Hunch Based Decisions vs. Data Based Decisions
Human Resource departments have historically made decisions based on intuition and experience. Many publications indicate that this is a flawed approach and most of us who have at one stage felt aggrieved during a subjective performance review will probably tip our hat in agreement.
Many forms of bias creep into the decision making process when there is no data available or where the data is ignored. So more information will lead to better decisions. Problem solved.
If only it were that simple. Daniel Kahneman and Amos Tversky both identify factors that cause people act against their economic interest. In some cases, even when we have perfect knowledge, we still chose a more trouble laden route.
People Analytics does not completely eliminate bias but it does help reduce the problems caused by making decisions with limited data or decisions that are based solely on intuition, hearsay and experience. Cade Massey, professor of operations and information management at Wharton outlined “ I am sure there are some situations where we can take a bias all the way down, but mostly we are just trying to improve”.
When it comes to people data, in particular employee feedback, it is prudent to ask the obvious questions. Is the people data gathered using traditional performance reviews and 360 surveys a reflection of what employees really think? Or is it what employees think someone else would like to hear. The dangers of willful blindness are brilliantly outlined by Margaret Heffernan in her book “Willful Blindness -We ignore the obvious at our peril.
Great managers don’t need structured reviews or surveys to tap into valuable feedback. For them it is part of the daily routine of supporting and developing people. Unfortunately not all managers are great and as a result significant resources in terms of time and money will continue to be spent on analysing surveys and creating strategies based on the incomplete data contained inside them.
HR data analysis has exploded recently and when used correctly can provide valuable workforce insights. It is necessary, however, to question the honesty and validity of the data that is being analysed. Companies need to embrace the naysayers and the outliers.
Most would agree that people are an organisation’s most valuable asset. This is certainly true in the knowledge based economy where people are usually the competitive advantage. They also account for up to 60% of operating expenditure so it makes sense to analyse such a large cost item.
The world of sports used a data driven approach (in order to achieve better performance) long before the corporate world. The evidence is clear that this approach is successful. However, in the world of sports the data driven approach is coupled with a strong emphasis on mental fitness. This is key to achieving better performance. In the workplace people metrics can offer serious value but it could be part of a larger strategy to stop managing employees and start supporting individuals.