Protecting Customers and Your Business with Ethical Data Management

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Read more about author Jay Militscher.

Many companies have been criticized in recent years for mismanaging data. For example, a major social media conglomerate recently came under fire for reports that user data was accessible to employees, leading lawmakers to call for an investigation by the F.T.C. This has piqued concern for data privacy once again and shines a light on the lack of cohesive regulation for consumer data usage.  

While there isn’t a federal regulation in the U.S. similar to GDPR at present, organizations shouldn’t wait for this to happen before they get data management right. Companies must be prioritizing proper management of customer data, regardless of regulations. Consumer data privacy should be an ethical priority for businesses instead of just a regulatory requirement. On top of that, managing data the right way has business benefits and is essential to earning and retaining customer trust. 

Understanding the Need for Ethical Data Management

The social media example highlights that no strong U.S. federal regulations exist around data management, which is particularly concerning when it comes to tech giants who have a wealth of data at their disposal. These, and other, organizations understandably use personal data to deliver targeted advertising and customized social media experiences to consumers, of course for commercially valuable aims. But this comes with responsibilities and, regarding data management, it’s difficult to enforce guardrails without federal regulation. Improper or unethical data management practices can pose real-life risk to security, safety, and privacy.

Regulation like GDPR and CCPA has helped some companies align themselves with a standard for best practices. However, until there is a national data privacy law in the United States, it’s still up to business leaders to instill good data hygiene. Moreover, protecting customer data is crucial to business reputation and longevity.

Benefits to Businesses and Consumers

While many businesses have the intent to implement ethical data management practices, the adoption of such practices is far from commonplace. Implementing proper data management is an investment, one that likely won’t result in an immediate ROI. As such, this process can be perceived as slowing a business down, making it difficult to convince business leaders of the need to invest in these practices. In reality, however, investing in the necessary tools, time, and talent to properly manage a company’s data actually speeds up processes in the long run when companies are able to avoid the issues that can accompany inappropriate data management. 

Proper data management is beneficial to both customers and businesses in the following areas:

  • Security: Knowing where your data is can help protect consumers from identity and financial theft.
  • Privacy: Good data management feeds into data privacy, which can help you service customers with a personalized experience tailored to their preferences while ensuring the information is used only for reasonable purposes, aligned with consent. Another area closely aligned with privacy is the retention of data. It is crucial to have a plan for the end of life of the data.
  • Trust: Data management can make or break a business’s reputation and trust with consumers. If a customer starts seeing personal information in targeted ads that they did not consent to be shared such as name, location, etc., you run the risk of losing that trust entirely. 
  • Insights: You can’t measure what you can’t manage; sound data management programs enable you to uncover new understanding about your customers, workforce, products, and services.

Transparency: The Key to Ethical Data Management 

So, what are the fundamentals of good data management? Above all, transparency. Companies must be transparent about the type of consumer data they collect, how they collect it, and how they use it. All usage of consumer data should be reasonable and apparent and follow the terms and conditions that you set with your users. Further, all employees should be trained on these transparency policies. And finally, you must own up to any and all mistakes. If an employee goes rogue or makes an error, you must have a communication strategy ready to take accountability for that mistake.

To prevent these breaches from happening, the key is to make the right thing the easiest option. This means ensuring that the correct procedure that aligns with your transparency clause is the default course of action for data scientists. If transparency and clear data management guidelines aren’t embedded into your processes, it can be all too easy for an employee to download a mass import of customer data and not even realize they’ve crossed a line. 

As such, employee education is critically important. For example, financial services company Scotiabank has taken steps to prevent the misuse of data by teaching employees data literacy (the ability to read, write and communicate about data in context) and instilling responsibility so employees are aware of the magnitude of the data they handle day to day, all with the help of technology to do this at scale, as Anna Hannem described in a conversation on The Data Download

In today’s data-driven world, ethical data management processes are a nonnegotiable part of any business strategy. Without appropriate management practices, not only will consumers lose faith in your business, but digital transformation growth will be stymied from a lack of insights into products and consumer preferences. 

Our own data ethics journey is just getting off the ground now, and we know that transparent policies are key to staying in customers’ good faith and ensuring your data engineers and scientists are given clear, simple processes that align with proper management practices is key to ensuring your data collection and usage won’t get you in any hot water. Overall, while often lagging behind social norms, legislation is a good starting point. Ultimately, it’s up to each company to ensure that ethical data management is rooted in their data culture and operations.

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