1/11/2021 Balancing the Risks, Rewards of People Analytics - CIO Journal - WSJ

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Balancing the Risks, Rewards of People

Analytics
More companies than ever are using workforce data to analyze, predict, and improve
performance. But as organizations start to use people analytics in earnest, new risks are also
taking shape.

People analytics has been

advancing steadily over the past
few years, and today it appears
to have hit the mainstream.
Eighty-four percent of
respondents to Deloitte’s 2018
Global Human Capital Trends
survey now view it as important
or very important to their
organizations, making it the
second-highest-ranked trend this year.¹

Sixty-nine percent of surveyed organizations are building integrated systems to use worker-
related data to analyze, predict, and improve organizational performance; 17 percent have real-
time dashboards in place to crunch the avalanche of numbers in new and useful ways.² Leading
organizations are mining a rich variety of sources to create a comprehensive architecture for
listening to employees, thereby providing new insights about the entire employee experience, job
progression, career mobility, and performance.

But while such tools offer tremendous opportunities, there are also significant potential risks. The
European Union’s new General Data Protection Regulation (GDPR), for one, can make the mere
existence of people data in a company’s systems a risk. Organizations are approaching a tipping
point in their use of this data; those that tilt too far could suffer severe employee, customer, and
public backlash, with the potential for lasting brand damage.

Risks New and Old

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This year’s Global Human Capital Trends survey yields some important insights about the data-
related risks facing organizations today. For instance, 64 percent of respondents report they are
actively managing legal liability related to their organizations’ people data; six out of 10 say they
are concerned about employee perceptions of how their data is being used. But only a quarter
report their organizations are managing the impact of these risks on their consumer brand.

Fears over employee privacy appear to be justified. One employer, for instance, installed body
heat detectors at desks to track how many hours people spent in the office. Employees reacted
with outrage, swamping managers with complaints and leaking unflattering stories to the media.
Many employees also fear sensitive data may be vulnerable to high-profile cyberattacks—again
with good reason. While 75 percent of surveyed companies understand the need for data
security, only 22 percent report having excellent safeguards in place to keep employee data
safe.³

Other types of risk are more insidious. For example, some experts worry algorithms and
machine-based decisions could perpetuate bias due to flaws in the underlying data or the
algorithm itself. The marriage of people data and algorithm-based AI raises such concerns to a
new level. Understanding the potential for this type of risk is critical to preventing a new source of
bias from seeping into an organization’s hiring or promotion processes.

Business leaders are beginning to realize automated decisions are not guaranteed to be
understandable, accurate, or good, even if they are based on good data. As a result, some
companies are hiring people to monitor their AI-based social networking and advertising
algorithms. Tech leaders are also beginning to invest more resources in solving these problems.
For example, a consortium of data experts recently formed the Partnership on AI, a group funded
by some of tech’s biggest names and established specifically to study and formulate leading
practices.

A Balancing Act

Despite the potential risks, the promise of people analytics remains too compelling for most
organizations to ignore. The coming year is likely to bring continued growth in this area, so it will
be increasingly important for organizations to carefully manage their exposure through strong
policies, security, transparency, and open communication.

C-suite executives can play an important role. CIOs, for instance, can work to understand the
flow of internal and external people data and make sure key security and IT controls such as
anonymization and encryption are in place. Chief risk officers can keep a close eye on regulatory
changes and watch for any potential privacy issues. CMOs, meanwhile, can monitor employee
and consumer sentiment about their companies’ handling of people data and provide insights as
necessary on where policies or actions can be changed to help avoid brand damage.

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1/11/2021 Balancing the Risks, Rewards of People Analytics - CIO Journal - WSJ

*****
Most organizations have good intentions in collecting and using people data, but mitigating the
associated risks requires a strategic approach. In today’s data-driven era, it’s more important
than ever to be vigilant about data quality, privacy, security, and the accuracy of machine-driven
decisions.

—by Josh Bersin, Erica Volini, and Jeff Schwartz, principals, Deloitte Consulting LLP

Endnotes

1. Deloitte’s 2018 Global Human Capital Trends survey is based on responses from more than 11,000 HR and business
leaders in 124 countries.
2. Bersin, Deloitte Consulting LLP, High-impact people analytics research, 2017.
3. Ibid.

Related Content

“People Analytics Grows Up”

“Building Effective Analytics Ecosystems”
“Mastering Data Sovereignty”

May 30, 2018, 12:01 am

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