Article: Data privacy laws and the future of HR

HR Technology

Data privacy laws and the future of HR

The collection of personal data within the HR function is quite large. This could soon pose a problem for HR professionals as data laws become more stringent.
Data privacy laws and the future of HR

The ownership of personal data and its relating privacy laws have become an important corporate concern. Given that the ticker is shifting towards becoming more vigilant to safeguard data, the past few years have seen a marked rise in privacy legislations. The debate around data privacy has been shaped by factors that range from forces like rising cybersecurity threats to ethical considerations like the ownership of personal data and its privacy. With the shift today reflecting on a global scale—all from Europe to states in the US like California have legislation towards more stringent safeguards on data sharing and storage—corporations and especially HR functions have a challenging task ahead.

According to Gartner, more than 60 jurisdictions around the world have enacted or proposed postmodern privacy and data protection laws. Even in India, a Supreme Court verdict back in 2017 emphasized the right of privacy of an individual as an intrinsic part of the right to life and personal liberty.

While most such regulations are in response to a larger trend of companies collecting consumer data, they have serious implications for the HR functions as well. The dependence is multi-fold. For example, many have depended on screening assessments and performing background checks on candidates, often without their consent. A critical component of HR decision making today is their reliance on employee data. Even in places where decision making is not data-driven, the very nature of HR compliance and functioning ends up collecting troves of data of their employees. With the rise in privacy concerns, companies have found themselves in the need to be more aware of how they handle personal data, thus impacting their strategy, purpose, and methods of managing personal data.

HR’s role as data custodian

Under such considerations, the onus on HR professionals to be the custodian of employee data becomes an important task, one that’s often ignored in the hubris of day to day activity. According to a Gartner study by 2020, the backup and archiving of personal data will represent the largest area of privacy risk for 70 percent of organizations, up from 10 percent in 2018. Moving ahead, this percentage is only going to rise. The scope of personal data has risen with a parallel rise of data-based decision making and digital systems like analytics and AI that require such data to enable managers to make better decisions. But storing such personal data comes with its costs, one that has been rising in recent years.

The problem is not just data generation but often also the inefficient use that opens up a possibility of it being abused. There still exist processes within companies that generate and collect personal data without having a clear purpose in mind. The rise in the amount of personal data stored opens up companies to a higher probability of default. And doing so can come at a great cost to the company. Privacy regulations have already begun introducing penalties and stiff fines for violations, making the risk of holding unused personal data potentially very expensive. As a result not only is it a concern of CIOs and CTOs but it's also CHROs who should be worried about the amount of personal data that they generate.

There are advantages too of HR professionals taking active steps in working closely with technological counterparts. In addition to a growing compliance need, ensuring employee data is both ethically and securely managed creates a healthy transparent environment that promotes trust within the company. It will also enable many to cut down on unnecessary processes and streamline decision-making procedures which depend on employee data.

Upskilling of HR in data-skills

HR professionals wouldn’t just require a shift in understanding but also skills in the coming years to take care of their employee's privacy concerns. It's often a tricky line to toe given the need to make people processes more data-driven.  The business case of backing employee management decisions will soon have to be balanced with the need to collect, store, and use data ethically. Currently, one outweighs the other where data collection is less affected by compliance needs.

But with both a rising awareness within the general populace on their right to privacy and legislation in efforts to safeguard the same, HR professionals will need to rethink their often intrusive practices. This, in some cases might mean refiguring HR policies from scratch.

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Topics: HR Technology, #BuildingHRCapability, #MyNextCurve

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