Big Data in HR: Why it's here and What it means

Big Data in HR: Why it’s here and What it means

Without a doubt, big data, predictive analytics and data science are some of the most used terms in the tech space these days. Many will tell you that the future of every industry, leave alone recruitment, lies in exploring the “immense potential and possibilities” offered by these technologies. While this might be very true for some sectors, (healthcare, banking and finance), is recruitment also one of those industries is the big question. Does big data spell big changes for recruitment in the future, or all we are witnessing is a false rhetoric? Let us examine.

What is Big Data in HR?

When the term ‘Big Data’ was being used in the lunch table conversations in 1990’s at Silcon Graphics, even John Mashey, the person attributed to popularizing it must have not imagined in his wildest dreams that this would become one of the hottest topic of discussion in the near future. Beyond 2002, big data has emerged as the strongest contender for becoming “the transforming technology” for every industry. The growth in its significance over the last few years can be attributed to its pervasive nature, with applications ranging from meteorology to preventing epidemics, revolutionizing healthcare to preventing crimes. Yet, there is little that is defined about Big Data, except for its definition, may be. Majority of us know big data as

“Big Data is high-volume, high-velocity and/or high-variety information assets that demand cost-effective, innovative forms of information processing that enable enhanced insight, decision making, and process automation.”

The 3V’s of Big Data as defined by Gartner are:

      Volume: Volume refers to huge amount of unstructured datasets to the tune of many terabytes and petabytes

      Velocity: The data is being generated at speeds far greater than we can process.

      Variety: Data comes from a number of sources in a number of forms. New forms of unstructured data are being generated.

Where does all this fit in the scheme of HR related processes like recruitment?

We have found divided opinions when it comes to the usability of Big Data for HR. Experts believe that in the current situation, there is not much utility that can be extracted out of big data and analytics. First of all, going by its popular definition, Big Data needs to be a collection of huge unstructured datasets. Now not many organizations have thousands of employees and even that number is not big enough to be considered for a reason to use sophisticated tools and software associated with big data. These analytics tools are still “work in progress” and moreover, it can take months to set them up before they are able to spew out any useful information. Does HR have this kind of time at their disposal?

Role of Big Data Analytics in HR

Those who think Big Data and HR analytics have the answer to all hiring problems of the HR are forgetting that these questions have been a part of discussion right from the history of recruitment. What makes a good hire stay?  Which qualities constitute a top class employee? These questions have been dealt with in detail through multiple researches and surveys throughout the history of recruitment across industries. If we hope to add some new insights to the already available information by spending thousands of dollars on developing analytical tools, we might be fooling ourselves. Google’s Project Oxygen is one such example.

(Also Read: 5 HR Trends To Watch Out For In 2018)

Yet why such huge noise about Big Data in recruitment? There are many HR software providers who swear by the power of Big Data and HR analytics. Surely, there must be something more that meets the eyes.

Start by making sense of the basics first. Use small data to its fullest potential.  Most ATS or Recruitment Management Systems provide a variety of data in form of candidate sourcing reports which have various parameters that keep a track of channels that bring in the best candidates. These automatically generated reports carry a wealth of information and do not require any manual intervention. Also monitor stage-to-stage hiring metrics and identify bottlenecks if any that are causing the process to become slow.

In HR, data is of key importance without any doubt. Whether it is recruitment or human resource management or performance management, it’s the numbers that matter. However, the data associated with all these processes resides in different databases. Until we are able to combine these databases in a compatible manner, we might not be able to answer even the simplest questions. Once you have a common database, it becomes easier to analyze it and identify predictive patterns.  You should be able to understand the relationship among the data to really make sense of it.

Importance of Big Data in HR

Every recruiter wants the best numbers against their names when it comes to measuring their performance through a host of recruitment metrics such as offer acceptance ratio, retention rates and cost per hire or quality of hire. What if data could help you in driving all these metrics to their best conclusions? Wouldn’t it be a value proposition to use data driven approach to recruitment if it guarantees you a better success rate by

Importance of Big Data in HR

more than 300 percent? (Precision Metrics). Benefits of data driven recruitment are plenty for the recruiters. They can benefit from a data driven approach to hiring in terms of improved employee retention rates, reduced hiring errors and a bird’s eye view of the overall recruiter performance.

Impact of Big Data on HR

Let’s look at a big data hr use case. Take talent acquisition for example. A number of stakeholders are involved in the talent acquisition process and also a number of man-hours that are spent in zeroing on who you think is the right candidate. However diligent you might have been in your pursuit, there were few ways to tell that the person you have hired will stay for the long term, or will prove a valuable resource for the team.  This challenge was always a sore point for the recruiters, and still remains so, but those who have been able to develop the ability to harness and understand the data about their hires are making the most impact and have been partly able to offset some of the uncertainty that comes with talent acquisition. Hence, some of the benefits that you can experience with big data predictive analytics are

1) Reduced recruitment time

2) Reduced human bias and increased workforce diversity. According to McKinsey, for every 10% increase in diversity, profits can grow by up to 3.5%.

3) Improved hiring quality. Engage with the best talent before competition.

Implementing an Effective Data Driven Recruiting Strategy

Data in itself is not the game changer. The ability to collect, analyze and use this data for improved decision making facilitates limitless possibilities for enterprises. Collecting data is not a new exercise, even in HR. Most HR management software provide the most essential recruitment metrics like cost per hire. The need is to move further from simply collecting data to letting it drive decisions.

1) Develop a formal data driven strategy: Once you have a holistic view of the data, it’s important to identify the key takeaways that you want from the data analysis. For the same, it will be good to have a formal strategy. While every organization will have its own priorities, long term objective and ongoing goals, the strategy should be able to clearly define how recruitment is driving business results.

2) Integrate the data:  If your recruitment data is disintegrated, it won’t make much sense in itself. Any hiring manager would face challenges in fully realizing the potential benefits of a disjointed set of data. Thus the first step is to gather data that relates to different parts of the recruitment process as well as measure the performance of any and every tool being used. The easiest way to achieve this objective will be to connect all forms of recruiting technologies, with data from each solution accessible from one centralized location.

3) Choose HR analytics solution provider:  HR organizations rarely create their own talent analytics tools; instead they prefer to find worthy vendors who have a proven track record of driving performance. Owing to these vendor based tools, the potential of data and analytics in talent acquisition is being exploited by companies of all sizes and the benefits are not limited only to the largest organizations.

In terms of functionalities, you should be looking at:

 

Implementing an Effective Data Driven Recruiting Strategy

There are no two thoughts about the fact that the future of recruitment will be driven by data and analytics. Yet, we do not see a heartwarming adoption of data based tools in recruitment organizations currently. Meager 14% employers are currently using advanced analytics to make talent decisions. LinkedIn, in its research, reveals that three out of four organizations do not use data at all for any of their talent acquisition decisions. But the future is going to change all of this and that too at a breathtaking pace. As an HR manager, it shouldn’t be a problem for you to build a strong business case for tools and technologies that will support end to end business goals.

(Also Read: The Importance of HR Analytics in an Organization)

What is the Impact of Technology on Recruitment?

What is the Impact of Technology on Recruitment?

The role of HR has never been more crucial. With organizational excellence being the need of the hour, only the companies that focus on innovation, engineering, teamwork and people, will be able to achieve this as the most likely outcome. However, until HR stuck to its traditional role of workforce administration, it did not elicit as much importance as it does now. It was only once leaders and senior executives realized its strategic importance in contribution towards business results, the focus turned to making HR capable of driving a high-performance culture that lead to attainment of growth objectives.  This is where technology came to rescue; tools were developed and introduced that could help HR sustain its strategic efforts.

HR Technology became a fundamental prerequisite instead of being merely a buzzword. Today’s business environment is intensely competitive and promotes only the survival of the fittest and that’s why organizations are using information technology for increasing efficiency in human resource management. Implementation of technology in HR in the form of a HRIS (Human Resource Information Systems) has made it easier and faster to collect, collate and communicate information with employees and also speed up the hiring process.

The first MIS or Management Information System emerged during the 1960s when there was a mounting demand for HR departments to adopt computer technology to process employee information more effectively and efficiently.  Over the decades, the reducing costs of computer technology compared to increasing costs of employee salary and benefits has made it a necessary business decision to implement computer-based HR systems.

Importance of information technology in recruitment

HBR reported in 2016 that 57% of business and HR executives are using and 32% are willing to use new recruiting technologies and tools to speed up the hiring process.

Cloud and data analytics are going to play a huge role from now on.  But what is driving HR managers to use new technologies for screening and selection?

There are several ways in which technology can improve the efficiency and effectiveness of the recruitment and selection process:

Role of technology in recruitment results in cost reduction

Role of technology in recruitment results in cost reduction

In a research, Innovex reported a reduction in screening costs by 50% using IVR in their hiring process (Thornburg, 1998). These reduced screening costs led large companies like Proctor & Gamble to adopt video conference technologies for campus hiring. (Chapman,1999). The globalization of economy and labor market has provided employers with a playfield which is not limited to any geographical settings.

In order to succeed in such a competitive global market one needs to have the brightest talent on board. Further the scarcity of highly skilled workers in engineering and computer science propelled recruiters to seek candidates beyond geographical borders. Most organizations that were earlier discouraged by the costs involved in international hiring are now employing technological aids like career websites and ATS to reduce costs while simultaneously expanding the applicant pool.  With the right tools, HR will not only have access to a larger talent pool, but will also be able to hire the right candidates. Greater retention has direct impact on cost savings.

(Also Read: How to Create a Positive Candidate Experience with HR Technology)

Using technology in the hiring process reduces human error

Another benefit of increased use of technology tools in screening and selection has been the reduction in human dependence. Humans often bias their decisions on bases of issues like sex race and age rather than merit or experience. HR professionals are also known for making compelling decision making errors like placing too much important on unverified and negative feedbacks.

Such rating biases can lead individuals responsible for hiring candidates to consciously or subconsciously make unfair judgments and discriminate against a particular group or candidate. The ATS or a similar tool removed the human element from the selection procedure and ensures a standardized one-for-all selection process that helps in valid and accurate decision making.

(Also Read: Top 10 Benefits of Using an Applicant Tracking System)

Technology impact on recruitment in terms of improved efficiency and quality

Technology impact on recruitment in terms of improved efficiency and quality

The final factor that propels use of various technologies like online talent platforms in recruiting is the improved efficiency of hiring systems by automating processes such as resume screening. Improved efficiency leads to shorter hiring cycles, thereby improving the competitiveness of organizations when hiring the best talents who may otherwise accept another offer if selection procedure takes a longer time. Automation is more about driving the quality of hire rather than focus on lowering the cost of hiring. (Also Read: How to reduce hiring cycle time)

While it’s hard to predict what exactly future holds for the human resource industry, we know for sure that innovations required to keep the HR functions competitive and relevant will rely heavily on technology. Cloud, for one, is an excellent platform for organizations to quickly jump aboard this rapid pace of innovation. Migrating to cloud provides the much needed push to break the shackles of traditional recruitment methods and adopt new ones.

The evolution of HR tech has helped reduce administrative burden on the HR department so as to be able to focus more on other responsibilities. In fact, in its current form HR technology isn’t a separate industry or entity. Its ubiquitous nature has made it as common as any other technology and companies that do not implement it in their businesses will have a tough time in the market.  CB Insights in its 2015 research estimates that investors put $2.4 billion into HR Tech vendors/ software providers/startups which are building new age Human resource management system platforms. This is a 60% growth over the previous year. The data is just an indicator of the speed with which the HR industry is changing.

(Also Read: The Importance of HR Analytics in an Organization)