The Importance of Ethics in People Analytics for Leading Companies
The Insight222 People Analytics Trends Report for 2023 explores the eight characteristics of Leading Companies in People Analytics. Leading Companies in People Analytics are those that invest, measure, and scale their work to have the greatest impact across the enterprise. They focus on the most important business priorities, ensuring their investments provide a return, and deliver value at scale.
One of these eight characteristics is ‘Ethics’. Insight222’s research found that in Leading Companies, the people analytics function adheres to strong ethical standards for people analytics activities and communicates these directly with employees.
Ethical practices and people analytics go hand in hand. However, it is not enough to hope that ethics are at the forefront when companies are considering people analytics work. It is important to build employee trust in the use of people data and tackle ethics and privacy intentionally, being open and transparent with how data is used.
The ethical use of data in people analytics work in Leading Companies is composed of three key practices:
Strong Ethical Principles
Open Communication
Ethics Oversight
Drawing on the work of Insight222 over the last five years, we will explore each of these in more detail, showcasing examples of leading practices that every people analytics function in any organisation can adopt.
1. Strong Ethical Principles
In Leading Companies, the people analytics function builds and establishes strong ethical principles for the use of people data in collaboration with, amongst others, the data privacy or legal team. This is the foundation for the ethical use of people data and these partnerships are critical for every people analytics team.
At Insight222 we recommend that organisations go further than the partnership alone and establish an ethics charter. 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 refine your messaging.
Demonstrate/communicate the specific individual benefit. A proactive and sustained communication approach is key to socialising your charter internally. A key question that should be answered is: What is in it for the employee? If no specific benefit can be derived for employees, don’t do it.
Create a process to get to your goal. The creation of the ethics charter should not be a one-time conversation, a single day-long meeting, or offsite. Embedding an ethics charter requires an effective change management process. It should also be living document that evolves over time. For example, the evolution of technologies such as generative AI, represent an opportunity for people analytics teams with pre-existing ethics charters to update them and incorporate guidelines for Responsible AI.
Develop an implementation plan. This plan must contain clear actions and steps for each phase of your people analytics project.
Translate your charter into action questions. An ethics 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.
It is important that the principles set out in the ethics charter evolve as business priorities and the work of the people analytics team progress. A case example of this requirement is the emergence of personalised products for employees. Fuelled by technological advances and greater employee expectations for choice, personalised products use data about an employee to make recommendations in areas such as internal mobility and learning and development. As people analytics focuses on creating personalised products, the ethical standards to ensure employee trust become more demanding.
At ABN AMRO, people analytics practitioners ensure high ethical validity of the models for personalised products to ensure there is no bias. As part of Insight222’s People Analytics Trends Research in 2022, Jaap Veldkamp, People Analytics Lead at ABN AMRO, shared the approach the team take:
“Moving into personalised products means we must add new questions to our ethics framework. We must closely examine the work of our data scientists and the models they are developing.”
The entire people analytics team at ABN AMRO has a strong focus on ethics across the work they do in people analytics and think about ethics and privacy as a fully embedded part of the process. People analytics experts should also be ethical and privacy experts.
2. Open Communication
In Leading Companies, the principles for the ethical use of data are communicated openly with employees alongside transparency about how their data will be used. Transparency and fairness are key in all aspects of people analytics. The “fair exchange of value” is a key mantra for people analytics teams. If employees understand how their data will be used and see the benefit, it is far more likely that they will contribute data.
While nearly all people analytics leaders agree with this notion, communicating the ethical use of employees’ data needs more focus in most companies. Insight222’s People Analytics Trends research in 2022 found that only 40% of people analytics leaders say that they transparently communicate to their employees about their people analytics projects.
Dawn Klinghoffer , Head of People Analytics at Microsoft, has spoken extensively about the ethical standards for managing people data. A focus on ethics and transparent communication underpins the work of the people analytics team. Dawn explains.
“Being able to communicate with your employees on how you are using their data is so important. You can do it through confidentiality statements, or through an internal social media platform, which is a great way to share how you are using data for people analytics. It’s about getting in front of the communication as opposed to being reactive. I encourage people to be proactive.”
3. Ethics Oversight
A leading practice when it comes to ethics and governance is having in place an ethics and privacy forum – or council – that regularly reviews the use of people data, and the analytics projects in which that data is used, to ensure its appropriate use.
Our research found that most companies still need to establish this level of governance. Only 36% of companies have a formal council in place that meets regularly to govern the ethical use of people data.
The ethics and privacy council should be responsible for managing aspects of data privacy, and the ethical and moral aspects of the types of projects included in the people analytics functions’ focus. Figure 5 shows a typical composition of an ethics and privacy council. While it sounds very formal, the actual council may operate on a flexible and agile basis.
The following case insight provides an example of the flexible operation of an ethics and privacy council in practice. As the global pandemic unfolded in early 2020, one financial services organisation, with operations in more than 35 countries, mobilised its ethics and privacy council to meet twice a week.
The council expanded to include representatives from people analytics, HR data privacy, employee relations, HR operations, data privacy legal and employee legal. As new regulatory and risk requirements emerged, the council was able to meet and discuss the ethical and privacy considerations.
The flexibility and frequency with which the council met was critical as new requirements for people reporting emerged at an unprecedented pace, often daily. The requirements included data that had never been collected or reported on before. The representation at the council ensured that any data and reporting provided met legal and privacy standards, and was for the benefit of employees.
Upholding Ethical Standards in People Analytics
Insight222’s research has found that Leading Companies set the bar high for adhering to and sharing strong ethical standards. In these companies, not only are ethical standards developed and governed in strong partnership with legal and data privacy teams, but these standards are then shared in open communications directly with employees.
In fact, in some companies, the ethical management of people data has become so important that a dedicated person has been assigned within the people analytics team to manage and lead the case for all ethical standards and practice of people data across the enterprise.
These factors combined enable Leading Companies to deliver the highest standards of ethical data use for the people whose very data is being gathered and analysed – the employees and their data.
ABOUT THE AUTHORS
Naomi is an experienced business professional with over 15 years’ experience, mainly in the financial services industry. She has undertaken roles as a HR business partner, HR chief of staff and as a commercial banker during her time at Barclays Bank. In the last six years Naomi has dedicated her career to people analytics, with particular expertise in consulting with business executives, HR leaders and other stakeholders. Naomi took a career break in the mid 2010s to travel around South America to learn Spanish and immerse herself in the Latin American culture. In her spare time, she loves to watch professional athletics, having once been a junior national athlete herself. She currently lives in the UK.
David is a globally respected speaker, author, and consultant on people analytics, data-driven HR, and the future of work. With lead responsibility for Insight222’s brand and market development, David helps our clients create value through people analytics. David is the co-author of Excellence in People Analytics (Kogan Page, July 2021), and the host of our Digital HR Leaders podcast. Prior to co-founding Insight222, David worked in the human resources field in multiple major global companies, most recently at IBM. He has lived in both UK and France and worked all over the world during his career. He has been a director of Insight222 since 2019. David is a keen cricket player and supporter of Liverpool FC.