Data or Intuition: When Should HR Rely on the Numbers?
January 6, 2021
Do you operate on gut feelings a lot? You know, when you interview someone for a job and within an instant you know this person is right—or wrong—for the job? What about when you're making a big decision about a reorganization, or implementing perks that you just know employees will love?
Many HR professionals make all kinds of decisions without looking at the numbers—sometimes it works out and sometimes it doesn't. But the flip side is also true: Sometimes you look at the numbers, make your decision accordingly and things go poorly.
So, how do you know when it makes sense to use data and when to trust your gut?
The Myth of Homo Economicus
Have you ever heard of Homo Economicus? You may not know the term, but you probably know the principle. In economics, Homor Economicus is the assumption that everyone is a rational actor and will choose the option that will maximize their benefit in any situation.
While people do tend to do what they think will make them happiest, sometimes their analysis of the situation is way off the mark. And other times, they discount what will really work.
For instance, you may want to hire someone with whom you just "click." Except that situation can result in hiring someone who is great for a weekend road trip, but not the best at maximizing sales. Don't use your gut when hiring.
Instead, channel your inner Homo Economicus and use the information you know about your business and the information you know about the candidates in order to make a rational decision.
Yes, personality can be one of the items on your checklist, but using objective data allows you to avoid making an irrational—and sometimes illegal—decision. Our "guts" tend to favor people who look and sound like ourselves, which means your gut is going to tell you to hire people of the same race, gender and national origin as yourself.
Before you start the interviews, make a list of the qualifications that are critical to the success of the position, and then match up the candidates to that list. Using your data can save you a lot of headaches in the future.
But What About Perks?
I received a question from a reader recently, who asked, "Why do team building events always involve pulling people up to the stage? I hate that." Well, he's not alone. You know who loves that type of stuff? The people who plan team building events.
A team building activity is supposed to be fun—it's a perk. The same goes for other office perks you may offer—from Yoga classes to discounts at local restaurants, these things are supposed to make your employees happy.
So, why shouldn't you sit in your office and brainstorm ideas for perks? Because you might like certain things, but it doesn't mean your employees will like them. Just like the team-building exercises that only the group leader enjoys, bringing a Yoga instructor on site may satisfy your desires, but not the rest of the office's.
Instead, use data to determine what perks and programs will benefit your employees. Send out a survey. Ask for feedback. Use the results to decide where to allot the money for such programs. The results may surprise you—or they may be exactly what you thought.
Time to Fire
When you fire someone for gross misconduct—like stealing or swearing at customers—that's an easy decision, even if actually carrying out the termination is difficult. But what about when you need to do multiple layoffs for business reasons? That's when your data needs to come out in full force.
Hopefully, you've done performance appraisals over the years, and can easily rank your employees. Why is this important? Well, naturally, when you have to do a layoff, you want to keep your best employees if at all possible.
This ensures that you are keeping the consistent high performers, not just whoever you happen to like best today. It also protects you from legal challenges, since you'll be able to demonstrate your methodology for selecting people for termination.
In addition to looking at individuals, you'll need data to look at which positions really add the most value to the organization. Don't eliminate a position just because it commands a high salary, if that position is also the one bringing in the money.
Paycheck Boosts and Bonuses
It should be pretty clear that unless you do a flat cost of living increase where every employee gets the same boost (or the same percentage boost) in salary, you need to look at the data before telling employees their increases.
Why? Because you can have something called "disparate impact" which means that even though you didn't intentionally discriminate, one group got treated better than another.
You want to double check that you didn't inadvertently give higher raises to women than men, for example. You also want to make sure that your raises make sense overall.
Bottom line: In nearly any decision, data is your friend. While it's important to keep the "human" in human resources, it doesn't hurt to balance your decision with some solid numbers. You can always look at the data and make a decision to go against it, but at least you'll know that it's your gut and not the numbers that you're following.