Here are some interesting stats by Deloitte. In 2015, only 24 percent of HR organisations felt ready for Analytics and no more than 4 percent believed they were fully capable of developing predictive models. By 2016, the percentage of companies ready for Analytics had increased to 32 percent, while 8 percent believed to be capable of building predictive models. This rise in confidence is encouraging of course, but ‘Algorithm Aversion’ is still a thing. That’s why it’s time to get some of the myths around HR Analytics out of the way: Here are 4 Myths Demystified.
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I. Human Judgement Beats an Algorithm
We humans are strange creatures. We tend to think our own judgement is best, even if we have proof showing us otherwise. Unfortunately this is no different in the HR industry. Even when HR professionals use data in their daily tasks, it still often happens that they trust their gut rather than the numbers.
Researchers call this phenomenon, where people have more faith in human beings than in machines, ‘Algorithm Aversion’; even when an algorithm consistently beats human judgment, people prefer to go with their gut. Unsurprisingly, this rather daft behaviour of ours, can affect the business and cost the organisation a lot of money. According to the HR Trend Institute, algorithm aversion is one of the obstacles for the use of Analytics in HR and the question of how to overcome it will be an important topic for 2017.
Time will probably solve part of the problem. As more companies get into Analytics, more people will get familiar with the use of it. Over time, the statistics about HR Analytics will increase and the benefits it can have for organisations will become all the more obvious. But instead of simply waiting around for time to go by, a small leap of faith from the HR Community would be a big step in the right direction. So next time an algorithm ‘tells’ us something, let’s try to forget about our gut…
II. The More Data, the Better
When you put it like that, it seems pretty obvious that this isn’t the case. But with all the available technology out there it’s easy to get lost in the big web of data, and before you know it you are gathering and using information that isn’t relevant for your organisation. That’s why you need to have a clear strategy. Before you start collecting any data, you need to make a plan and determine what your objective is. Besides data, your master plan should include which analytic models and tools it needs. Once you start gathering the relevant data, make sure you store it all in once place, so you can have a thorough analysis of how the company is doing.
If you want to read more about making your business more data driven, go here for 6 Do’s and Don’ts.
Back to the myth now, the most important thing to take away from this one is: More data does not equal more insight. Random data collection without a bigger purpose behind it is nothing more than a waste of valuable time and resources.
III. HR Isn’t Ready for (Predictive) Analytics
In one of our first blogs we said:
“So after Marketing, Finance and many other business sectors it seems that HR is finally catching up. The time of Big Data being for geeks and scientists is officially over and datafying your HR department is slowly becoming inevitable. But trust us, once you’ve set your first steps into the world of data, you’re going to be hooked!”
Although you don’t have to take our word for it, this quote pretty much demystifies the myth. HR is indeed catching up and the numbers at the start of this post clearly show a growing interest from within the HR Industry. HR Analytics Manager Esther Bongenaar put it this way: “HR will never mature if it doesn’t just adopt analytics. Others (Marketing, Finance, Retail, Operations) have adopted analytics because there is a business value in it. HR should do the same. Analytics is a set of tools to help separate the wheat from the chaff, facts from feelings.”
Now, do we really need to say more?
IV. Analytics Specialists Are Crucial (and need to be hired)
It’s true that you’ll need people with specific (statistical) knowledge and skills. We spoke about this in our People Analytics Q&A with David Green. You don’t necessarily need to hire them though. There are third party providers who can help you with your ‘Analytics Plan’. Those companies know exactly what they’re doing and you can select one that specialises in HR. However if you do want to create your own team of experts, you could have a look at statisticians that already work elsewhere in the organisation (in the marketing department for example).
You can read more on both of these solutions here.
So yes, you do need the right people, which makes this myth partially true. But you don’t need to hire an army of employees before you can start with HR Analytics and have a meaningful impact on the business. Speaking from our own experience: When an organisation starts using TalentPitch, our consultants train their recruiters in using the software and making sense out of all the data. This makes it easy to turn your recruiters into data driven decision makers!
