With data gleaned from workers, companies hope to improve bottom line

If you have taken an "employee engagement" survey lately, you have plenty of company.

Employers are increasingly studying their workers to search for clues about how to improve business performance. They are also deploying more powerful software tools to find patterns that would go unnoticed otherwise.

To do so, companies are turning to human resources experts like Patrick Riley, chief executive of Modern Survey in Minneapolis.

Riley calls the firm a human capital measurement company.

One of the things it measures is employee satisfaction, or whether workers are happy in their jobs.

Companies have been gathering information on their workers through surveys and other means for decades. In the past, Riley said, some might have hired consultants to make sense of it, but most organizations did not know how to put the information to work.

"They perfected supply chain and financial systems," he said. "They eked every bit of efficiency out of their organizations. And they saved the most complex problem for last, which is people."

Now employers are increasingly tackling the people problem, and trying to find correlations between employee attitudes or work history and important business metrics like sales or customer satisfaction.

Companies are also using sophisticated talent management software to do so. For Riley, it's all an application of so-called big data. The buzzword generally refers to searching vast amounts of information from disparate sources to find connections.

"They saved the most complex problem for last, which is people."

Riley's company, which charges $15,000 to $600,000 for its HR software, has big clients including Ameriprise Financial, UnitedHealth Group and Select Comfort.

Gartner, a research firm, expects revenue from talent management software to climb to more than $3 billion this year, a 10 percent jump from two years ago.

Consultant Jason Averbook of Appirio, a company that offers services to help its business clients develop better relationships with their customers and workforce, helps employers use these systems. He said when one of his clients in the financial industry used analytic software to identify its top performing money managers, it found that the best were former real estate agents; they had great people skills. Averbook said that insight then shaped recruiting efforts.

"They went out in the housing crash of 2008, targeted the markets that were hit hardest in the real estate bust, went out and did massive recruiting efforts [and] turned real estate agents into these money managers," he said. "And those have been the most successful money managers."

Workers might find it intrusive that employers are gathering so much "intelligence" on them. Other skeptics say the software could put an employer into legal trouble.

"You have to actually determine whether the analytic will affect the racial mix, for example, of your hiring," said Joe Schmitt, a Minneapolis attorney who represents companies in employment cases.

Schmitt, of Nilan Johnson Lewis, is particularly leery of recruiting efforts that are based on a profile spit out by software. If the software concludes that a firm's top performers were all men who graduated from Yale in 1998, and the company then hired only people who fit that profile, it could wind up discriminating against older workers, women and minorities.

"If it does have a disparate impact on minorities, that employer has just violated Title VII of the Civil Rights Act of 1964 or another statute and it hasn't just done so for an individual," he said. "It's probably done so for a whole class of individuals."

That could invite a class-action lawsuit.

Aside from potential legal pitfalls, the "big data" systems for HR could run into another peril, namely, that the data isn't big enough, Schmitt said.

If a company has only limited information about its employees, he said, the software may come to exaggerated or incorrect conclusions.