The Transformational Power of Big Data For HR

The Transformational Power of Big Data For HR

Big Data is one of the most used tech buzzwords of the last five years, and the interest is growing, yet only 20% of companies use it for various operations. The laggards cite lack of knowledge (51%) or absence of data (30%) as the main reasons for not using this new tool.

Predictive analytics is slowly replacing experience and gut feeling in areas like investment, crime-fighting and human resources. Over half of HR departments use some type of Big Data powered tool in their daily operations. The rising popularity is also due to a more agile approach to work and the affordability of cloud-computing solutions.

Big Data is just a tool, albeit a popular one, with numerous powers, but only useful if the underlying problem is well-defined. In HR, the main challenges are related to candidate filtering, retention, evaluation and reducing bad hiring. The good news is that algorithms can at the very least assist in each of these steps, if not perform them entirely.

The most time-consuming part of HR is filtering. Deep learning and natural language processing can select promising candidates based on the content of their resumes. Those who provided relevant key-words and have the required qualifications are chosen first, but those who would fit in with the team, based on their choice of words are also given a chance. Sentiment analysis can indicate a more assertive personality or dangerous levels of pugnacious behavior.

Big Data can also show the sources (schools, competitors, etc.) that yield the best candidates based on their skill level, the estimated time it takes to train them and dedication to the company. Retaining staff is done by analyzing the risk for them to change employers based on their job descriptions, salaries, involvement in team-work and other predictors. Creating mathematical models is an objective way of assessing HR and more accepted by employees since they don’t suspect personal management bias.

Collecting data regarding questions and answers during hiring and exit interviews helps companies create a repository of relevant inquiries and eliminate those subjects that don’t have a correlation to the later performance of the employee. An example of a traditional validation tool that is slowly being abandoned is the IQ test.

The real question is what KPIs are still valid today for the workforce? In the past, the corporate environment was plagued with vanity metrics, that looked good on annual reports, but brought little value to the company, such as the percentage of middle managers with a college education.

Data should offer actionable insights and the only metrics that deserve a place on the company’s dashboard are those that show progress or some which act as red flags.

The simple test in keeping a metric or not is: “Can we connect this to measurable output or ROI?” Even in the case of soft skills, the right metrics will pass the test by showing an increase in client retention rates or customer relationship improvement.

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