Data Driven Leadership; Panopticon or Nirvana?

Collecting and utilizing data to better understand customers or improve the logistics or processes of a company is old news to most business leaders across the globe. However, over the past few years, several tech companies have invested heavily in systems that also allows leadership and management to gain insight into their own employees’ work habits. One example of this, is Microsoft Viva Insights that can help companies perform Organizational Network Analysis (ONA) to understand patterns of collaboration, management behavior, and more. Other examples include survey platforms that enable leaders to investigate employees’ needs, concerns, and motivation levels. Yet, while Data Driven Leadership certainly has a lot of potential, criticism is also being raised towards this phenomenon.

In the worst-case scenario, Data Driven Leadership confines the workforce to a virtual Panopticon by allowing management to monitor employees’ work habits, reducing leadership and human resource management to a number’s game, and supporting (too) fast-paced decision making.

In the best-case scenario, Data Driven Leadership leads to better business results in the short term and continuous improvement opportunities in the long term by integrating leadership, change management and data analytics, and steers away top-level decision-making from unsubstantiated opinions, cognitive bias, groupthink, and self-censorship.

To shed some light on this, and to better understand the pros and cons of Data Driven Leadership, I have dug a little deeper into this phenomenon, and in this blog post, I would like to offer you my thoughts on how data might be able to support leadership decisions in a conscious and ethical manner.

Create a culture of conscious data consumption

Most people working within areas such as product development or sales & marketing, feel comfortable using data to support decision making, but when it comes to leadership, management, and HR, data driven decision making is often not recognized as a valid strategy. However, even though we might not think of it as such, leaders today already use various kinds of data to support their everyday decision-making, such as formal- and informal interviews, personal dialogue, observation, etc. Most often we just do not collect and display this type of data in a structured way but rather internalize it and make it part of our ‘gut-feeling’ and conscious- or unconscious analysis- and subsequent decision making.

Furthermore, as soon as the numbers come out on paper or display, they very often become a ‘one truth’ representation and while this might be acceptable for products, advertising spending, hit rates etc. it is certainly not comme il faut to treat your workforce the same way. In fact, one of the first and biggest mistakes I see, when talking about Data Driven Leadership, is that not enough time and effort is spent to thoroughly consider the purpose of the data, what added value we expect it to bring to our leadership decisions, and what kind of culture we want the data to help us support. When we do not think these things through, the risk of reducing leadership to a number’s game is unfortunately eminent.

Bring data into play in dialogues that translate into value

Good data gives us the potential for great learning, but numbers also tell a flimsy story, and thus require the need for interpretation and explanation. However, excavating the story behind the data takes time and effort and is often neglected. To conduct Data Driven Leadership, we must not forfeit the explanatory phase of data investigation, as this is where we take a critical approach to the numbers and make decisions about which type of data to bring forward to the employees, and what story we want the data to support.

Data can help us understand the past and present better, but the numbers in themselves will never really become a valuable leadership tool. As an example, employee engagement surveys have recently become quite popular, as many believe they can help organizations improve productivity and employee retention. Still, besides reaching a companywide engagement score, what are the numbers then actually telling us? -And, if we as leaders are not willing, or able to invest time and effort into finding the explanation behind, or the story in our numbers, then why are we asking our employees to fill out surveys in the first place?

If we want to use data to support leadership decisions, we have a moral obligation to invest time and resources into not only gathering and presenting data, but also to research the story behind the numbers, and initiate curious dialogues with our employees about the data, so that together we can use it to create insight and actions.

Are you leading in the past or the future?

The past is a funny thing. As humans we love to reflect and study the past as a way of trying to make sense of our world today. But the past is also complex and frustrating, and because data can only be collected in the present or the past, it is also an expression of a snapshot, that does not say much (if anything) about the future.

As mentioned in the beginning of this article, Viva Insights or similar ONA technologies can give us great insights into the patterns of collaboration but collecting vast amounts of quantitative data on your employees’ work habits, meeting behavior etc. will neither make you understand the reasons behind their (past) behavior, nor give you strategies for future changes. What it might do, though, is offer an opportunity to open up substantiated conversations and reflections, that will allow us to make better – or at least different – choices for the future.

So, is data good or bad? In my opinion it is neither. It’s just numbers. What we use the data for, and the decisions we justify with data is what will render it as good or bad. Thus, before you invest in employee engagement scans or ONA technology, make sure you fully understand how your data will be used and in what ways it will affect your business. From there you’ll be able to explain to your team why it matters.

Further inspiration

If you would you like a hands-on example of how to use data to support (and challenge) leadership decisions, then why not spend a couple of minutes on this article written by members of Microsoft’s’ People Analytics team; Why Microsoft Measures Employee Thriving, Not Engagement. 

Should you want to explore these tools and methods further, then give us a call and we will be happy to help you take the first steps towards sustainable Data Driven Leadership.