Big Data, Small Data — The Challenge Collecting and Protecting Employee Data

In the wake of a massive data breach at the Office of Personnel Management, the largest federal employees union is suing OPM for failing to protect its employees’ data.

The lawsuit alleges that the breach compromised personally identifiable information from 18 million government workers, including private social life details of employees applying for security clearance.

The data breach was a huge blow to national security, but it also throws into sharp relief the staggering amount of employee information organizations are collecting and the risks associated with housing that data.

More importantly, it’s raised awareness among workers about employee data collection and forced employers to ask tough questions about the ethics and efficacy of people analytics.

The staggering power of big data

With the right technology, big data can tell you just about anything you ever wanted to know about current or prospective employees: who your top performers are, which job applicants you should interview, and even which employees are your biggest flight risks.

People analytics companies continue to pop up across America with the sole purpose of helping other companies find great candidates. Gild, for example, uses data from online coding communities, social networks, and Internet search behavior to identify promising new developers. And perhaps the most intriguing company is a startup called Knack, which has developed a video game that, within minutes, collects data that determines whether someone has the qualities of a good leader.

This data trolling isn’t just limited to the hiring process. Forty-five percent of employers track employees’ keystrokes, 43 percent monitor employees’ email accounts, and 62 percent of companies with field employees use GPS to track their workers.

While many of these practices seem a bit Orwellian, there are plenty of legitimate reasons to collect this data. Better hires lead to lower employee turnover, identifying promising leaders early can help fast-track them into management roles, and tracking employees’ Internet usage can help cut down on cyberloafing — something that costs the average 1,000-employee company $11 million per year.

According to recent research, firms that use data to drive decision-making experience 5 to 6 percent greater productivity than those that don’t. They also outperform competitors in asset utilization, return on equity, and market value.

Improving customer outcomes

Since UPS began gathering driver data, for instance, it’s been able to increase the number of deliveries a driver makes and reduce fuel consumption. Shaving off just one minute of wasted time per driver per day adds up to $14.5 million in savings each year.

Tracking other data points can even help improve customer outcomes. Harrah’s tracks employees’ smiles to boost customer satisfaction, and one startup has developed “smart shoes” to track hospital workers’ hand-washing habits to reduce the spread of hospital-acquired infections.

However, for every company that’s seen positive outcomes from data collection, there are others that have opened themselves up to major liability and bad press.

One woman in California is suing her former employer for wrongful termination, alleging the company fired her for deleting an app that enabled her boss to track her 24/7. In another case, scientists and doctors-turned-whistleblowers sued the Food and Drug Administration for intercepting data and communications that took place via government computers. And, of course, there’s always the risk that data could fall into the wrong hands.

Stories like the OPM scandal and the aforementioned lawsuits give employee data collection a bad rap, but there’s a big difference between intrusive employee tracking and using big data in an appropriate, thoughtful way. It’s up to you to weigh the benefits and risks to determine what’s best for your organization.

5 ways to be a smart steward of employee data

Before you begin collecting employee data, use these five tips to ensure you aren’t violating employees’ rights or putting your organization in jeopardy:

Always ask “why?” Just because you can collect certain information doesn’t mean you should. Before you activate the GPS on your employees’ smartphones or start tracking keystrokes, ask yourself what you’re hoping to learn and what you plan to do with that information.
Get legal involved. Even seemingly innocuous data collection can get your company in hot water, so it’s important to get your legal department on board to make sure you aren’t overstepping your bounds. For instance, laws on video surveillance in the workplace vary by state, and screening job applicants using certain data points can veer into discriminatory territory.
Appoint a central data manager. As the scope of employee data grows, so will concerns about how that data is stored and managed. If possible, assign one person to manage that data and ensure company policy doesn’t infringe on employees’ rights to privacy.
Thoroughly vet third-party vendors. If you decide to entrust a third-party vendor with your employees’ personal information, there are certain criteria those vendors should meet, such as having appropriate safeguards to prevent a data breach and specific policies around data storage and retention.
Be transparent. Before you begin gathering employee data, draft a written policy that outlines what data will be gathered, who has access to it, and how it will be used. If possible, give employees the option to opt out of data collection, or establish a system to keep individul data anonymous.

Your responsibility to protect the data

A thoughtful approach to data collection can deliver enormous benefits to your organization: Smarter hiring, improved employee retention, greater productivity, heightened security, saved money, and increased customer satisfaction. But before you start gathering all the data you can, make sure you consider the risks and take steps to prevent disaster.

Just remember, once you dive into the world of big data, it’s your responsibility to protect that data — today and in the future.