Big Data Coming to an HR Department near You

Atlanta Fed guest discusses the advancing science of hiring based on analytics

The days of making an educated guess at how a prospective employee might fit into an employer's culture are probably coming to an end. Much as advanced analytics have revolutionized everything from baseball to retailing, they are in the process of doing the same for hiring practices, according to Prasanna "Sonny" Tambe, an associate professor of information, operations and management sciences at New York University's Stern School of Business.

At a recent Public Affairs Forum at the Federal Reserve Bank of Atlanta, Tambe explained how employers are increasingly using "big data" to go beyond the resume. From monitoring Facebook pages to sponsoring "hackathons" designed to test problem-solving skills, large corporations in particular are applying analytics to sharpen hiring decisions, Tambe said. There are even online tools to measure emotional intelligence, or "EQ."

He likens such applications of big data to "the ability to turn up the power of a microscope." That microscope can, for instance, track tools that rate the top 10, 20, and 30 percent of contributors to websites where IT professionals post highly technical questions. He cited another example of data-driven hiring by the ride service Uber. The company installs screens in some drivers' cars that quiz passengers on what data structure will best solve a specific logistical problem.

A key to the usefulness of those sorts of instruments is that they have amassed enough users—a million in the case of the IT advice site—to make the information credible, he added.

These sorts of methods can be used not just in hiring but also inside companies. Employers and technologists are developing ways to use data to inform decisions about what motivates people, where workers should be located in a building, or which individuals should be on teams together. Significant advances can be made especially in organizations such as consulting or accounting firms, where there are no widgets coming off a line and so outcomes are difficult to measure, Tambe noted. 

These advances do not come without challenges, to be sure. Foremost, serious cultural barriers stand in the way of widespread adoption.

"It's not an overnight thing moving to more datafication of decisions," Tambe said. "We're talking about a major cultural shift, perhaps a shift generationally."