Big Data for HR: Can Predictive Analytics Help Decrease Discrimination in the Workplace?
After four months of rejection by employers, a man named Kim did one simple thing that changed his luck. He added “Mr.” to the front of his name on his resume. And then he got a job.
Discrimination and bias, often unconscious, are still alive and well in the United States’ workplace.
Take a look at these studies: Recruitment firm Hays created two resumes, one for Susan and one for Simon. The resumes were actually the same, just named differently. They then asked hiring managers to evaluate the candidates based on their attributes and suitability. In large companies, which means over 500 employees, 62% of hiring managers said they’d likely interview Simon, while only 56% said the same about Susan. The more experienced hiring managers, ones that hire more than twenty times per year, had the same bias: 65% of them preferred to interview Simon.
This bias against women happens in all industries. In the top research universities, budding female scientists are rated lower than male scientists with identical credentials.
Bias Doesn’t End With Gender
Unfortunately, there is more to a name than just an associated gender. When it comes to minorities, the statistics are staggering. Cambridge-based National Bureau of Economic Research created two comparable dummy resumes, half of which had “white-sounding” names and half of which had “black-sounding” names. They then responded to 1,300 classified ads and found that black-sounding names were 50% less likely to get a callback than white-sounding names.
What’s even more shocking is what happened when they sent out resumes that were of exceptional quality. The high-level resumes improved the likelihood of getting called by 30% for those with white-sounding names. Yet for those with black-sounding names, the same exceptional resume only increased their likelihood of a call by 9%.
What we are seeing is that bias, unconscious or not, is a very real thing, and being qualified doesn’t override it.
Diversity Improves the Bottom Line in Organizations
Aside from the difficulty this causes for the applicants, lack of talent diversity makes organizations suffer. Here are four examples of the measurable, positive effects that employee diversity has on organizational success.
- Catalyst took a good look at Fortune 500 companies with women on their board of directors and found that these companies had a higher return on equity by at least 53%, were superior in sales by at least 42%, and had a higher ROI, to the tune of 66%. Those are not small numbers.
- McKinsey quarterly reported that between 2008 and 2010, companies with more diverse top teams were also top financial performers.
- When 321 executives at large global enterprises ($500 million plus in annual revenues) were surveyed for The Fostering Innovation Through a Diverse Workforce study, diversity and inclusion were identified as the key driver of not only internal innovation, but also business growth.
- Groups of diverse problem solvers outperformed groups of high-ability problem solvers, according to a study by Lu Hong and Scott E. Page.
- According to PwC’s 18th Annual Global Survey, 85% of CEOs have said that having a diversified and inclusive workplace population improved their bottom line
Plain and simple, diversity breeds innovation. It’s not only the right thing to do; it’s the right thing to do for the bottom line.
After years of trying to eliminate bias and discrimination in the workplace by legal means, the truth is that it still exists. Where are we going wrong?.
Big Data For HR is the Next Frontier for Eliminating Workforce Discrimination
Big data for Human Resources (known as predictive analytics, talent analytics, workforce analytics, HR analytics, and human capital analytics) may be the next frontier for cutting discrimination and bias. We can’t give up on humanity to move past discrimination, but advanced technology can work in partnership with people to bridge the gap of inclusion.
HR analytics is the practice of using qualitative and quantitative data to bring predictive insight into the decision-making needed to manage the people in organizations. It is not simply about raw data; it is about what insights that raw data can provide, when combined with a range of measurements and tests, to move closer to answering questions relevant to your organization. While HR analytics may look to the past for data, its main function is to create predictive behavior for the future.
The results of using data analytics can be seen in the numbers. Organizations and top performers with advanced analytics strategies tend to enjoy increased revenue growth and operating margins of 15% or more. In fact, organizations that leverage people analytics capitalize on predictive modeling, giving them unique insight into future issues and how to address them. However, the greatest impact is the ability to accurately measure the value and impact of investments and elements of an organization.
Five Ways HR Can Use Predictive Analytics to Move Past Discrimination and Bias
Using a data-driven approach to decreasing bias in organizations moves far beyond using a platform to hide the name and gender during initial screening from hiring managers. There are many high-level ways where it can help. Here are five ways HR analytics can be used to help organizations move past discrimination and bias:
- Perhaps the most impactful use of HR analytics is how data can be used to influence top leaders. Data can be presented in graphic and statistical reports in ways that are easy for leaders to understand. When armed with facts that are clear and actionable, decision makers will be able to tackle pinpointed organizational issues, and use resources appropriately.
- When tackling complex questions, organizations can use in-memory analytics, which are designed to deliver multi-dimensional analysis. For example, for an organization to tackle pay gaps, they may want to know if their minority employees receive raises at the same rate as the rest of the population. This question has many layers such as rate of change across populations, whether performance standards are equal among populations, market pay rates, employee tenure and more.
- Organizations can use predictive analytics to determine who is at risk for resigning. Recruiting diverse talent is one thing, but if your minority talent resigns, you haven’t done much to improve the diversity of your workforce. Predictive analytics can look at specific gender or ethnic populations to determine who is likely to resign, and HR can use that information to create initiatives to improve the work experience of those populations more likely to leave.
- Companies like Seedcamp move beyond demographics by using psychographics (the study of personality, interests, work style, etc.) to identify teams with the greatest chances for success. The individual is seen as a team member from the start, which helps not only find a candidate with applicable experience, but also a candidate who is a good fit. Companies that are using psychographics are able to eliminate the constraints of the information provided by a resume alone, as well as the unconscious bias that resumes often carry with them.
- Using data can also enable companies to focus on the core vales and behavioral traits of candidates. Saberr uses algorithms to compile, process and compare the fundamental values, behavioral compatibility, and diversity to predict the potential strength of the interpersonal relationship between the applicants and potential employer. They do this with a survey for both the applicant and the employer that moves past skills and credentials, thereby bypassing initial bias in the hiring process.
Examples like these give us just a glimpse at the potential big data has to enhance effectiveness of HR leaders, who may otherwise be primarily influenced by their own human experience. According to a 2016 Human Capital Institute survey, nearly 80% of leaders were still using gut feeling and personal opinions to make decisions that affected talent-management practices.
When you are part of a human system, it is very difficult not to make decisions based in your own experiences in life. On a basic level, people tend to hire those like themselves regardless of gender or race. Add in our instincts, relationships, work experiences, generational traits, and deeply ingrained cultural belief systems and what do you get? A lot of unconscious forces that can interfere with our ability to hire and promote in a truly unbiased way. Turning to a more data-driven approach will mitigate those factors, and potentially move the United States’ workforce into one that reflects its rich cultural diversity, no longer leaving the talent of women and minorities untapped.
Using big data to inform decisions about human beings can make some people uncomfortable. How do you feel about it? Do you believe it can make a difference in increasing diversity in the workforce? I’d love to hear your opinion. Please leave a comment below, send me an email, or find me on Twitter.
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Photo credit: orvalrochefort / Foter / CC BY-NC-SA
Jeroen de GoeijApril 10, 2016
I am looking to this at a Dutch point of view as I am a management consultant working in the Netherlands. I am very interested in the opportunities that rise from new technologies like big data. Applied to talent management, but also aplying it to hospital logistic issues.
Workforce discrimination, racism, gender discrimination are big problems in the Netherlands as well. To breakdown the forces of discrimination and cultural bias is not only profitable for organisations and society, but also just. Utilizing technology to achieve this is fine with me. As long this is used wisely and ethical.
Jeroen de Goeij
Anne LoehrApril 13, 2016
Thank you so much for your thoughtful comment. Interesting to hear the Netherlands are facing similar challenges with workforce discrimination, racism, and gender discrimination. I agree with you– as long as it is used wisely and ethically, I am okay with using technology to change the discrimination game.