Are Computers the New Boss in HR?

Too many resumes, too few job openings. What’s an employer in today’s job market to do? Turn to computers of course! Sophisticated algorithms and personality tests are the new rage in HR circles as a method to separate the “wheat from the chaff” in terms of finding the right employee. However, there is danger in relying on machines to pick the best employees for your company, especially because hiring is such a complex process full of nuance and hundreds of variables and multiple predictors of success.

The article “The New Boss: Big Data”  in Macleans – a Canadian publication – discusses the challenges for human capital professionals in using machines for the hiring process– and coincidentally has a quote or two from me.

Net, net, with hundreds if not thousands of resumes to sort through and score for one to two open positions, it does appear this is an ideal task for machines.  However, I believe a careful balance is in order between relying on machines to solve the problem and also using intuition or “gut decision making” especially to determine cultural fit.  This is a complex problem to solve where the answer isn’t machine or HR professional –but in fact, both are necessary.

The Zero Latency Future is Now

Today’s advanced technology brings us virtual broadband autobahns that move data across the globe with speed and precision. In an attempt to capitalize on fast-moving data, some companies are using sophisticated applications and compute power to make decisions faster than competitors. However, when machines move millions of times faster than humans, there are some implications for the decisions made by marketing professionals.

A previous column “Is the Speed of Decision Making Accelerating?” cited how a century ago, managers could take weeks or days to make important decisions. That’s because before the advent of the telephone, it would take a substantial amount of time for information to travel by courier. Fast forward to the 21st century, most executives now have a mobile device and can be reached at a moment’s notice.

Our global society is moving towards a zero latency world, where the time between decision and action is drastically reduced. And we need to look no further than Wall Street’s high frequency traders for evidence.

John Plender of the Financial Times recently defined high frequency trading (HFT) as a “type of computerized dealing (that) exploits the millisecond gap between news events and their impact on markets … such trading has expanded rapidly to the point where 60-70% of the trading volume is in U.S. equities. Much of this volume is conducted by a very small number of companies.”

So what’s wrong with HFT? Plender cites potential problems, such as the “ability (for high-frequency traders) to see orders before they are public” and the propensity for high-frequency traders to co-locate servers on the floor of stock exchanges for faster trading (something not available to the average investor). In addition, the race is on where the winner in high-frequency trading can close trades as fast as 250 microseconds—faster than you can blink your eye!

The speed of decision-making is accelerating. In HFT, the trend is unmistakable. Machines are trading with and against each other. They’re moving ahead of individual investors, leaving day traders in the dust. And as a Financial Times article notes, speed isn’t just confined to Wall Street:  “Technology has changed many other big markets around the world and tied them more closely together … Such changes has created winners and losers.”

For marketers, the implications of zero latency are clear. For example, did you know that “robots” are purported to perform text mining on press releases when they hit the wire? With analysis completed in microseconds, advanced algorithms then execute trades based on what they’ve learned. Your company’s equity price could go up or down in seconds, based on the words in your press release!

In a zero latency world, what marketers (and other employees) say, write, tweet, and announce can all be used as fodder by the machines to either raise equity prices or destroy shareholder value. Our ability to react and “fix” our mistakes before they are noticed is greatly diminished. All it takes is a bad press release, poorly written whitepaper or negative analyst report.

And it’s not just PR. To borrow a phrase from Thomas Davenport, companies are now “Competing on Analytics.” Marketers must understand that they are now engaged in an arms race with competitors mining their own (and third-party) data for insights—increasingly by the hour and minute, and then taking action to better connect with customers. Companies without these capabilities will increasingly face mammoth disadvantage.

Zero latency decision-making isn’t the future. It’s now. Are you ready?