December 5, 2023

Unboxed: Big Data, Trying to Build Better Workers

In telephone call centers, for example, where hourly workers handle a steady stream of calls under demanding conditions, the communication skills and personal warmth of an employee’s supervisor are often crucial in determining the employee’s tenure and performance. In fact, recent research shows that the quality of the supervisor may be more important than the experience and individual attributes of the workers themselves.

New research calls into question other beliefs. Employers often avoid hiring candidates with a history of job-hopping or those who have been unemployed for a while. The past is prologue, companies assume. There’s one problem, though: the data show that it isn’t so. An applicant’s work history is not a good predictor of future results.

These are some of the startling findings of an emerging field called work-force science. It adds a large dose of data analysis, a k a Big Data, to the field of human resource management, which has traditionally relied heavily on gut feel and established practice to guide hiring, promotion and career planning.

Work-force science, in short, is what happens when Big Data meets H.R.

The new discipline has its champions. “This is absolutely the way forward,” says Peter Cappelli, director of the Center for Human Resources at the Wharton School of the University of Pennsylvania. “Most companies have been flying completely blind.”

Today, every e-mail, instant message, phone call, line of written code and mouse-click leaves a digital signal. These patterns can now be inexpensively collected and mined for insights into how people work and communicate, potentially opening doors to more efficiency and innovation within companies.

Digital technology also makes it possible to conduct and aggregate personality-based assessments, often using online quizzes or games, in far greater detail and numbers than ever before.

In the past, studies of worker behavior were typically based on observing a few hundred people at most. Today, studies can include thousands or hundreds of thousands of workers, an exponential leap ahead.

“The heart of science is measurement,” says Erik Brynjolfsson, director of the Center for Digital Business at the Sloan School of Management at M.I.T. “We’re seeing a revolution in measurement, and it will revolutionize organizational economics and personnel economics.”

The data-gathering technology, to be sure, raises questions about the limits of worker surveillance. “The larger problem here is that all these workplace metrics are being collected when you as a worker are essentially behind a one-way mirror,” says Marc Rotenberg, executive director of the Electronic Privacy Information Center, an advocacy group. “You don’t know what data is being collected and how it is used.”

Companies view work-force data mainly as a valuable asset. Last December, for example, I.B.M. completed its $1.3 billion acquisition of Kenexa, a recruiting, hiring and training company. Kenexa’s corps of more than 100 industrial organizational psychologists and researchers was one attraction, but so was its data: Kenexa surveys and assesses 40 million job applicants, workers and managers a year.

Big companies like I.B.M., Oracle and SAP are pursuing the business opportunity. So is eHarmony, the online matchmaking service. It announced in January that it would retool its algorithm for romance so it could examine employee-employer relationships, and enter the talent search business later this year.

THE penchant for digital measurement and monitoring seems most suited to hourly employment, where jobs often involve routine tasks. But will this technology also be useful in identifying and nurturing successful workers in less-regimented jobs? Many companies think so, and can point to some encouraging evidence.

Tim Geisert, chief marketing officer for I.B.M.’s Kenexa unit, observed that an outgoing personality has traditionally been assumed to be the defining trait of successful sales people. But its research, based on millions of worker surveys and tests, as well as manager assessments, has found that the most important characteristic for sales success is a kind of emotional courage, a persistence to keep going even after initially being told no.

The team of behavioral and data scientists at Knack, a Silicon Valley start-up firm, uses computer games and constant measurement to test emotional intelligence, cognitive skills, working memory and propensity for risk-taking. Early pilot testers include the NYU Langone Medical Center, Bain Company and a unit of Shell, says Guy Halfteck, Knack’s C.E.O.

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Small Business: Why It’s So Difficult for Entrepreneurs to Head for the Exit

His goal was to find a way to help his company, Beryl — a call center that caters to hospitals and is based near Dallas — keep growing while also allowing him to free up time to pursue other ventures.

In January 2010, Mr. Spiegelman signed a letter of intent to sell a majority interest in the company to a private equity firm. But after considering the risks of letting someone else control his company, which has 350 employees and annual revenue of $35 million, he decided to walk away from the deal.

Mr. Spiegelman, who is 53, spoke recently about why he decided not to sell and why succession and exit issues are so difficult for business owners.

Q. How did Beryl get started?

A. I started the company with my two brothers in 1985. But I’m the only one involved now since my youngest brother, Barry, died from a brain tumor in 2005 and my other brother, Mark, left the business 11 years ago.

Q. What roles did the three of you play when you started the company?

A. We tried to align our roles with our natural talents. Mark was the technical genius behind everything we did. I was the sales and marketing guy. Barry was the utility guy who helped do everything to bring it all together.

Q. Why did your brother decide to leave the business?

A. Mark had always been a natural entrepreneur. It seemed like every year he wanted to spread his wings and get involved in a different business. In 2000, he decided it was time he did something else. It ended up being the best decision for everyone since up to that time, it was like we had three chefs in the kitchen. Something had to give.

Q. Is your business like other call centers?

A. We made the decision early on that we would never compete on cost. We have taken what is generally thought of as a commodity and turned it into a product with a premium price customers are willing to pay. It has set the bar differently for us.

Q. How so?

A. I think that many companies miss the fact that having a great internal culture where you have engaged employees is not only the right thing to do, it’s also good for business. We have won nine “best places to work” awards and have client-retention and employee-retention rates that are unheard of in the industry. That has also made us four to six times more profitable than a typical call center, which allows us to invest in better tools for our people. It also allowed us to avoid bringing in outside investment as we grew the business. We have had control over our own destiny.

Q. Then why did you decide to explore selling part of the company?

A. There were a couple of reasons. One was that starting in 2009, because of changes in the health care industry, we saw opportunities to accelerate Beryl’s growth. Another was that I had brought on a team of very experienced senior leaders from outside the company who were chomping at the bit to expand and take advantage of the market drivers. Third, I was interested in diversifying my own time to try to help other businesses connect culture with financial performance. For example, I had begun to get involved in something called the Small Giants Community, an international community I helped build around the ideas in Bo Burlingham’s book, “Small Giants: Companies That Choose to Be Great Instead of Big.”

Q. Isn’t there something contradictory about bringing in outside executives and outside investors to help your company grow faster — so that you can help other companies learn the joys of staying small?

A. Being a Small Giant does not mean staying small. All entrepreneurs are growth-driven. Being a Small Giant means that we want to grow for reasons more than just growth and profit.

Q. Part of the goal, I assume, was to take some money off the table.

A. Taking some money off the table was a factor, but it was the least important one. Having built this profitable business, I had been able to build some wealth outside of the business over the years. I had already reached the point where my financial security wasn’t at risk.

Q. So what happened?

A. I signed a letter of intent in January 2010, to take on a major investment by a private equity firm.

Q. Did the investors give you any assurances about how they would run your company and treat your employees?

A. Yes. They did that by validating our belief that there was a connection between the culture we had built and the financial performance of the company.

Q. Then why did you change your mind?

A. Well, as we went through the due diligence process, it began to dawn on me what life would be like to have a financial partner, people who are focused on the short-term view of financial performance. Even though I knew that their plan was to get a return on their investment in four to six years, I began to get nervous. I felt like if we went down this road, it would have an irreversible negative impact on Beryl’s culture.

Q. And you decided to walk away?

A. I did. I pulled the plug about three weeks before we were supposed to close the deal. I know there are cases where entrepreneurs sell their business, get their payday and are happy. But I know there are many more cases where business owners look back and are disappointed with the impact on the culture of their business.

Q. Did you learn anything from the investors?

A. It was great for us to get an outsider’s take on what we needed to do to improve our business, like building an outside sales team, which we have now done. We are making the kinds of investments the private equity firm would have done, but at our own pace, and under our control, which is exciting and fun.

Q. How are you doing it without the additional capital?

A. I decided to fund the growth out of our own working capital, or maybe take on some debt for the first time. It feels like we have reinvented the business by investing in new talent and technology.

Q. But if you didn’t really need outside capital to finance the growth and you didn’t really need to take money off the table and you had already brought in outside leaders to lighten your load, why did you come so close to doing this?

A. That’s like asking me why I had the ice cream if I didn’t really need it. As entrepreneurs, we are going through constant business phases and a search for the right thing to do. Sometimes we make good decisions and sometimes we don’t.

Q. Are you now considering other succession plans?

A. I’ve begun to look at the possibility of an employee stock ownership plan. I never thought this was a company my children, who are 5 and 9, would run. But now sometimes I think, maybe they could.

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