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Is data the new oil?

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When I was in my twenties, I remember one of my uncles saying to me, “data is the new oil, Karim, stick with data and you will stay employed.” That phrase has stuck with me, but as I reflect on it I would change it to “data is the new crude oil.”

We cannot run our cars on crude oil, heat houses or fire up the BBQ. Crude must be refined, thus made into something more useful: distilled, distributable, traceable and ultimately most importantly, fit for fulfilling needs. Crude is the basis, but it can’t do what we need it to do in its raw form! The same applies to data.

Data needs to be converted to information that can be acted on, akin to the BBQ and the subsequent steaks. Analytics, in all its variants – from descriptive to prescriptive and beyond – is like the refinery, and the additives in the fuel can be related to artificial intelligence or machine learning.

Duty of care – and a refinement of thinking

Our world is full of data. As HR professionals we have access to an almost daunting amount of it, and it comes with serious responsibilities. We have access to data that is highly personal and private. As custodians of this information we have a duty of care towards it. Needless to say, this duty of care is enforced by legislation with very sharp teeth.

Recently, my Buck colleague Lori Block spoke about the People Optimisation Program (POP) and the evolution of wellness programmes. More importantly, she shared research that showed that ‘companies with strong wellness programmes performed three times better than the market average appreciation.’

Meanwhile Ben Wells, a Buck colleague from London, noted that we need a ‘better balance with more transparency, fairness, and engagement, enabling organisations to share success with their workforce.’

What we are hearing from consultants all over the world, ours included, is an evolution of the thought process, a refinement of thinking, and the introduction of new programmes across all aspects of HR. These programmes are designed to keep employees engaged, help them strike a balance between work and home, assist them in saving for retirement – the list goes on and on.

Measured progress – and measurable ROI

What has changed is that we are now able to track the progress of these grand designs: you can measure the performance of the plan against what the consultants sold you. You can measure perception of the benefits versus cost of the benefit. With the technology now at our disposal, we can measure the success of campaigns that in the past have been difficult to put a value on. This is a great thing for clients.  For those of you who control the purse strings, you can measure the return on investment – you can decide if your trusted advisors are actually worth the spend!

Take this a step further and you can then correlate portal usage to calls placed to a call centre. We have seen instances where adding content to the portal designed specifically for terminated employees deflected calls to the call centre, which from that audience would otherwise last an average of 45 minutes. Multiply this by your typical turnover rate, and you have a measurable ROI. The instances that such data can be put to use in are endless, and so are really determined by the most burning business issue at the time.

Insight – but watch out for bias

For this reason, the insight that analytics can provide is fantastic. If managed properly, you can have an astounding wealth of information at your fingertips. The potential for transparency, insight, and fairness becomes that much broader.

Couple this with artificial intelligence or machine learning, and the information you have at your fingertips is powerful. But – and this is a BIG but – you have to be aware of bias induced by the data. This can of course seriously impact the decisions one makes with any given set of information, and that brings us back to our duty of care as custodians. Sometimes the analytics say one thing when viewed through one lens, but say something completely different when perceived through another. To be objective stewards of data, we must apply context and reason to what is being said and measured.

The science of HR

At Buck, we remind our actuaries that HR analytics isn’t a new thing. We’ve been in the business of providing data-driven insights for 102 years. In fact, our founder George Buck sold a patent to IBM founder Thomas Watson (yes, that ‘Watson’) for the first punch card verifier. That provided the analytic smarts behind one of the most important data machines of the 20th century.

Just as actuarial analysis is regarded as a science, so too can HR analytics. Developing HR analytics into HR science will help us get better at what we do in HR, as well as how we do it. Predictive and prescriptive insights from data will play a big role in the development of HR science, hastening its evolution. As stewards of the data though, we constantly need to verify whether the context of the analytics is fair, unbiased, transparent and consistent.

What we need to ask ourselves is whether our refinery is producing HR insights that are driving our business. We’ll strike oil when it is.

 

 

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