Recruitment

Your people are the powerhouse of your company and recruitment is key to getting the right talent on board. But the reality is that recruitment is an HR process plagued with biases that can lead to costly hiring mistakes.

The Harvard Business Review article “In Hiring, Algorithms Beat Instinct” suggests that 85%–97% of professionals rely on intuition when it comes to assessing a candidate. A poor hiring decision made on intuition alone can cost you thousands of dollars. In a 2013 CareerBuilder survey, 27% of employers said a bad hire cost them more than $50,000.

You’re more likely to find the right fit when hiring decisions are supported by hard data (e.g., analysis of skills, knowledge, and experience), coupled with manager input. Studies show that companies that make fact-based workforce decisions perform better than those that don’t. A 2013 CEB Corporate Leadership Council survey found that companies leading the way in the use of analytics had 12% better talent outcomes than the average company.

Compensation

According to Laine Thomas Conway, a partner in the Talent & Rewards Best Practice team at Aon Hewitt, data should be used to drive compensation decisions, especially as variable pay becomes more common. At a baseline level, data can be used to determine internal benchmarks (pay ranges), external benchmarks (market pay), and performance ratings. Thomas Conway cites two obstacles to the use of data for compensation decisions: 1) data is not readily available, and 2) managers are not trained how to use data effectively. Without the use of hard data, compensation decisions are often made on personal judgments that can lead to inequitable pay practices.

Paying employees is the most expensive budget item for most companies. That’s why it’s so important to make sure you’re compensating your employees in the most efficient way possible. Sticking with the status quo is the easiest thing to do, but not knowing your employees’ real value may have a direct impact on your company’s recruitment and retention initiatives. When it comes to compensation, data analytics can give your company the upper hand in securing the top talent you need to succeed.

Retention

Another advantage of using big data in the workplace is the opportunity to learn why employees leave – and what makes them stay. With the use of data analytics, Xerox cut its call center attrition rate by 20%. Data helped Xerox determine that individuals they identified as “creative” types were more likely to stay with the company than those who were “inquisitive.” They gathered data by putting applicants through a series of tests and then tracked their job performance.

In addition, Xerox identified several characteristics of their ideal call center worker. He or she is a person who lives near the job, has reliable transportation, and uses one or more social networks, but not more than four. And he or she tends not to be overly inquisitive or empathetic, but is creative. Since Xerox invests $5,000 to train each call center employee, reducing attrition was a big win for its bottom line. These types of employee insights are universal and apply to all businesses of any size. The key is to find the right partner to help you turn raw data into winning solutions.

Source: "Meet the New Boss: Big Data," The Wall Street Journal, http://www.wsj.com/news/articles/SB10000872396390443890304578006252019616768