Will Big Data Make Labor Markets More Efficient?

Each time I read an article in the business press on Big Data and hiring I chuckle.  The authors always make it sound like businesses have just recently discovered how to measure attributes about lots of people and apply them to hiring.  The only difference now is that there is a lot more data about people available on-line (“the digital exhaust”) for the applicant pool to whom it might apply (programmers, software engineers, etc.).

This article is no exception.  The first half is somewhat unfocused on the use of data to hire, but then it gets to the first main point:  The data is there and it can be useful.  Obviously the described algorithms are proprietary, but I would really be interested in seeing at least a range of the correlation coefficients.  With the amount of data being gathered there is bound to be statistical significance, but is there really any practical impact in terms of moving the performance needs?  Do these passive sources of data on people predict above and beyond the general areas that are well researched (cognitive ability, conscientiousness, etc.)?  My hunch is yes.

By the way, how much more is a good programmer worth than an average one?  The big data articles speak a lot about the value of the predictors, but there is very little discussion about the economic impact of performance in digital jobs.  For instance, if we are predicting performance for call center agents, we can put a dollar value on each contact in terms of labor time and how much it costs a company when a customer has to contact the company a second or third time.

The last point the author makes is probably the most important one:  How does big data help identify talent in under valued pools.  The example they give is looking at the quality of code written rather than paying attention to work experience, education, etc.  This is bound to find talent in places where up until now it was not explored.  I have done this before using biodata with clients who were insistent that only people with experience in previous work would succeed in their company (this was rarely the case).  The technique does uncover high performers from non-traditional backgrounds.

When we find new pools of talent we make for a more efficient and rational was to get through the labor pool.  More importantly, we get a step closer to making the hiring process more of a meritocracy.  This benefits applicants (I get ahead based on what I can do) and employers (we are hiring the best people available).  And isn’t that the goal of any selection process?

For more information on pre-employment testing, test validation, skills assessment and talent management, please contact Warren at 310 670-4175 or  [email protected]

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