Over recent years, there’s been a decisive move towards objectivity in business. This has largely been driven by a boom in technology and resulting data, which is enabling leaders to make more informed decisions in a plethora of business functions.

The COVID-19 pandemic has only accelerated this trend. Over three quarters (77%) of C-suite leaders increased their use of internal and external real-time data over the last 12 months, as they looked to understand their new context and its impact on their businesses.  

However, while of profound value, data is not a magic bullet. As it plays an increasingly prominent role in decision making, it’s vital that leaders acknowledge its shortcomings, while exploring its advantages.

Deploying data within HR
Like every other function, HR stands to gain hugely from the proliferation of data and advancements in analytical tools. Many teams are already embracing these to support and guide people strategy – and align this to business objectives.

Recruitment is one area where data insights could help drive efficiencies and improve accuracy. By collecting data on the skills, experiences and attitudes possessed by successful employees, employers could create a blueprint of the ideal candidate to guide sourcing. Alternatively, they could use this information to direct learning and development strategies – so that they build these skill sets throughout their workforce.

This is just one example of how HRs might lean on data, but there are many more. As the pace of change accelerates across sectors, fuelled in part by digital transformation, more and more leaders are considering their organisation’s design and undertaking workforce planning to ensure they have access to the necessary talent to secure their future.

Data is absolutely central to this process. HR and business leaders need to start with a real understanding of the business goals, people, qualities and skills they have within their workforce, before they can identify gaps that need to be filled.

Why applying judgement is non-negotiable
The case for data informed decision making is clear, but statistics are notoriously open to interpretation, so business and HR leaders need to really interrogate them.

Take, for example, the data finding that shark attacks increase in line with ice cream sales. Recipients of this might conclude that it’s unwise to eat an ice cream and then swim in the sea – but if you apply some human experience to the equation, your interpretation is likely to be very different. 

HR and business leaders need to exercise a similar level of caution when looking at people data. Returning to a previous example, HRs who have identified the skills or personality attributes most strongly associated with success at their organisation, should still think twice before going out and recruiting for them.

The data might show that the ability to delegate is important, or that extroverted personalities do better – but it’s easy to see how over-indexing on these attributes could have negative repercussions. Good delegators need people happy to be delegated to, while hiring more extroverted individuals could lead to introverts feeling uncomfortable and leaving the business.

This scenario underscores the importance of looking at the organisation holistically. Most businesses are made up of teams of people who need to mesh and work well together. Organisational design and workforce planning need to focus as much on creating high-performance teams, as high-performance individuals.

HR leaders also need to be aware of data’s potential role in perpetuating biases. In 2018, Amazon reputedly scrapped an AI recruitment tool after it was found to be biased against women. The tool, which was trained on data largely submitted by men, effectively taught itself that male candidates were preferable.

While, on the surface, this is a cautionary tale about AI, it also illustrates the issues with basing decisions purely on historical data. In many organisations, leadership roles are disproportionately occupied by men, but this is not a reason to recruit more of them. Rather, it is a reason to interrogate progression within the organisation, and question why women have not achieved leadership roles. If leaders fail to do this, they will end up propagating entrenched biases at their organisation, leading to a lack of diversity, which we know is an important factor in business success. 

The future of data-based decision-making
Moving forward, data will play an increasingly important role in business decision making – and we should view this as a positive thing. Data can help leaders, understand consumer preferences, decipher gaps in the market and, as we have discussed, build a workforce able to drive business progress. However, unlocking the full value from data will depend on leaders adopting a scientific mindset. They need to develop hypotheses, test these with data and then consider whether their data could be telling another story.