Category: Work and Employment

Gaining competitive advantage with people analytics

Posted by MIT Sloan Executive Education - 2 months and 29 days ago

Gaining Competitive Advantage with People Analytics

In the past decade, analytics have taken significant guesswork out of decision making and scenario planning in fields like sports and finance, replacing gut feeling with big data. In the years since Tom Davenport's bestselling Competing on Analytics: The New Science of Winning, organizations have used data and analytics to identify their most profitable customers, accelerate product innovation, optimize supply chains and pricing, and leverage the true drivers of financial performance.

Analytics is now coming of age in the World of Work, bringing a healthy dose of science to the art of human resource management. While most hiring, management, promotion, and rewards decisions are based on intuition and corporate belief systems, "people analytics" offers a more data-driven approach to making those decisions. Recent studies are showing how the application of science to the selection, management, and alignment of people can result in better hires, significantly increased profits, and even a correction of systemic workplace bias.

Better HR decisions with data

It makes perfect sense: just as finance, operations, and business units have volumes of data, so does the HR function—companies are loaded with employee and performance data. Leading-edge organizations are building analytics teams and adopting more sophisticated analytics tools in an effort to enhance their competitive advantage and attract and retain top talent in increasingly talent-constrained industries. They are using their data to analyze flight risk, identify characteristics of high-performing sales and service teams, predict compliance risks, assess engagement and culture, and identify leadership candidates.

Here are some of the ways analytics are being used to improve the management of human capital across various industries:

  • The sports industry has been a pioneer in the analytics revolution, using data to win games and run profitable businesses, and the implication of these techniques continues to evolve. As reported by Davenport and co-authors Jeanne Harris and Jeremy Shapiro in an article for Harvard Business Review, the soccer team AC Milan created its own biomedical research unit to help the team gauge players’ health and fitness (drawing on 60,000+ data points for each player) and to help make contract decisions.
  • Analytics can be used to help correct workplace bias. According to groundbreaking studies by MIT Sloan Professor Emilio Castilla, merit-based reward practices can unintentionally lead to pay disparities based on gender, race, and national origin—the very biases that those systems seek to prevent. People analytics can play a key role in defining clear processes and criteria for hiring and evaluating employees. (In 2017, Castilla will lead a new MIT Sloan Executive Education program, Leading People at Work: Strategies for Talent Analytics, which focuses on the strategies that can be used to successfully design and implement people analytics in an organization.)

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Business leaders agree: It's time to start talking about race in the workplace

Posted by MIT Sloan Executive Education - 3 months and 14 days ago

Business leaders agree it's time to start discussing race in the workplace

Discussing race, religion, and politics at holiday gatherings and in the workplace has been taboo for decades. Even in safer spaces and among friends, conversations about race are particularly difficult and anxiety provoking. But in the wake of heartbreaking events around the country, conversations about racial inequality and cultural divide have forced their way into the national consciousness. Social media is abuzz with chatter about the degree to which prejudice is at work. And yet the one place where we spend most of our time--at work--is noticeably bereft of dialogue. Should we make race and racial bias an open platform for discussion at work?

Many business leaders say yes. While such dialogues can be difficult to navigate, they are essential to helping us face the tragedies that surround us. When we avoid constructive conversation about our differences, communication deteriorates and productivity suffers. Perhaps most critically, open dialogue about race at work helps address the fact that the same racial bias that underscores these events also exists inside corporate walls.

Edith Cooper, Head of Human Capital at Goldman Sachs, recently authored an article for Business Insider, “Why Goldman Sachs is encouraging employees to talk about race at work – and why as a black woman I think this is so important," where she writes, "Ultimately, our experience at work is a collection of interactions with the people around us. When those interactions are stimulating and challenging and take place in an environment of inclusivity and collaboration, you have a better experience and, in turn, you perform better ... because as a result of those varied inputs and insights, you are better."

Cooper shares that Goldman Sachs is working to provide forums for their people to engage in and advance the diversity dialogue. “The pervasiveness of current events affects everyone at our firm from summer interns to senior leaders. With impassioned questions pertaining to race, fair treatment and equal opportunity being asked both in public and in private, we knew this was not a topic we could ignore.”

After Ferguson, Howard Schultz, CEO of Starbucks, drew a lot of heat for his “Race Together” campaign, which tried to get employees to engage customers in conversations about race. While some disparaged the effort as poorly planned, others praised him for trying to be part of a solution. At a candid panel discussion among executives held in Chicago earlier this year, Dorri McWhorter, CEO of the YWCA of Metropolitan Chicago, said Schultz's initiative was a move in the right direction.

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MIT's Bengt Holmström wins 2016 Nobel Prize in economics

Posted by MIT Sloan Executive Education - 5 months and 17 days ago

MIT's Bengt Holmström wins Nobel Prize in economics

Bengt Holmström, an influential MIT economist and long-time MIT faculty member, was this week awarded the 2016 Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel. He shares this honor with Oliver Hart of Harvard for their deeply influential work on contract theory, including the optimal design of contracts between employers and employees.

Holmström holds a joint appointment between the Department of Economics and the MIT Sloan School of Management.

"MIT's latest Nobel laureate is not only an extraordinary economic thinker," said MIT President L. Rafael Reif while introducing Holmström at an on-campus press conference on Monday morning. "Bengt Holmström is also an outstanding citizen of MIT and a delightful human being."

Oliver Hart and Professor Holmström have devoted their lives' work to what's called contract theory—how and why contracts work and how they can be made better. This niche has just begun to gain the same cachet in academic circles as game theory and the study of stock market fluctuations.

"Their analysis of optimal contractual arrangements lays an intellectual foundation for designing policies and institutions in many areas, from bankruptcy legislation to political constitutions," the Royal Swedish Academy of Sciences wrote in its Nobel announcement.

Their work has touched on everything from executive pay to health insurance deductibles to the use of tax shelters and how to divide up control of a firm when it's not explicitly written into an agreement. Holmström's economic models, for example, can help companies develop the right incentives to optimize employees' performance.

"This theory has really been incredibly important, not just for economics, but also for other social sciences," said Per Stromberg, a member of the prize committee and professor at the Stockholm School of Economics.

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How meta data is changing expectations of privacy at work

Posted by MIT Sloan Executive Education - 6 months and 1 day ago

How metadata is changing expectations of privacy at work

Workplace privacy and the expectations that go with it is a thorny and ever evolving issue. A few decades ago, many employees likely had high expectations of privacy in the workplace, as the breach of it was relegated mostly to overheard phone conversations. More recently, with the advent of email and its proliferation into the workplace, the thinking around workplace privacy has changed. Today, many organizations require their employees to sign paperwork indicating they understand that any and all emails sent through the company's email system and servers are the property of the organization—and that the employee should have no expectation of privacy.

While one may agree to the idea that the organization owns the emails sent through its own system, they may be taken aback at the thought of someone--a manager, an IT person, an HR executive--actually reading those emails. In most cases, of course, no one is reading any one employee's emails unless there is cause to, such as suspected misbehavior.

This topic was a discussion point at the recent Boston CHRO Leadership Summit (MIT Sloan Executive Education was a sponsor). The executive boardroom session, "The Gold Mine Between the Lines—Analytics-Driven HR," focused on organizational analytics and how they are evolving to drive wide-scale transformation. This discussion included the use of meta data around email to understand how an organization collaborates and reaches (or does not reach) performance management goals. The diverse group represented private sector businesses, non-profit organizations, and governmental agencies. Interestingly, some of the participants commented that their millennial employees (in general) aren't concerned by the idea of their employer looking at email meta data, or even the contents of email.

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When the walls come down: Weighing the pros and cons of modern work spaces

Posted by MIT Sloan Executive Education - 8 months ago

MIT Sloan Professor Christian Catalini weighs in on the pros and cons of modern work spaces

A corner office--replete with windows and great views--was once a highly coveted perk in the world of work. Many businesses today, however, have opted for a more open floor plan. Over the past two decades, workers have seen office walls shrink to partitions and then disappear altogether in favor of shared offices, open spaces, and "bull pens." Also influencing our view of the traditional office setting is the growing popularity of remote work--more and more employees are choosing their home office over a corner one.

So how do these different environments actually affect the way we work? Do open floor plans truly make us more creative and collaborative, or are we just more distracted? Conversely, does confinement make us more productive? Could cubicles have a comeback? A recent Boston Globe article cites a mix of feelings over the open floor plans that, according to architecture and design firm HOK, account for more than 80% of office renovations in the past two years.

"One way an open office space can foster a more collaborative environment is by increasing the chances that people will interact and exchange ideas," says MIT Sloan Professor Christian Catalini. Catalini has studied how proximity impacts collaboration and ultimately the generation of new ideas, using data from a large, science-intensive campus: after co-location, scientific labs were 3.5 times more likely to collaborate with each other than before. Moreover, the discoveries resulting from their daily interactions (serendipitous or not) were more likely to be of high impact.

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New approaches to the skills gap

Posted by MIT Sloan Executive Education - 10 months ago

Last week, George Westerman, Research Scientist at MIT Sloan and the MIT Center for Digital Business, showed a headline from the Wall Street Journal article, "CIOs, Facing IT Skills Gap, Eye the Gig Economy for Talent," to the attendees of a panel he moderated at the MIT Sloan CIO Symposium 2016. The panel discussion, Developing your Organization's Skills for the Digital Future, played to a packed room.

Gerald Chertavian MIT

While turning to freelancers and contract employees participating in the gig economy may be one solution to the talent gap, there are companies taking other approaches as well. One panelist in the skills discussion at the MIT CIO Symposium may have offered a solution for winning the talent war. Gerald Chertavian, CEO and Founder of Year Up, believes that there’s a wealth of untapped talent among the six million U.S. young adults who are "out of work, out of school, and without access to the economic mainstream." As he told the attendees, "These are smart, hard-working young people who just happen to have been born or live in the wrong zip code, essentially making a college education impossible for them."

Chertavian's organization works with more than 250 organizations and companies to develop the talent in these young people and move them into white collar, career-focused jobs, such as software engineers and (highly prized) Java developers. The list of companies turning to Year Up to address their talent shortage is impressive and includes Accenture, Airbnb, American Express, athenahealth, AT&T, Bank of America, Biogen IDEC, Cisco, Deloitte, Facebook, GE Energy, Google, and many others

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The real costs of layoffs

Posted by MIT Sloan Executive Education - 10 months and 17 days ago

Layoffs

Corporate layoffs, often referred to as "downsizing", are very common nowadays. In the past, layoffs were a last measure for companies that were truly struggling. Or, downsizing was used only at times when the economy was exceptionally bleak.

So, why do companies now frequently use layoffs as an easy cost-cutting measure? And, what are the real costs of doing so? 

Corporate downsizing is often tied to short-term cost cutting measures. Unfortunately, this has become a more common practice, especially with publicly-traded companies, where there is extreme pressure for organizations to focus on quarterly profitability and share-holder value. Although layoffs may achieve these short-term financial objectives, the true costs down the road are often higher.

For example, when an employee is laid off from a company, a lot of knowledge leaves the organization. Morale amongst remaining employees is often lower, and the existing workforce is likely encumbered with having to fill the void and take on additional responsibilities. And what happens when that same company needs to augment their workforce again? There are costs to recruit, train, and retain the new employees.

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Is the tech industry overlooking half its talent pool?

Posted by MIT Sloan Executive Education - 11 months ago

There is much talk as of late over the lack of women working in and leading organizations in the technology industry. For example, a report by the American Association of University Women concluded that women made up just 26% of computing professionals in 2014, a substantially smaller proportion than 25 years ago and about the same percentage as in 1960. Women in engineering roles in the US are even less represented, making up 12% of working engineers.

Mitra Best

MIT Sloan Executive Certificate holder and U.S. Innovation Leader at PricewaterhouseCoopers, Mitra Best, may have said it best in her recent blog post on CIO Dashboard: "It is ironic that while technology has broken many barriers to innovation, barriers to women’s engagement are rising." Mitra recalls her time as an undergraduate in computer science in the late 80s, when approximately 30% of computer graduates were women. She had assumed at that time that we’d reach parity in 10 to 15 years and was recently disappointed to learn that, in 2015, only 18% of computer graduates in the US were women.

Unfortunately, the underrepresentation of women in tech is, for the most part, a global phenomenon. In the U.K., women represent only 17.5% of computing professionals, and only 8.2 percent of engineers. In Israel, known for its thriving tech scene, women compose only 12% of PhD graduates in engineering and only 15% of professors in STEM subjects.

There is hope. Female scientists, technologists, engineers, and mathematicians worldwide are breaking barriers and making incredible contributions to their fields, despite the odds. Projects like The Internet of Women, an upcoming book and global community to support women in technology founded by leaders from Cisco and New York Institute of Technology, prove that there are exciting cultural shifts taking place around the globe. Some of these achievements, particularly in the Middle East and Africa, are in part driven by the UN's Sustainable Development Goals and Millennial Development Goals, which emphasize gender equality and technology education for girls, respectively.

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