October 5, 2016
Applying Big Data to Human Resources
In the film Money Ball, based on real life, the use of statistics was responsible for turning around the long losing streak of the major league Oakland Athletics Baseball Team. Once the correct algorithm was applied to their recruiting process and they chose “the right” players, they began to turnaround their losing record. The team ended that season with the longest record of winning games in the league. A recent report by McKinsey and Company highlighted major improvements Human Resource Professionals could be making, if they began using their own statistics.
Fish in the “right pond”
A large bank in Asia was very surprised to learn that their top university recruits were not necessarily their highest-potential employees. When they analyzed their data, they actually discovered that the highest performing employees came from “a wider variety of institutions, including five specific universities and an additional three certification programs”. Once they applied this new knowledge, they were able to produce “a 26 percent increase in branch productivity . . .and a rate of conversion of new recruits 80 percent higher” than before they implemented the new regime. Not only that, but the bank’s net income also rose by 14 percent!
Eliminating bias through automation
By applying a new algorithm to the screening of resumes, a professional services company was able to not only process 250,000 applications, but all to reduce bias in the screening process and likewise accomplish their goal of hiring more women at the same time. The results were phenomenal: The savings associated with this automation, which involved more than 55 percent of the résumés, delivered a whopping 500 percent return on investment. Plus, there was a 15 percent increase over the number of women who had been passed over in manual screening. Their assumption that screening by humans would increase gender diversity more effectively was found to be incorrect.
People join companies and leave bosses
By identifying the real issue---the need for additional leadership training---another McKinsey client was able to significantly increase retention. Throwing money at the problem by increasing salaries and bonuses was found to be much less effective that increasing managers’ leadership skills.
Wise HR Professional will embrace the opportunity
Big Data has long been used by marketing and sales professionals and other executives. HR Professionals will do well to heed this advice and begin applying their Big Data to their own procedures for recruiting and retaining employees. We are only seeing the beginning of the applications for Big Data; once you begin to analyze the information for your business, expect that some of the results will be counter-intuitive.
Special thanks to Henri de Romrée is a partner in McKinsey’s Brussels office, the lead consultant on this report.
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