The Importance of Data Ethics and Privacy in People Analytics
I believe ethics is the most critical ingredient in people analytics. Those working in the field simply cannot afford to get it wrong. The risk to employee trust and to the reputation of the people analytics function is too high.
In this article, we’re going to look at:
Why do People Analytics functions have to consider ethics and privacy?
How big a concern is ethics and privacy?
How should organisations be using employee data?
What can organisations do to better address ethics and privacy concerns?
Why does People Analytics have to think about ethics and privacy?
The amount of data being collected by organisations about employees is incredible. And the volume of data available will continue to grow exponentially.
Using traditional HR data can be challenging enough for people analytics teams, but the situation becomes even more complex when emerging technologies and non-traditional data sources such as wearables, sensors, email and social media are taken into account. Organisations can conduct active data collection through surveys, to passive data collection, through Organisational Network Analysis and employee listening tools, for example.
In the last year, these activities have only increased as organisations raced to get a handle on their newly remote workforce. (See this case study from Rabobank, for example.)
But with this much data, comes a lot of responsibility. A survey by UNLEASH and the IBM Smarter Workforce Institute found that 84% of people believe HR urgently needs guidance on the fair use and privacy of new and emerging data sources in people analytics.
Beyond data collection and analysis, the increasing use of AI-based tools in talent management and people analytics offers even more fertile ground for ethics and privacy concerns.
In fact, a majority (79%) of Americans are concerned about the way their data is being used. And they don’t feel they’re in control: 59% say that they have little or no control over how employers use their personal information. This cannot stay the norm.
How big a concern are ethics and privacy?
The saying goes, “just because you can, doesn’t mean you should.” And this very much applies to the collection and analysis of employee data.
In terms of collecting and analysing employee data, judging what is acceptable and what is not presents a huge dilemma for HR professionals and people analytics teams. The challenge is as much moral as it is legal. People analytics is about people, after all, and the risk of getting it wrong and eroding employee trust, perhaps irreversibly, means that ethics needs to be front and centre of any people analytics initiative.
Research in November 2017 from Insight222 found that 81% of people analytics leaders and practitioners believe their people analytics projects were jeopardised by ethics or privacy concerns.
From a legal standpoint, new regulation is coming through thick and fast. From the European Union’s GDPR, which came into effect in 2018, to the more recent SEC guidelines for Human Capital disclosures.
A popular example of the risk of getting ethics and privacy wrong is the negative press surrounding the announcement that Amazon has been awarded patents to develop wireless wristbands for warehouse workers. A series of media outlets queued up to lambast Amazon, conjuring up images up Big Brother to support their argument that this represented a further erosion of worker rights. This prompted Amazon to counter that the wristbands will support employee wellbeing as well as improving productivity.
People analytics teams have to navigate different rules and values with regards to data privacy and usage in the countries that they operate. In certain countries, particularly in Europe, people analytics leaders need to work with local HR teams to seek and receive agreement from workers councils and employee representative groups.
How should organisations be using employee data?
What analytics teams in HR could and should do with people data are two entirely different questions. The reality is that we are at an inflexion point where the delta between what is possible with technology and what is covered by legislation is widening. As such, a nagging question for people analytics leaders is what to do in those situations – or ‘grey areas’ – not adequately covered by legislation.
To find out what companies can do to inform their decisions on how to use employee data, the IBM Smarter Workforce Institute surveyed more than 20,000 workers in 44 countries about their preferences regarding how data dilemmas are resolved in people analytics. The Institute clustered countries according to national preferences on how decisions regarding usage of workers’ data are made.
The results show that within the grey areas, where legal precedent does not exist, or where data ownership is unclear, context and culture matter most. There are important differences between cultures that may impact employees’ receptiveness to having their personal data analysed for people analytics. Even when examining countries in the same continent, the Institute sometimes observed differing dominant ideologies.
The research discovered most countries have dominant ethical ideologies (with 77% falling into the Absolutist ‘I believe the rules are the rules’ type.) This infers companies and people analytics practitioners can look to the regions where their business operates to gain a better understanding of how employees might react to an initiative to collect and analyse a new source of people data.
What can organisations do to better address ethics and privacy concerns?
At a foundational level, for people analytics to operate ethically, there has to be a clear reason for collecting and analysing employee data – to avoid falling into the trap of conducting analyses just because you can.
It is critical that every people analytics project or activity starts with a clear business challenge, and results in demonstrable business impact. Only with this understanding can you hope to communicate openly and transparently about why the work is important and therefore why it’s necessary to analyse the data.
I’m fortunate to spend much of my time working with leading experts and many of the most advanced teams in the people analytics space. Alongside this knowledge and experience, at Insight222 we developed a People Analytics Ethics Charter in collaboration with 15 leading Global 500 companies. And it is my strong recommendation that you too establish an ethics charter for your organisation.
The ethics charter consists of a set of principles for conducting ethically sound people analytics:
Define what’s important to you. The people analytics team must understand the benefits that both management and the employees can derive from the proposed data analytics project and weigh risk and benefit.
Align key stakeholders. Once you know your key stakeholders, engage with each to assure your principles address their key concerns. If not, iterate on your principles or iterate on your messaging.
Demonstrate/communicate the specific individual benefit. A proactive and sustained communication approach is key to socialising your charter internally. A key question has to be: what is in it for the employee? If no specific benefit can be derived for employees, be careful.
Create a process to get to your goal. The charter creation is not a one-time conversation, a single day-long meeting, or offsite. A truly effective charter creation is also a change management process.
Develop an implementation plan. This plan must contain clear actions steps for each phase of your people analytics project.
Translate your charter into action questions. A charter and decision model becomes actionable when it can be tested. Create specific questions for each stage of the analytics project to test whether the project conforms to your agreed ethical norms.
You can read more about the Ethics Charter here.
As well as these six principles, let me finish by sharing a few more lessons from the road.
Partnering with legal and IT. To ensure that you are complying with the data privacy and security legislation of the countries you are operating in as well as company rules and regulations. For example, as Patrick Coolen writes here, no people analytics project at ABN AMRO starts without approval from the bank’s legal and compliance teams nor are any findings communicated without sign-off.
Establishing a Governance Council. To consider and prioritise potential projects is commonplace amongst the bulk of advanced people analytics teams. Ethics and privacy should be at the top of the list of items to debate by members of the council on whether to give the go-ahead to individual projects.
Have an expert on your team. As Dawn Klinghoffer describes in this article make serious consideration to having a data privacy expert as part of the people analytics team (as Dawn has done at Microsoft). This is a trend I expect to see grow over the coming years.
For People Analytics to continue to deliver business value, it is absolutely vital that ethics and privacy concerns are top of mind across every single piece of work being conducted. From both a moral and legal standpoint, teams would be wise to engrain this type of thinking from day one.
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ABOUT THE AUTHOR
David is a globally respected author, speaker, conference chair, and executive consultant on people analytics, data-driven HR and the future of work. As Managing Partner and Executive Director at Insight222, he has overall responsibility for the delivery of the Insight222 People Analytics Program, which supports the advancement of people analytics in over 70 global organisations. Prior to co-founding Insight222 and taking up a board advisor role at TrustSphere, David accumulated over 20 years experience in the human resources and people analytics fields, including as Global Director of People Analytics Solutions at IBM. As such, David has extensive experience in helping organisations increase value, impact and focus from the wise and ethical use of people analytics. David also hosts the Digital HR Leaders Podcast and is an instructor for Insight222's myHRfuture Academy. His book, co-authored with Jonathan Ferrar, Excellence in People Analytics: How to use Workforce Data to Create Business Value will be published in the summer of 2021.