For their new book, The Talent Equation, co-authors Prasanna Tambe and Lorin Hitt embarked on an original, landmark study on big data and its ties to human resources. In a new video interview, Tambe and Hitt discuss the findings from the landmark study and the implications these findings have for human resources professionals worldwide.
Over the course of surveying more than 2,700 employers and analyzing 33 million résumés, Tambe and Hitt found some surprising links between employees’ education attainment, tenure and a company’s market performance – all of which could significantly impact the human resources profession in years to come.
Four Things HR Must Know About Big Data
1. Big data has the power to transform HR as we know it.
“Big data has the potential to transform certain aspects of human resources management,” says Prasanna Tambe, Assistant Professor, NYU Stern School. “Questions around employment and the skills gap are some of the most critical, economic and social questions we’re facing today…big data can be a really useful tool when addressing some of these questions.”
2. Résumés are an untapped source of data.
“Résumé data is a unique resource that was only discovered as an opportunity for doing research and answering these types of questions about five or eight years ago,” states Lorin Hitt, Professor, Wharton School, University of Pennsylvania. “There’s a tremendous amount of information in résumés – not only about the employees, but about the employers that hire them. You can sketch out not only an employee’s career path, but also the types of employees the firms have been hiring.”
“The novelty of this study was using this data to…look at education and tenure across different occupations and tasks, understand where education mattered most, where retention mattered the most across different job functions,” adds Tambe.
3. Education matters more in some jobs than others.
“One of the interesting things we found [in our research] is…having a higher level of workforce education than the norm tends to increase performance for certain occupations – like sales – more than in other occupations – including ones where you’d think education is really important, like information technology,” says Hitt. For example:
- A 10 percent increase in customer service workers with college degrees is associated with about $26,000 higher value added per employee.
- A 10 percent increase in sales workers with college degrees is associated with about $31,000 higher value added per employee.
“I think the main takeaway is that we see a lot of change in these professions. It’s not to say that education doesn’t matter in other places, but perhaps in the last decade or so, we’ve seen the most change in these particular occupations,” says Tambe. “We do see the most variation in what these companies are doing strategically in these occupations, which means perhaps these occupations are in a time of flux.”
4. Data is applicable to everyday HR initiatives.
“We’ve thought about the use of résumé data in a couple ways for human resources managers,” says Hitt. “First, human resources managers can benefit from analytics done on these very large data sets. Tens of millions of people can be tracked across firms and across their career path, and you can make some inferences about which rules of thumb that are normally used in human resources management are effective, and which ones are not, and that can be done broadly.”
Tambe adds, “Two, it’s going to be useful for developing company-specific recommendations – so moving beyond rules of thumb and really understanding what works at that specific employer. Number three, I think it’s going to be very useful for developing quantitative insights – being able to measure the impact of particular HR policies on the bottom line, allowing HR professionals to really say, “This is the cost of not having the people we need.”
Learn more at talentequationbook.com.