Why smarter machines call for smarter HR

HR for humans: How data, digital, and human-centered design can transform HR

Posted by Jim Guszcza and Kathi Enderes on January 25, 2019.

We are in the midst of two major revolutions that are reshaping societal and business landscapes—each of which carries major implications for the HR domain.

The first revolution is technological in nature, connoted by taglines like big data, digital, and artificial intelligence (AI). Cheap computing power, advances in machine learning, and the explosion of data in nearly every aspect of life have given rise to an AI renaissance that will profoundly affect the future of work. It is increasingly feasible to build machines capable of performing tasks that, until recently, only humans could perform.

But the inevitable hype surrounding new solutions like deep learning neural networks generates real confusion about the nature and limits of real-world AI. This lack of clarity can lead to exaggerated speculation about jobs being automated away. That type of narrow framing of AI—as a means to replace people, rather than extend their capabilities—might also create some self-fulfilling prophecies.

As the saying goes, “what happens in vagueness stays in vagueness.” Clear thinking about the future of work requires clear thinking about how human and machine intelligence can function together as complements. One goal of this blog series is to explore the interaction of humans and smart technologies in the future of work.

The second revolution underway is psychological in nature. The past four decades have ushered in a sea change in our understanding of human psychology, summarized in Daniel Kahneman’s book Thinking, Fast and Slow.1 So profound and far-reaching are these discoveries that Harvard linguist and author Steven Pinker has remarked that they should be high on the list of things every educated person should know.2

Kahneman and collaborator Amos Tversky were awarded the 2002 Nobel Prize in Economic Sciences—even though both were trained as psychologists.3 Recent Nobel laureate Richard Thaler, the father of behavioral economics, joked that his most important scientific achievement was importing the work of Kahneman and Tversky into the economics profession.4 Rather than study the economic behavior of fictional rational actors, behavioral economics studies the behavior of actual people. We believe that HR is poised for a similar revolution.

Ten years ago, the behavioral economics revolution gave rise to the behavioral insights movement, sparked by the publication of Richard Thaler’s and Cass Sunstein’s landmark book Nudge.5 Not settling to merely study the way actual humans behave, the book uses knowledge of human psychology to actively design “choice environments” in ways that help improve judgments, decisions, and behaviors. Nudge can be viewed as a form of human-centered design: it demonstrates that it is often possible to design environments in ways that encourage people to make smarter decisions more or less automatically. For example, if you make stairs more attractive and noticeable, people are more likely to use them instead of elevators. More generally, when programs and policies are designed with empathy and an understanding of human psychology, people will likely make better decisions.

The second goal of this series is to explore the idea that—analogously as Thaler revolutionized economics—we can revolutionize HR by designing programs, policies, and work environments in ways that go with—not against—the grain of human psychology. We call this idea “HR for humans.”

As future posts will explore, behavioral design can be used to enable smarter hiring decisions; ameliorate biases in the workplace; increase worker (or customer, patient, student, etc.) engagement; help people achieve their health, wealth, and wellbeing goals; promote collaboration; support ethical behavior and good corporate citizenship; and encourage purpose-driven, people-centered approaches to HR.

HR technology is clearly an important piece of the puzzle. Digitally-mediated work environments generate all manner of fine-grained behavioral data and can be used to communicate with, connect, and engage workers in innovative ways. Data and technology can facilitate smarter decisions and improved engagement, but not many organizations are taking advantage of this opportunity. According to Bersin research, only 2 percent of organizations leverage people analytics as an essential part of operations to create a nuanced, holistic picture of each worker and drive business results.6 To drive these desired outcomes, organizations need the type of human-centered design described in Nudge.

We call this type of organizational approach “3-D thinking”: Data, Digital, and Design.

We can put these two themes together this way: previous approaches to management were developed in a time when many jobs involved discrete, repetitive, and easily measurable tasks. In a sense, these approaches treated people like machines: the more the employer pays, the more units the worker produces. Thanks to the AI revolution, organizations will increasingly have actual machines capable of performing such tasks—considerably faster and more efficiently than humans can. A sophisticated understanding of both AI and human psychology can enable the creation of workplaces in which humans are naturally motivated to learn, innovate, and create forms of value that machines cannot. HR for humans, therefore, also connotes the idea that behavioral insights can help harness AI technologies to humanize workplaces—rather than the opposite.

Readers can look for more posts regarding the future of HR for humans on Capital H throughout 2019.

Jim GuszczaJim Guszcza, is the US chief data scientist of Deloitte Consulting LLP and a member of Deloitte’s Advanced Analytics and Modeling practice.
Kathi EnderesKathi Enderes, PhD, is a vice president and the talent & workforce research leader at BersinTM, Deloitte Consulting LLP.

1 Thinking, Fast and Slow, Daniel Kahneman / Farrar, Straus and Giroux, October 2011.
2 “On Kahneman,” Edge.org / John Brockman, March 27, 2014, https://www.edge.org/conversation/daniel_kahneman-on-kahneman.
3 “The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2002,” NobelPrize.org, October 9, 2002, https://www.nobelprize.org/prizes/economic-sciences/2002/press-release/.
4 “The Making of Richard Thaler’s Economics Nobel,” The New Yorker / John Cassidy, October 10, 2017, https://www.newyorker.com/news/john-cassidy/the-making-of-richard-thalers-economics-nobel.
5 Nudge: Improving Decisions About Health, Wealth, and Happiness, Richard H. Thaler and Cass R. Sunstein / Penguin Books, February 2009.
6 High-Impact People Analytics, Bersin, Deloitte Consulting LLP / Madhura Chakrabarti, PhD, 2017.

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