the organisation. We were the ones blowing the whistle and saying to people ‘No, you can’t do that’”, states Marcus. But HR shouldn’t be about compliance, control and constraint. HR should enable people to reach their full potential by using data.
Historically, the HR department has been like the referee of the organisation.
Going back to AI and automation and the digital transformation we are currently, these new technologies are giving people more time to focus on higher-value activities, and taking over the boring, administrative work that no one wants to do. But what’s more important is that these smart technologies give us digital autonomy at our workplace. They are not taking our jobs but changing them. People are not let go but deployed at other more value-added positions. Of course, this transition may seem scary for some people. We are afraid of the unknown and fear we might not know how to do something different. Educating people about how these technologies will make their lives easier will help in eliminating this fear factor, states Marcus.
The smart devices that provide us with digital autonomy enable us to work whenever and wherever we are. So much so, that the concept of career is redefined. We are seeing the rise of the gig economy, freelancers, contract jobs that are based on more flexible and temporary engagements.
This is precisely what data-driven and digital HR aims to deliver. Digital HR seeks to simplify and personalise people’s work experience based on science and behavioural data, provide palpable evidence and data for stakeholders interested in numbers, i.e. the CFO and CEO, and ultimately impact performance and productivity.
Is data enough to inform our HR decisions?
In the hiring process, decisions are usually based on resumes which only provide us past information of candidates. But this information tells us nothing about how a candidate would work or if they are a good cultural fit. The data-driven hiring process based on cognitive, cultural and behavioural data helps organisations make informed decisions about who to hire, find the best position for them, and personalise their onboarding experience and career path.
However, looking blatantly only at the aggregated organisational data in our systems, and not taking into account individual, contextual information may lead us to make rushed decisions. On the other hand, if we rely only on engagement surveys and feedback from employees, we also might not get the complete picture.
How do we make data-driven HR possible without driving humanity out of human resources? How do we go from making gut-level decisions, and not go too far afield to the other side of letting software make our HR decisions?
A story that offers great learning is the Amazon case that earned them a lawsuit based on the contention that they used software and algorithms to asses productivity and fire workers who underperform or fail to reach company productivity targets with little human intervention. In a business where workers productivity is measured by the number of orders fulfilled, data clearly shows workers who are lagging behind their peers. However, what the software doesn’t consider is the human aspect.
Imagine if one of the bottom performers is a more tenured worker who is familiar with the processes like the back of his hand, and oftentimes offers to help his colleagues, which impacts his productivity score. What the data doesn’t capture is that this worker is probably one of the most valuable people in the organisation. And by firing him, the company loses valuable know-how and enterprise capital.
Bias in AI hiring tools is another issue in the hiring process. Critics warn they could automatically discriminate against certain job applicants because they are as biased as the humans who train them.
The data-driven, human-oriented approach
So, what might be a fair, balanced solution to measure performance, but still keep a personal, empathic approach towards employees?
Marcus suggests that we should use data to understand:
- Opportunities for improvement, but also strengths
- Correlation between behaviour and outcomes
- Objective predictors of performance.
Data is important, but so is the human touch when approaching your employees for performance, productivity, or any kind of assessment.
We need to use conversations to understand:
- Things that can’t be captured on a spreadsheet; like what is happening in their personal lives, what they’re feeling, things that might impact their performance.
- What makes each individual unique and valuable
- And most importantly, understanding their Arbetsglädje (in Swedish – “happiness at work”).
The bottom line is, if a person is happy at work, they will be a more productive, efficient and engaged employee. And it should be the end goal of every organisation.
For data enthusiasts, Marcus also offers data and tangible results from a real case study.
As he states, when people are put in a job position they are born to do, turnover goes down 46%. This decrease resulted in an increase in revenue, as the turnover and revenue have an inverse relationship. And these are the numbers CFOs and CEOs care about. Additional benefits were increases in sales per hour and performance, positive difference in margins, while safety incidents decreased.
All these benefits come in when people are more engaged and happy in their workplace, for which besides the data, we need to add that extra ingredient of human approach.
Join the Nordic People Analytics Summit on September 16th and 17th 2020 and learn how some of the forward-thinking HR and advanced people analytics practitioners harness the full potential of data and AI-innovation to improve and empower data-driven HR function.