People data – How far is too far?
By Craig Renshaw, Manager, Human Capital Consulting
Workforce data is on the rise
The 2018 Deloitte Human Capital Trends (HC Trends) Report [i] ranked Data and Analytics as the second most important trend globally - and it is easy to see why. Workforce data usage has surged over the last few years, which has brought rise to an array of opportunities and risks. It has become vital in this new age of information that organisations understand how to best leverage their data to achieve optimal business outcomes.
The New Zealand specific statistics on data importance and readiness paint a concerning image. While 77% of national respondents rated it as an important or very important trend, only 23% indicated that they were ready to take on the challenge of protecting their data. Globally, 42% of respondents indicated they were ready to take on the challenge, which illustrates a gap in the readiness of NZ businesses.
People analytics has gone mainstream, and has offered businesses a rapidly growing ability to hire, manage, retain, and optimise their workforce. In Deloitte’s 2018 Future of Work (FoW) report, over 2,200 SMEs ranked ‘big data’ the highest in likelihood and third highest in impact out of 75 forces on the future of work. [ii] Three converging forces can broadly explain the surge in analytics: [iii]
- A growing emphasis on critical workforce issues such as productivity and employee engagement, as well as on social issues such as diversity and gender pay equity;
- New sources of data through HR investments and technologies;
- Growing anxiety from organisations about their ability to protect employee data, and for good reason. This year, only 10 percent of FoW survey respondents felt that their companies were “very ready” to deal with this challenge.
Workforce data is powerful and on the rise, so it is essential for businesses to understand how to make best use of it.
The rise of the exponential organisation
Organisations are increasingly leveraging workforce data to improve their talent and efficiency. The HC Trends Report highlights that effective data creates comprehensive “employee listening architecture,” providing useful insights about the entire employee experience, including data on job progression, career mobility, and performance.
The Deloitte 2018 FoW report highlights several key and emerging realities that are most critical to the future of work. The first of these is the rise of exponential organisations. Exponential organisations (ExOs) are organisations that have a disproportionately large impact in their field due to their ability to capture the value unleashed through technology and data, and they are increasingly out-competing their rivals.
An ExO finds the balance between people, technology and data to create opportunities in untapped markets. To do this, ExOs build capabilities around statistical reasoning, data manipulation and data visualisation, and use these in conjunction with soft skills such as communication, problem solving and creative thinking, in order to leverage their resources. A concrete example of data utilisation by an ExO is that of a leading medical practise using cloud technologies and data science to provide precise health care and value to patients, outperforming similar providers. [iv]
The second reality in the FoW report, the ‘unleashed workforce’, also touches on workforce data utilisation. It suggests that HR recruitment and management processes that have adapted to the use of data and technology have been able to make efficient fact based choices. This has enabled HR to reduce proven biases against women and minorities, resulting in a diverse, inclusive and more capable workplace.
A new age of risk
Organisations are struggling to get their heads around the vast pool of workforce data. Data is growing rapidly – some experts estimate that 90 percent of the world’s data was created in the last 2-3 years. [v] It is therefore crucial to implement a data-driven business model, one that leverages useful data to inform decision-making and create competitive advantage.
High-risk data, defined as “data likely to result in a high risk for the rights and freedoms of individuals”, should particularly require better protection. 69% of NZ organisations reported that they are actively managing legal risk from data usage, and 31% reported they are actively managing consumer brand risks.
Other privacy issues can arise from non-“high risk” data, but from data that feels obtrusive to the individual(s) from which it was collected. An example, outlined in the HC Trends report, is that of one employer who installed heat body detectors at desks to track hours spent in the office. Employees reacted with concern, lodging complaints with managers and presenting harmful stories to the media. This such instance has obvious negative repercussions to workplace culture and organisational reputation, and is a common concern. Likewise, cybersecurity attacks are a big risk to the security of organisational data, and is particularly concerning given only 25% of NZ respondents indicated they had excellent security measures in place.
Aside from the usual security concerns, there are new emerging risks and concerns that algorithms and machine-based decisions could perpetuate bias and errors through flaws in the underlying data and algorithms. Business leaders are realising that collecting data does not guarantee that data-driven insights will be understandable, accurate, or good. [vi] In response, companies like Facebook and Twitter are hiring thousands of people to monitor their AI-based social networking and advertising algorithms. HR organisations must be rigorous in monitoring “machine-related” decisions to make sure they are reasonable and unbiased. [vii]
How we can help
Many NZ organisations are not prepared to prioritise data utilisation as part of their business strategy. Research showed that many New Zealand organisations do not have strong data governance structures, have limited understanding and capability within their HR teams relating to data governance, and limited data security measures in place.
Deloitte has a number of subject matter experts in workforce data and analytics, and has worked with a range of clients to improve their data strategies, tighten up data security and lift the capabilities of workers in order to maximise efficient use of data. Our Human Capital team can support your organisation in driving effective data management and utilisation, and improve workforce understanding of its importance and security measures.
[i] Deloitte, HC Trends Report – The Rise of the Social Enterprise, 2018.
[ii] Deloitte, The Evolution of Work, 2018
[iii] Deloitte, HC Trends Report – The Rise of the Social Enterprise, 2018.
[iv] Jennie Dushek, ‘Stanford Medicine, Google team up to harness data sciene for healthcare’, News Centre 2017
[v] Mikal Khoso, “How much data is produced every day?”, Deloitte University Press, 2016
[vi] Christopher Mims, “Without humans, artificial intelligence is still pretty stupid,” Wall Street Journal, November 12, 2017.
[vii] Ibid.; Todd Spangler, “Mark Zuckerberg: Facebook will hire 3,000 staffers to review violent content, hate speech,” Variety, May 3, 2017; Benjamin Mullen, “Twitter is hiring people with ‘newsroom backgrounds’ as real-time curators,” Poynter, June 18, 2015