Apparently, when people search on Google looking for a job, men see significantly higher paying job opportunities than women do. Given that it is generally illegal to discriminate based on gender, it appears that either Google, a male-dominated firm, could be adjusting the results to favor men, or the client companies could be, in order to get around equal opportunity laws. I think we could argue that the intent of equal opportunity laws is to provide equal opportunities and that by concealing higher paying jobs from women, either Google or its advertisers (and Google might then be considered an accessory to this civil crime and partially liable) could be illegally discriminating.
This showcases the danger in the spread of analytics; crimes that otherwise might be undiscoverable may not be that hard to find shortly, and simply by not looking, a firm might be found negligent.
One of the defenses against a charge of discrimination, particularly in tech jobs, is that the mix of candidates is predominantly white and male. A firm, in theory, has no real control over who applies to a job. The stats they would provide during discovery would start with the applications that were presented and end with the hires. If the percentage of minorities hired wasn’t significantly below the percentage of minorities that applied, depending on the state and politics of the time, they’d likely be given a pass.
But if you could alter the mix of the people who applied, you could circumvent the law and, until now, there was virtually no way to get caught. Yes, you could try to do a detailed study manually, but the cost would be so massive that you’d have to be really sure of a very high judgement just to break even. And, even so, you might not actually get the smoking gun you’d need to win the case because the people doing the work could be discredited through bias.
But an analytics system can look at lots of records very cheaply, its process is auditable and can be made relatively bias proof, and because it is so cheap you can afford to run the analysis just to find out if anything is there. You don’t even need the potential for a judgement, you can fund it in a variety of ways.
The Problem Is This
I think you could argue that there are dishonest executives in every company, often in critical positions and, until now, most have been certain they won’t get caught. Even with older tools (I was an internal audit manager for a time), we would catch a few of these folks every year. But it was as much by accident as anything else because we couldn’t look at everything exhaustively. A sampling methodology misses most of the activity. The one big embezzlement I was involved with I missed (I did identify the control weakness that allowed it, which saved my bacon), because our sample didn’t pick up the fraudulent invoices (we caught them when one of the colluding employees was forced to take vacation and her replacement had an uh-oh moment).
But with analytics, you can do 100 percent samples, basically analyzing the entire population of an activity, so if you have employees or executives embezzling, padding expense reports, faking backgrounds, having an unauthorized paid sex partners as employees, or something like this screwy Google thing, it is almost certain to get caught as soon as someone turns a tool loose on it. And here is where it gets really iffy. If a stockholder’s action was founded on this discovery and it is by a third party, the failure to use an analytics tool could be argued successfully as an intent to cover it up. There is a reasonable chance that accusations could be leveled at the control organizations and non-involved executives for not using these tools in a timely manner and enabling the theft. Most at danger are likely firms that sell analytics tools because their defense will appear the weakest. Firms are starting to rise up that specialize in just this kind of analytics approach, and to a jury, analytics are likely to sound pretty generic.
his should, over the next few years, be an increasing risk for every executive, not just the ones who have questionable ethics.
Wrapping Up: Recommendations
I realize that the focus of analytics has been on customers and markets. What I suggest is that you begin to consider the use of analytics in areas of enforcement and ethical assurance. Internal audit and HR, likely need these tools to make sure that the firm isn’t accidentally or purposefully doing things that will tarnish the brand, result in civil or criminal charges, or have a lot of executive collateral damage. Today, Google stands as an example of just a taste of what analytics is capable of doing. Maybe it would be wise to step back a bit and think about how to protect your firm from a far more dangerous and embarrassing outcome.
Oh, and if you are someone currently stealing from your employer, you may want to tour a few of the white-collar prisons and countries that don’t have extradition treaties with the U.S. to assess your new potential home. Because there is a damn good chance that what you’ve been doing will be picked up within five years.
Rob Enderle is President and Principal Analyst of the Enderle Group, a forward-looking emerging technology advisory firm. With over 30 years’ experience in emerging technologies, he has provided regional and global companies with guidance in how to better target customer needs; create new business opportunities; anticipate technology changes; select vendors and products; and present their products in the best possible light. Rob covers the technology industry broadly. Before founding the Enderle Group, Rob was the Senior Research Fellow for Forrester Research and the Giga Information Group, and held senior positions at IBM and ROLM. Follow Rob on Twitter @enderle, on Facebook and on Google+