Finding the value that can be mined from big data.
By David Bernstein
With the advent of big data, HR is poised to become more evidence-based and a true strategic business partner to senior leadership.
It’s clear that companies across the globe are making a big investment in big data. The Wall Street Journal recently reported that 85 percent of Fortune 1000 executives have projects planned or underway for getting more business value out of data their companies generate and collect. And a recent Gartner report projects that big data will account for $28 billion of IT spending globally this year and will increase to $34 billion in 2013.
What isn’t so clear is exactly how organizations will extract real business value from the vast amounts of data they gather. At this early stage of the game, companies are already awash in data. They know there’s value to be mined from it, but they’re unsure of where to focus their attention, how to unearth the insights buried deep within the often-unstructured data, and how to act on their findings with sufficient speed and purpose. These challenges are understandable. After all, we’re entering a promising new frontier that hasn’t been mapped out yet. We’re blazing trails with technologies and software so astonishingly powerful that we’re literally inventing new ways to apply them.
Even in the face of these challenges, big data holds tremendous business potential. And for human resources, in particular, big data offers an historic opportunity: the opportunity to make the most rigorously evidence-based human capital decisions ever made. Big data can help solidify HR’s reputation as a strategic business partner that makes evidenced-based decisions, especially when it comes to talent acquisition. Big data-fueled hiring means getting the right people into the company at the right times, the first time. It means improving candidate sourcing and selection, speeding up the hiring process and reducing costs, all of which equate to significant competitive advantages.
Big Data and HR: Made for Each Other
In many ways, big data and human resources are a natural fit. HR already “owns” much of an enterprise’s most valuable internal data: its human capital information. In fact, HR departments have long invested in software and systems devoted entirely to capturing, reporting, and securely storing its people data. HR also spent the better part of the past decade investing in solutions to manage human capital more effectively. According to Gartner, global spending on talent management software rose to $3.8 billion in 2011, a 15 percent increase over 2010.
If you look at all of these investments in context, you can actually see HR’s gradual movement toward big data-style analytics:
The use of anecdotal evidence. Before HR information management systems (HRIMS) and similar tools were widely available, HR departments were forced to make human capital and hiring decisions based on past experiences, opinions, and hunches.
The use of internal data. As cost-effective computing and data gathering tools became available, HR then began conducting simple “data dumps” and counts to bolster their decisions.
The use of internal metrics. HR began to improve the quality of its decisions by examining the company’s own operational data—e.g., internal sourcing and hiring metrics. This represents the beginning of HR’s shift toward true talent management.
The application of descriptive analytics. The next shift HR makes is toward actual data analysis— looking at information (such as attrition rates) and analyzing past events for useful insights on how to make future sourcing and hiring decisions.
The application of predictive analytics. HR uses big data to determine probable future outcomes of human capital decisions, which represents a significant leap in terms of extracting value from data.
Big data offers HR the opportunity to take its evidence-based decision making to an entirely new level by factoring in an unprecedented amount of data from a wide array of sources, some of which might never have been considered previously. Big data will enable HR to test theories, proactively solve problems, and conduct more complex predictive analytics related to sourcing and hiring strategies.
The real value of big data is that it gives HR the ability to capitalize on more powerful technologies and an exponentially greater amount of data to make more accurate evidence-based decisions and then take faster action on those decisions. This creates significant competitive advantages—not only in the war for talent but also in the organization’s ability to execute its business strategies more effectively. Employers hire for a reason: They have an immediate need for talent that is critical to the execution of their business objectives. Uniformed sourcing and hiring practices lead inevitably to hiring delays and poor candidate selection, and this results in delays to the achievement of business objectives.
Big Data’s Role in Talent Acquisition
One factor that makes talent acquisition so ideal for big data is that CEOs now view talent as a critical component of the organization’s success. In PricewaterhouseCoopers’s 15th Annual Global CEO Survey 2012, 66 percent of the CEOs surveyed believe they need to spend more time developing their talent pipelines. And while almost half of all CEOs are confident their companies will grow over the next three years, only 30 percent believe they will have the talent they will need.
Big data’s potential for improving talent acquisition was illustrated in a recent Wall Street Journal article titled, “Meet the New Boss: Big Data.” The article highlighted the fact that Xerox slashed its call center attrition rate by roughly one half after it began using big data to assess job applications. While the company once hired people based on their job experience, new data evidence informed Xerox that experience didn’t matter in hiring a good call center worker (in this case, one who would remain employed long enough for Xerox to recover its new hire training investment). Instead, the evidence highlighted that personality was more relevant than experience. After a trial period proved the data to be correct, Xerox began hiring all of its call center employees based on this evidence-based recommendation.
Of course, finding the right sources for talent is just as important as finding the right types of talent, and big data can be invaluable in this capacity. It can show employers precisely which sources have the greatest likelihood for generating the flow of the specific types of candidates they need.
Employers need to leverage a mix of sourcing strategies to build their talent pipelines. Savvy employers are careful to allocate their resources—time, money and people—to activities that produce optimal outcomes. Big data can be leveraged to identify sources that will be most effective and what the expected volume of candidate flow will be. The forecast for the optimal sources and the anticipated candidate flow can now be made with greater accuracy and precision. The competitive advantage of knowing in advance which sources will produce the best results is clear.
As noted earlier, HR already has an incredible amount of internal data at its disposal. It has the opportunity to hasten its big data initiatives by plugging into external partners that possess the additional data and the specialized hardware and software required. This is an especially attractive approach for organizations that don’t want or can’t afford to make the infrastructure and other investments to do big data in-house.
Despite the claims of some pundits, job boards continue to be one of the top sources for reaching active job seekers. For example, CareerBuilder’s 2012 Candidate Behavior Study reports that 74 percent of workers are actively searching for or are open to a new opportunity— and over two-thirds of those workers are using job boards to find that opportunity. And CareerXroads’ new report, 2012 Sources of Hire: Channels that Influence, reveals that job boards rank just below referrals as the largest source of external hires. They also provide a goldmine of information for employers and HR departments and represent a viable first step into the world of big data.
Of course, most employers and HR departments won’t have the computing power, the expertise or the storage capacity to launch big data initiatives on their own. They’ll need the assistance of external partners who have been successfully building Big data capabilities and personnel over the past few years.
Another business advantage that big data offers is the ability to eliminate biases among an organization’s hiring managers and other key decision makers. Instead of relying on various opinions, beliefs and instincts, big data’s large data sets and powerful computing technologies impartially identify desirable hiring outcomes.
The Importance of the Human Element
Despite the relative youth of big data, many companies are already losing sight of something crucial—the human element. This is understandable since the technical and technological aspects can pretty easily become overwhelming. But the fact is, big data is nothing without the right people.
At its core, the real value of big data lies in the answers it can provide, the insights that can be derived, and its ability to enable business users to ask new kinds of questions that could not previously have been answered. Big data only achieves its full potential when this information is analyzed, interpreted, reported, and put to use by an organization’s people. In this respect, the promise of big data could easily be squandered if HR doesn’t help to lead the big data charge, especially where talent acquisition is concerned.
It’s no exaggeration to say that HR will be on the front lines in helping their organizations find the right people with the right skills for putting big data to use. According to a report published by McKinsey, this won’t be easy. The report states:
“A significant constraint on realizing value from big data will be a shortage of talent, particularly of people with deep expertise in statistics and machine learning, and the managers and analysts who know how to operate companies by using insights from Big data.” McKinsey researchers envision a need for 1.5 million additional data-savvy managers in the U.S. alone to analyze, interpret, and share big data findings effectively.
Obviously, HR will be charged with helping to find these individuals and assisting in the assembly of teams with the right mix of business, analytical and technical expertise to unleash the power of big data.
The time has come for HR to raise its profile as a strategic business partner by plugging into big data and lifting talent acquisition strategies to a new level of success. Talent acquisition touches every part of the organization. Nothing else is as critical to the organization’s ability to achieve business objectives. With help from the right external partners, HR can jump-start their organizations’ big data efforts, make decisions that are exponentially more evidence-based, and build strategic business advantages that will empower the entire organization.
David Bernstein is the vice president of eQuest’s big data for HR/predictive analytics division.
Big Data Defined
The definition of big data depends on the industry, company, or expert offering it. Generally, though, big data refers to a collection of large amounts of information and complex data sets from a wide variety of sources. Big data initiatives are characterized by three criteria:
1) Volume (the data sets used are enormous);
2) Variety (data streaming in from a vast number of sources); and
3) Velocity (the increased pace at which data is being created and then incorporated into the analytic process and the ability to put the data to use in real time as it streams in).
The main challenge of big data for most organizations is developing the ability to tap into and extract value from all of this information. It takes tremendous resources and expertise to acquire, normalize, process, and analyze big data in real time.
In the past, technology and computing limitations made big data analysis impossible. Companies wanting to glean insights about their business practices had to scrutinize smaller amounts of data from a limited number of sources. Big data has changed this forever.
As business strategist Dion Hinchcliffe of Dachis Group wrote in the article, “How is Big Data Faring in the Enterprise”, for ZDNet.com, “Just like Google enabled the layperson to query the entire contents of the web with a few keywords, the next generation of enterprise big data seems to be about connecting workers with the data landscape of their organizations.”
The Power of Today’s Evolved Job Boards
While the members of the global job board community ranks have changed over the past decade, thousands of job boards continue to fulfill their mission of connecting employers and job seekers. The boards that died off did so not because the job board model itself isn’t sound but because they failed to stay relevant to all of their constituents—employers, recruiters, and job candidates.
Some boards failed to update their technology sufficiently. Others failed to understand and respond to the needs and behaviors of their users. Still others failed to deliver the metrics and analytics that employers now rely upon to justify costs and make informed sourcing decisions. The best job boards, on the other hand, have evolved. They remained in sync with their users’ needs, making the necessary adjustments and investments to improve sourcing effectiveness.
Matt Ferguson, CEO of CareerBuilder, explains, “The way companies recruit today is different from ten years ago. Job candidates use up to 15 resources for finding a job, so it’s critical to be everywhere they are. CareerBuilder is automating the sourcing and candidate engagement process through our talent network solution, SEO [search engine optimization], career sites, social media, job aggregation, mobile. We use digital technology to promote job opportunities to candidates at every touch point.”
Today, job boards enable employers to do much more than post open positions. They help employers engage candidates in meaningful ways via discussion forums, blogs, helpful content and other tools. They have become an important resource for employers to establish and promote their recruiting brands.
When asked about this resource, Gerry Crispin of CareerXroads says, “Job boards remain an essential step in the dance many employers and job seekers perform in order to meet, greet and engage one another. Easily 10 to 20 percent of all hires will be attributed to job boards each year for the foreseeable future.”
Bottom line, today’s job boards continue to be a top source for tapping into active candidates and an important part of a sound talent acquisition strategy.