What Most HR Departments Still Don’t Get About Big Data

There’s no shortage of articles in Forbes, Harvard Business Review, LinkedIn, and elsewhere telling HR departments that “Big Data changes everything!”  The main thrust of these articles is HR needs to use “talent analytics” (as Big Data is known in HR) to better hire, manage and retain talent.  I call this Big Data as a Tool because it’s where HR uses Big Data to do its job better.  But the full benefits of Big Data are only available when HR recognizes and takes a leadership role in two other aspects of Big Data: Big Data as Culture, and Big Data as Outsourcer.

Big Data As Culture

Big Data as culture refers the disruptive cultural effects — both negative and positive — that Big Data can have on organizations.  Specifically, Big Data will come to replace personal expertise and heirarchy (not so affectionately known as HiPPO) as the standard bearer for right and wrong.  Get ready for the new kid on the team to contradict the boss … and have the new kid be right.  And be able to prove it.  Tension and bruised egos accompany all transitions, and HR’s adoption of Big Data is no exception.

And what’s happening in HR is happening in every department.  As I’ve written about before, and help organizations overcome, Big Data is not only disruptive in industries (as when an upstart company supplants a legacy one), it’s also disruptive in companies.  When data-driven employees ignore departmental lines and show established “facts” in other departments wrong, I’m sure you can imagine the political infighting that results.  Or the significant competitive advantage for those companies that overcome the infighting and implement what others are too politically afraid to even consider.

In my experience, culture is the Big Data differentiator.  Anyone can amass a big pile of Big Data and run lots of analysis. It’s the companies that can act on those insights — despite the discomfort — that pull away from the pack, as Apple, Amazon, and Google have shown — three companies well-known for both harnessing data and for irreverent leadership that doesn’t suffer politics gladly. Big Data will certainly bruise some egos, and likely cause a few defections. But the alternative is to let competitors absorb the discomfort you couldn’t and be able to execute on the insights you discovered but couldn’t stomach.

HR’s Big Data As Culture Leadership Role

I believe HR has a leadership role in the culture shift brought about by Big Data.  First and foremost, by walking the walk: HR needs to learn from it’s own cultural experience with Big Data.  And then be a mentor to other departments experiencing similar disruption.

Second, HR needs to get out ahead of these predictable and foreseeable problems.  At a minimum, HR should join with IT to ensure that any Big Data training include a discussion of the possible pushback and how to navigate those waters. Indeed, it’s borderline reckless for an organization to encourage wide-ranging data access (including cross-departmental data access) and not include a discussion of how to navigate the possible resulting friction.

And lastly, HR must help prepare for a data driven talent pool.  As McKinsey reported, there will be a shortage of 1.5 million data driven mangers by 2018.  With such a shortage, data driven managers will be spoiled for choice about where they work.  If your talent analytics says you need more data-driven employees (as indeed it will), you’ll fail attract and retain such talent if you can’t help leadership pivot to the data driven environment.  Data driven managers don’t stick around where there’s resistance to listening to the data and a preference for the political status-quo.

Significant competitive spoils go to those who recognize HR’s co-equal standing with IT in implementing Big Data.  Big Data is as much about culture as it is about technology.  HR is not simply a user of Big Data as a tool, it’s also an essential advocate for the cultural shifts Big Data brings.

Big Data As Outsourcer

Big Data, like many technologies before it, will further automate tasks and displace workers.  It first happened with agriculture, which in 1900 employed 41% of America’s workforce but today employs less than 2%.  Displaced agricultural workers initially migrated to manufacturing, but then automation caught up and manufacturing jobs went from over 30% of the workforce to less than 10% today.  For the last half century, the service sector absorbed lost manufacturing jobs

But now, again, automation is catching up.  Specifically, Big Data is encroaching on the skill-centric automation (as opposed to muscle-centric automation of yesteryear) and white collar jobs, regardless of education level, will likely cede jobs to software based on Big Data, up to 50% of existing white collar jobs, by some estimates.

Big Data’s incursion into white collar jobs is not new.  Most famously, two MIT professors have been talking (here, here, here, and here) and writing about it for several years now.  But the discussion seems largely confined to socio-economic think pieces and academic papers.  The time has come for forward-looking HR departments to pull these predictions down from the ivory tower to begin actual planning.

Which raises the question — what is the relevant timeline for HR departments to adopt and adjust to Big Data?  By one estimate, fully pivoting a company to data driven takes 5-8 years, which would take us to 2023.  By that time, the job displacement effects of Big Data will be manifest.  The upshot is that HR departments must learn to deal with all three Big Data impacts simultaneously.

The Take Away

Big Data will bring significant upheaval to companies, and HR is no exception.  For market leading HR departments, the first competitive advantage comes from recognizing that HR isn’t just a user of Big Data as Tool, but has an active role to play — equal to IT, I believe — in helping companies overcome Big Data’s two other aspects: Big Data as Culture and Big Data as Outsourcer.