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HR Meets Big Data: How Analytics Are Helping Companies Identify and Develop Top Talent

Guy Halfteck, a former commander in the Israeli navy who earned a Ph.D. from Harvard University in game theory, had always been intrigued by what he saw as a core problem facing companies: how do you identify the best people to hire? He created Knack to help companies do just that.

Resumés are notoriously inaccurate and misleading. Studies show that interviews are not as effective as managers think they are. Plus, getting applicants to fill out questionnaires, whether online or off, produces poor results. It’s even hard to persuade tech savvy people in their 20s and 30s to sit down and fill out a questionnaire by hand. “Hiring is very challenging and difficult,” explains CEO Halfteck. “Job seeking for people is also very challenging and difficult. I was determined to find a better way.”

His search led him to game-playing, which may seem trite at first glance but is actually quite profound. He discovered that if job applicants can escape the formality of an interview process, they open an authentic window into how they really behave and think. So Halfteck launched a company called Knack, headquartered in Palo Alto, California, which provides simple online and mobile games similar to Angry Birds that companies can use to screen job applicants. In less than 10 minutes of game playing, during which the player must react to and interpret facial expressions of customers in a restaurant, Knack gathers enough information to make key judgments about her potential. The company applies its own algorithms, written by data scientists and behavioral neuroscientists, and runs them on Amazon.com’s cloud-computing server farms.

“It’s kind of astonishing how poor the analytics have been in human resources given how much money goes into it. Most  companies haven’t bothered to try to figure out who is the best employee or why they quit.”

“We are able to get very quick insights into personality characteristics, decision-making capabilities and the overall soft skills that a person has,” Halfteck says. “We can measure those attributes and use the data to predict whether that person will be a successful employee.”

Big Data has taken on somewhat of an ominous overtone following the disclosures of massive spying by the National Security Agency, but that is not stopping CEOs from continuing to explore new ways to exploit the advantages of massive computing and data crunching know-how. Already in use for mass-marketing endeavors, those tools are now being applied in one of the dark corners of the corporate world—human resources. “It’s kind of astonishing how poor the analytics have been in human resources given how much money goes into it,” says Peter Cappelli, a management professor and director of the Center for Human Resources at the University of Pennsylvania’s Wharton School of Business. “Most  companies haven’t bothered to try to figure out who is the best employee or why they quit.”

But CEOs are starting to realize that they can get smarter about the entire lifecycle of human resources—recruiting, hiring, onboarding, training, measuring performance, retaining and predicting departures—and they can do all those things in relatively cost-effective ways. Companies from the Fortune 100 down to regional restaurants, hotel chains and hospitals are embracing the new analytic tools.

“This is going to forever change how senior executives manage and interact with their work forces,” says Max Simkoff, founder and CEO of Evolv, a privately held startup in Silicon Valley that provides tools to help companies improve their HR capabilities. Evolv is one of the many small, non-traditional players to emerge at the intersection of information technology, human resources and psychology. “When you look at who is buying our solution, it’s typically someone in the C-suite,” Simkoff adds. “They don’t relegate it to the HR department.”

To be sure, potential hazards can arise from any major corporate initiative that borders on becoming a fad. The most obvious is that companies come to depend on their analytic tools at the expense of basic common sense—the human factor. “A lot of companies have said, ‘We’re just going to use our software to screen the candidates. It’s cheaper,’” says Cappelli. “But that has largely been a disaster.” It’s also a highly fragmented field with different vendors offering different tools for the various pieces of the employee’s lifecycle. Even eHarmony, the online matchmaking service, has sought to apply its romance algorithms to unraveling the mysteries of the employee-employer relationship.

Holstein-2The Holy Grail for any CEO is to combine data from the recruiting process into onboarding and assessing how an employee performs over time and whether he is at risk of leaving. However, that information is difficult to achieve, even by investing in large software packages from Oracle, SAP or IBM. “All the big guys have suites of options you can put under the same umbrella, but the issue of integrating them remains difficult,” says Cappelli. “I don’t know that anyone is really good at that.”

About William J. Holstein

William J. Holstein
William J. Holstein is a journalist, consultant and speaker. He is the author of, "The Next American Economy: Blueprint For A Sustainable Recovery." For more of his work, visit www.williamjholstein.com.