The question isn't whether AI will change work – it's whether we'll use this moment to finally build workplaces that enhance rather than diminish our humanity. Photo via Getty Images

When OpenAI's GPT-4 made headlines by passing the bar exam and scoring in the top 10 percent on medical licensing tests, I noticed something fascinating: everyone focused on AI replacing professionals, but they missed the deeper story. AI isn't just disrupting work – it's exposing fundamental flaws in how we've built our entire workplace ecosystem. It's holding up a mirror to our organizations, revealing just how far we've strayed from what makes us uniquely human.

The World Economic Forum tells us 44 percent of workers' skills will need updating by 2027, but that statistic only scratches the surface. In my conversations with business leaders, I'm watching a transformation unfold in real-time. Take the accounting industry, where I've observed forward-thinking firms like Deloitte and PwC turning their accountants into strategic business advisors while other firms continue training junior staff for tasks that AI will soon handle. This isn't just a skills mismatch – it's a fundamental misunderstanding of human potential.

The challenge runs deeper than individual industries. McKinsey predicts 30 percent of hours worked globally could be automated by 2030, but I believe they're missing a crucial point. We've spent decades designing jobs around industrial-era ideals of efficiency and standardization – the very qualities that make them perfect targets for AI automation. In our obsession with measuring, standardizing, and streamlining everything, we've created workplaces that treat humans like machines rather than the complex, creative beings we are.

What's emerging is a striking paradox: as work becomes more automated, our workplace cultures are growing more disconnected. Microsoft researchers identified a "collaboration deficit" in remote work environments, with 56 percent of employees reporting a decline in workplace friendships. This cultural shift is occurring precisely when we need human connection most. During the Great Resignation of 2021, 47 million Americans quit their jobs, they weren't leaving because of salary considerations or technological inadequacies. The most common reasons cited were lack of human connection, purpose, and authentic leadership.

Yet instead of heeding this wake-up call, the rise of AI is pushing us further apart. A decade ago, the concept of "workplace family" was commonplace – now it's often dismissed as manipulative corporate rhetoric. This shift reveals a troubling blindspot in our thinking about work. Consider this: we spend more than 90,000 hours at work over our lifetime – more time than we spend with our own families – yet we're increasingly treating these relationships as purely transactional. In our rush to establish boundaries and protect ourselves from corporate exploitation, we've overcorrected, creating sterile workplaces stripped of human connection.

This timing couldn't be worse. As someone who studies the intersection of technology and workplace culture, I've observed a clear pattern: the more we automate routine tasks, the more our success depends on distinctly human qualities like trust, emotional sensitivity, and the ability to navigate complex interpersonal dynamics. Yet we're systematically dismantling the very cultural foundations that enable these qualities to flourish. It's as if we're entering a boxing match by tying one hand behind our back – at precisely the moment we need every advantage we can get.

The real crisis isn't that AI might replace jobs – it's that we're creating workplace environments that suppress the very qualities that make us irreplaceable. When we treat our colleagues as mere interfaces rather than complex human beings, we don't just damage relationships – we damage our capacity for innovation, creativity, and the kind of deep collaboration that complex problem-solving requires.

Some companies are starting to get it right. When I look at examples like IKEA, who chose to retrain their call center workers as interior design advisors rather than simply replacing them with chatbots, I see a glimpse of what's possible. They recognized something profound: you can't automate the human ability to understand what a frustrated customer really needs, or the intuition to read between the lines of what they're saying.

This is what I call the "human edge" – and it's far more nuanced than most leadership teams realize. It's the marketing manager who can sense team tension during a video call and address it before it derails a project. It's the sales representative who builds such strong relationships that clients stay loyal through market upheavals. It's the team leader who knows exactly when to push for more and when to show compassion. These aren't just nice-to-have soft skills – they're becoming our most valuable business assets.

But here's the challenge: we're still trying to measure workplace success like it's 1990. We track productivity metrics, sales numbers, and project timelines, but how do we quantify someone's ability to defuse a tense client situation? How do we measure the value of a team leader who creates an environment where people feel safe to innovate? These human capabilities – empathy, emotional intelligence, relationship building, creative problem-solving – are increasingly what separate successful companies from failing ones, yet they're nearly impossible to capture in a performance review.

When I talk to business leaders, I tell them bluntly: if a job can be reduced to a process, AI will eventually do it better. Our value lies in all the messy, human things that happen between the bullet points of a job description. Instead of asking "How many tasks did you complete?" we should be asking "How did you help your team navigate that difficult change?" Instead of training people to follow processes, we should be developing their ability to build relationships and navigate complexity.

It's time we started treating these human capabilities not as soft skills, but as core business competencies. The question isn't whether AI will change work – it's whether we'll use this moment to finally build workplaces that enhance rather than diminish our humanity.

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Nada Ahmed is the founding partner at Houston-based Energy Tech Nexus and author of Amazon Bestseller “Determined to Lead- The Disruptive Woman's Guide to Stop Playing Small and Transform your Career through Agile Leadership.”

Talking about "personality hires"" is trending — but are they right for your company? Photo via Getty Images

Houston expert: Why employing 'personality hires' is good for your business

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The concept of a “personality hire,” those who are hired more for their soft skills rather than their technical skills, has gained traction, sparking discussions and even memes on platforms like TikTok.

However, these online narratives often cast personality hires in a negative light, overlooking the unique value they can bring to an organization. In reality, personality hires can be instrumental in strengthening corporate culture. They often possess a unique blend of soft and hard skills, contributing to the company's success by boosting morale and fostering team unity.

Business leaders' big question is whether personality hires are worth adding to their organization given that their strongest contributions are creating a positive work environment. Yet, those working with a purported “personality hire” know they contribute more than good energy. Building a team of employees with differing strengths, expertise and personalities strengthens the overall success of an organization.

Personality hires can manage relationships and create team unity, and the following ways are how they can benefit the business and improve corporate culture.

Bring People Together

Personality hires possess a unique set of skills that are often undervalued. They excel at building and maintaining relationships, a crucial aspect of business. Their ability to connect with others, foster trust and understand different working styles is a valuable asset that can take years for others to develop.

One of the key roles of a personality hire is in conflict resolution. Their understanding of communication and working styles allows them to navigate disputes and find common ground in tense situations. This ability to bring balance and harmony can have a positive impact on the overall work environment and contribute to employee retention.

Bridge the Gap

A successful organization strives to establish a solid workplace culture, but it takes continuous work. Personality hires put culture into action and encourage others to follow suit. They do this by embracing their strong communication skills, boosting team morale and supporting their peers.

Personality hires naturally bring unity to the organization. Their skills help bridge the gap between the work and a positive employee experience. When employees are engaged throughout the workday, productivity levels can increase.

Provide Balance

Not everyone is on the same page regarding personality hires and their impact on an organization. Some may view them as a breath of fresh air, and others do not feel they add substantial value. To ensure a personality hire brings value beyond just team cheerleader, work to develop their skills and competencies early. This allows them to contribute to the team quickly and fully demonstrate their value, which builds trust within the team.

The success of a team is dependent on hiring the right culture fit, which includes personality and competency. It is possible to have both, but it is important to remember many hard skills can be taught, whereas soft skills are harder to teach. You want to look for people who will fit culturally within the organization and possess the skills needed to do well within the role.

There are warnings when making personality hires. Hiring people based on who you “like” or who exhibits “charm” can lead to biased hiring. Your hiring practices should not be based on personal likes or dislikes. If an organization adopts this hiring practice, it runs the risk of creating a homogenous workforce. Additionally, there are risks associated with personality assessments because they can be deemed a discriminatory practice.

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Julia Lyons-Ryle is a performance specialist with Insperity, a Houston-based provider of human resources and business performance solutions.

Companies that intentionally focus on their employees’ mental well-being will reap the benefits of a happier, healthier workforce. Photo via Getty Images

Houston expert shares 3 ways to stay on top of employee mental health

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Conversations surrounding mental health have come to the forefront of business and is an imperative aspect that cannot be ignored by business leaders.

Approximately 20 percent of Americans, which is 50 million people (about twice the population of Texas), are experiencing a mental illness, 15 percent of Americans had a substance use disorder in the past year and nearly 5 percent, over 12.1 million adults, reported serious thoughts of suicide (Mental Health America). Notably, certain professions, such as construction, exhibit higher suicide rates, (CDC). With these staggering numbers, the foundation of workplace safety extends beyond physical well-being to encompass psychological health.

The landscape has undergone a transformation, stemming from the pandemic, and the stigma of mental health concerns and seeking help has loosened. Recognizing that September is Suicide Prevention Month, below are three ways businesses of every size can actively support the mental well-being of their employees.

Be Open

Long hours, physical strain and financial pressures can take a toll on employees. Many people are apprehensive to talk about mental health issues and feel it may show a sign of weakness.

Helping employees move mental health topics into everyday conversation begins with open communication. When leadership and managers listen to employees, they create an outlet for them to freely discuss their experiences and act if needed. Leadership sets the tone, and when leaders openly discuss mental health, it creates a ripple effect that encourages employees to feel more comfortable sharing their own experiences. By taking the lead in breaking the silence, leaders play a crucial role in dismantling the stigma surrounding mental health issues, fostering a workplace culture where open conversations and support are not just welcomed but embraced.

At Skanska in Houston and North Texas, we have gone as far as providing mental health first aid courses, which we call our “green sticker” program. Those who are willing to go through the training on how to talk with colleagues who may need to discuss challenges are given a green sticker to wear on their hard hat. This signifies to everyone on a job site that they are trained to discuss mental health issues and life’s challenges. In turn, these first aiders can direct them to the right resources for more in-depth assistance. Doing a simple thing like this helps break the silence and promotes mental well-being on the job site and in the workplace.

Provide Support

Shifting the workplace culture to include more open discussions has an incredible impact on employees. There are also policies companies can establish to make mental health and well-being more actionable. Employers can offer rotating mental health days or offer flexibility, which makes it easier for workers to ask for time off for a doctor’s visit or therapy session.

Also providing benefits like an employee assistance program (EAP), which is an anonymous way employees can seek mental health services or other resources for the root of the problem, such as financial and legal counseling, shows support. Employer-sponsored health screenings promote overall employee wellness, but it is another avenue where employees can address their own mental health and wellbeing in a private setting.

Stay Focused

Mental health and wellbeing concerns are much harder to spot than physical ailments, but they can have dire consequences if they are not addressed. Once the conversations start and the support is in place, it is not a time to become complacent. Leadership and managers need to continue to have regular conversations with their staff, which can help pinpoint when someone is struggling. Regular training for staff, even if they are not a mental health first aider, will help everyone stay vigilant in taking care of their own and watching out for their colleagues’ mental health.

There are numerous stressors in the workplace and when they are coupled with personal stressors, workers can be stretched thin. Companies that intentionally focus on their employees’ mental well-being will reap the benefits of a happier, healthier workforce.

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Dennis Yung is executive vice president and general manager at Skanska, one of the world's leading project development and construction groups, where he oversees building operations for Houston and North Texas.
Here are some tips to help startups and small businesses break through to candidates who are content in their current position or afraid to jump to a smaller business in today’s market. Photo by Tima Miroshnichenko from Pexels

How Houston startups can hire top talent amid 'The Big Stay' trend of 2024

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Attracting “A-plus” talent when job candidates are favoring "The Big Stay” is a challenge for small businesses today. This is especially true when small businesses are competing with larger corporations for the same top talent.

To help startups and small businesses break through to candidates who are content in their current position or afraid to jump to a smaller business in today’s market, small businesses need to strategically position themselves as an attractive, viable alternative.

The following tips can help small businesses increase their appeal and attract top job candidates.

Employer branding

The employer brand or managing your reputation among job seekers and internal employees, plays a crucial part in attracting talent. Your internal workplace culture influences current employees and potential job candidates, but it also includes your digital presence. You want to ensure your digital footprint – website to social media – reflects your values, culture and successes. Your career page is a first impression for the job candidate. Including testimonials, day-in-the-life videos and clear job descriptions enhances the appeal of your organization.

Online reviews are another area that needs attention from an employer branding standpoint. Managing your reputation on review platforms like Glassdoor, Indeed and LinkedIn, exhibits how you address concerns and take any corrective action. It is also a barometer for many job candidates regarding employee satisfaction and potential areas for improvement.

Unique selling points

Your product or service has a unique selling point (USP) for customers and your company has a USP for talent. Small businesses usually trump larger corporations in flexibility and innovation. Small businesses can make quick decisions and employees can make a big impact on the company’s direction and success. When job candidates desire to make a substantial impact and have a more dynamic work environment, this is a definitive USP.

Learning and development programs that offer greater opportunity for leadership, cross-functional work and rapid advancement than your larger competitors can be appealing to top talent. Many high performers desire to move up the ranks and make a notable impact as quickly as possible, which is quickly attainable with startups and small businesses. The pathways to career advancement are many times less rigid in small business.

Compensation and benefits

Startups and small businesses usually cannot compete head-to-head with salaries, but there are a number of other ways to make your business more attractive to top talent. Starting off, you need to do your market research to ensure your compensation package is competitive, but other desirable benefits to consider include work-from-home or flex work options, health and wellness programs, financial wellness programs and robust retirement plans. Offering flexible benefits packages that can be tailored to meet the needs of employees at different life stages can be a considerable draw as well.

Candidate experience

When you are trying to recruit candidates who may be content with their current positions, it is important to make the application process as straightforward and clear as possible. This shows attention to detail, tells the candidate that you know what you want in an employee and it is respectful of their time. Once they apply, being responsive to their communication, establishing clear timelines and providing constructive feedback further elevates the candidate experience.

Referrals

Employees are your best recruiting tool. A personal referral speaks volumes since very few recommend candidates who would not fit the culture or the jobs available. Additionally, encouraging current employees to share their positive experiences with the company on social media can help cast a wider recruiting net.

Even though many employees are choosing to stay in their current roles, startups and small businesses can position themselves as attractive employers of choice. When you intentionally position yourself in an authentic manner, top-tier talent looking for career-growth opportunities, influence and meaningful work can be lured away from large competitors that may offer more traditional stability and name recognition.

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Jaune Little is a director of recruiting services with Insperity.

How to prevent micromanaging at your Houston startup, small biz

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A manager’s job is to coach their teams and create opportunities for them to succeed. Yet, as managers rise through the ranks, they are not always trained in how to delegate, trust their teams and let the little things go. If managers lack these skills, their micromanaging can quickly lead to an unhappy work environment and increase employee turnover.

A team can become even more successful when managers do not try to control and monitor everything. Instead of getting caught up in the project’s minutia, managers should focus on the bigger picture. The best approach is to delegate tasks and trust the team to complete their assignments, without interfering with the direct work.

Startups and small businesses are full of people with an entrepreneurial mindset who love to roll up their sleeves and get to work, no matter their job description. Just like frontline managers, founders and leaders need to be mindful not to become micromanagers, by giving their teams both the guidance and autonomy to make the business a success.

To prevent micromanagers from taking root in the organization, follow these tips.

Identify the micromanager

Micromanagement is not always easy for founders to detect. However, recognizing and understanding micromanagement is paramount to well-functioning teams and businesses.

When looking for signs of a micromanager, start by searching for managers who tend not to delegate and, if work is delegated, take over from their teams again and again, even after only a simple and harmless mistake. As a result, most of their time is spent overseeing others, while failing to progress on their own work. This can lead managers to lose focus on larger projects and strategy, unable to see how their daily tasks relate to the larger goals of the organization. Additionally, micromanagers request frequent updates and often find deliverables unsatisfactory.

As leaders, it is important to know the signs of micromanagement in order to prevent employee work dissatisfaction and high turnover, which is detrimental to a small business. The culture of a brand-new startup encourages everyone to do everything, which is exciting and rewarding. Managers may grow accustomed to being deeply ingrained in their employees’ day-to-day work. That said, as business scales and becomes more successful, teams expand, and micromanagement is no longer a sustainable management style.

Establish a process

Implementing a formalized process or workflow can help those who tend to micromanage track team projects. Since some use micromanagement to feel in control of a larger project, a project management system or software can help them focus on the higher-level strategy. When the company has a specific method for recording common tasks, they reduce the risk that managers will check-in too often while still lending structure to the overall projects. Beyond helping micromanagers, project management systems help everyone stay on track and communicate at every step in the process. This can increase self-management and efficiency within the organization.

Provide training

Leadership training provides the tools to improve team management and discuss the company’s expectations of managers, which can prove helpful, no matter the leader’s tenure. Management training often highlights a manager’s current leadership style, encourages self-reflection on their strengths and weaknesses, and provides the tools for growth.

Oftentimes, micromanagers are perfectionists and need to simply set their expectations with team members. These expectations can include preferred communication methods and frequency, how to ensure clarity of the tasks, workflow/project management and alerts surrounding urgent updates/mistakes. Once a manager knows their own expectations and communicates them with the team, they establish a better working environment.

Set objectives and key results

Savvy business leaders know micromanagers want to control the end goal. Setting objectives and key results (OKRs), which are actionable, quantifiable, have a deadline and ambitious, allows managers to practice control by meeting the objectives without feeling the need to control every aspect of the project. OKRs encourage managers to focus on big, impactful objectives that can be accomplished in a set amount of time.

Once the OKRs are set, regular, once a week meetings can give everyone the chance to present their progress and give group feedback on the OKRs. Management is also likelier to look at the bigger picture and allow their teams to thrive independently.

Bottom line

Teams need managers, but they need managers who provide guidance and give them the space to thrive. Addressing micromanagement does not mean managers should eliminate one-on-one check-ins or knowing a few of a project’s details. It does mean managers should trust team members to do their jobs. Mutual trust works wonders for workplace culture and a small business’s retention efforts.

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Jill Chapman is a director of early talent programs with Insperity, a leading provider of human resources and business performance solutions.

Despite the inevitability of bad hires, recruiters equipped with proper tools and training can identify red flags and take preventive measures. Photo by Tima Miroshnichenko from Pexels

How to avoid bad hiring decisions when it matters most, according to this Houston expert

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Hiring the right people for the right roles is ideal and can make an organization reach new heights. The reality is every business has made a bad hire.

Finding the wrong fit for a team or organization is not uncommon, but it is important to know what it costs the organization, which can be detrimental to company finances and its workplace culture, especially small businesses and startups where the impact is magnified.

The U.S. Department of Labor reports a bad hire can cost up to 30 percent of the employee’s wage, which would be approximately $18,000 since the average American wage is $60,000. In addition, there are soft costs of managers and leadership time during the hiring and training process, which adds up quickly.

Bad hires explained

A bad hire can simply be someone who is not the best fit for the position or the company. The quality of work may not meet expectations; however, there are behaviors that can point to a bad hiring decision. New hires who were recruited due to specific knowledge or a skillset, but they do not deliver, have a negative attitude, or are disengaged, are all signs of a bad hire.

Even though hiring the best people for the job should be every recruiter’s goal, they are sometimes pressured to quickly fill the role. Once a new hire starts, it does not take long to find out if they are a bad hire. Recruitment is vital to a company’s success, so it is important to know how to identify a bad hire before they join the organization, the red flags, and the lasting impacts to the workplace culture.

Right turns, wrong fit

Business leaders most certainly think they are bringing in the right person for the job, but the wrong fit can significantly impact the organization.

Suffering morale and reduced teamwork: Incompetent employees force team members to cover their work, negatively impacting morale. If these issues persist, it signals to existing employees that suboptimal work is acceptable, which adds stress, distraction and reduced engagement.

Unmet expectations: When a new employee exaggerates their qualifications, they may struggle to meet expectations, resulting in slow or inadequate work product, which can be especially detrimental in a small business setting. This not only impacts the company financially but also demands managers’ time for oversight and performance issue resolution.

Weakened employer reputation: Startups and small businesses depend heavily on their hard-earned reputation and brand. Employees represent a company’s values, and when they fail to embody them, it can negatively influence sales, vendor relationships and recruitment efforts. Actions of employees, both in-person and online, significantly shape public perception.

Client attrition: Poor performance or unprofessional behavior can damage client relationships, leading to business losses. These client experiences may lead to lasting consequences for the company’s reputation, affecting potential clients and key partnerships, and its bottom line.

Recruiting and training challenges: The recruiting process usually spans four to six weeks, involving tasks such as drafting the job description, obtaining approvals, posting ads, resume screening, candidate communication, interviews and offer negotiations. After accepting an offer, new employees, regardless of experience, require time to familiarize themselves with the organization, its processes and job responsibilities. If a poor hiring decision is made, the recruitment process may persist, leading to extended periods of onboarding.

Preventing bad hires

Experienced recruiters can still make bad hires, but certain measures can help mitigate risks:

  • Fine-tune job descriptions. Clear and concise job descriptions aid in identifying suitable candidates and provide a better understanding of position expectations.
  • Take sufficient time. Resist the pressure to fill the role; prioritize finding the right candidate to avoid subsequent costs.
  • Standardize the interview process. Employ set questions for consistency and involve team members in behavioral and peer-to-peer interviews to assess cultural fit.
  • Check references. Verify candidates’ honesty, skills, attitude toward work, and work ethic through thorough reference checks.

Despite the inevitability of bad hires, recruiters equipped with proper tools and training can identify red flags and take preventive measures. This proactive approach ensures better preparation for attracting top talent and minimizes the impact of suboptimal hiring decisions on the company.

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Karen Leal is performance specialist with Houston-based Insperity, a provider of human resources offering a suite of scalable HR solutions available in the marketplace.

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Houston startup debuts new drone for first responders

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Houston-based Paladin Drones has debuted Knighthawk 2.0, its new autonomous, first-responder drone.

The drone aims to strengthen emergency response and protect first responders, the company said in a news release.

“We’re excited to launch Knighthawk 2.0 to help build safer cities and give any city across the world less than a 70-second response time for any emergency,” said Divyaditya Shrivastava, CEO of Paladin.

The Knighthawk 2.0 is built on Paladin’s Drone as a First Responder (DFR) technology. It is equipped with an advanced thermal camera with long-range 5G/LTE connectivity that provides first responders with live, critical aerial awareness before crews reach the ground. The new drone is National Defense Authorization Act-compliant and integrates with Paladin's existing products, Watchtower and Paladin EXT.

Knighthawk 2.0 can log more than 40 minutes of flight time and is faster than its previous model, reaching a reported cruising speed of more than 70 kilometers per hour. It also features more advanced sensors, precision GPS and obstacle avoidance technology, which allows it to operate in a variety of terrains and emergency conditions.

Paladin also announced a partnership with Portuguese drone manufacturer Beyond Vision to integrate its Drone as a First Responder (DFR) technology with Beyond Vision’s NATO-compliant, fully autonomous unmanned aerial systems. Paladin has begun to deploy the Knighthawk 2.0 internationally, including in India and Portugal.

The company raised a $5.2 million seed round in 2024 and another round for an undisclosed amount earlier this year. In 2019, Houston’s Memorial Villages Police Department piloted Paladin’s technology.

According to the company, Paladin wants autonomous drones responding to every 911 call in the U.S. by 2027.

Rice research explores how shopping data could reshape credit scores

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More than a billion people worldwide can’t access credit cards or loans because they lack a traditional credit score. Without a formal borrowing history, banks often view them as unreliable and risky. To reach these borrowers, lenders have begun experimenting with alternative signals of financial reliability, such as consistent utility or mobile phone payments.

New research from Rice Business builds on that approach. Previous work by assistant professor of marketing Jung Youn Lee showed that everyday data like grocery store receipts can help expand access to credit and support upward mobility. Her latest study extends this insight, using broader consumer spending patterns to explore how alternative credit scores could be created for people with no credit history.

Forthcoming in the Journal of Marketing Research, the study finds that when lenders use data from daily purchases — at grocery, pharmacy, and home improvement stores — credit card approval rates rise. The findings give lenders a powerful new tool to connect the unbanked to credit, laying the foundation for long-term financial security and stronger local economies.

Turning Shopping Habits into Credit Data

To test the impact of retail transaction data on credit card approval rates, the researchers partnered with a Peruvian company that owns both retail businesses and a credit card issuer. In Peru, only 22% of people report borrowing money from a formal financial institution or using a mobile money account.

The team combined three sets of data: credit card applications from the company, loyalty card transactions, and individuals’ credit histories from Peru’s financial regulatory authority. The company’s point-of-sale data included the types of items purchased, how customers paid, and whether they bought sale items.

“The key takeaway is that we can create a new kind of credit score for people who lack traditional credit histories, using their retail shopping behavior to expand access to credit,” Lee says.

The final sample included 46,039 credit card applicants who had received a single credit decision, had no delinquent loans, and made at least one purchase between January 2021 and May 2022. Of these, 62% had a credit history and 38% did not.

Using this data, the researchers built an algorithm that generated credit scores based on retail purchases and predicted repayment behavior in the six months following the application. They then simulated credit card approval decisions.

Retail Scores Boost Approvals, Reduce Defaults

The researchers found that using retail purchase data to build credit scores for people without traditional credit histories significantly increased their chances of approval. Certain shopping behaviors — such as seeking out sale items — were linked to greater reliability as borrowers.

For lenders using a fixed credit score threshold, approval rates rose from 15.5% to 47.8%. Lenders basing decisions on a target loan default rate also saw approvals rise, from 15.6% to 31.3%.

“The key takeaway is that we can create a new kind of credit score for people who lack traditional credit histories, using their retail shopping behavior to expand access to credit,” Lee says. “This approach benefits unbanked applicants regardless of a lender’s specific goals — though the size of the benefit may vary.”

Applicants without credit histories who were approved using the retail-based credit score were also more likely to repay their loans, indicating genuine creditworthiness. Among first-time borrowers, the default rate dropped from 4.74% to 3.31% when lenders incorporated retail data into their decisions and kept approval rates constant.

For applicants with existing credit histories, the opposite was true: approval rates fell slightly, from 87.5% to 84.5%, as the new model more effectively screened out high-risk applicants.

Expanding Access, Managing Risk

The study offers clear takeaways for banks and credit card companies. Lenders who want to approve more applications without taking on too much risk can use parts of the researchers’ model to design their own credit scoring tools based on customers’ shopping habits.

Still, Lee says, the process must be transparent. Consumers should know how their spending data might be used and decide for themselves whether the potential benefits outweigh privacy concerns. That means lenders must clearly communicate how data is collected, stored, and protected—and ensure customers can opt in with informed consent.

Banks should also keep a close eye on first-time borrowers to make sure they’re using credit responsibly. “Proactive customer management is crucial,” Lee says. That might mean starting people off with lower credit limits and raising them gradually as they demonstrate good repayment behavior.

This approach can also discourage people from trying to “game the system” by changing their spending patterns temporarily to boost their retail-based credit score. Lenders can design their models to detect that kind of behavior, too.

The Future of Credit

One risk of using retail data is that lenders might unintentionally reject applicants who would have qualified under traditional criteria — say, because of one unusual purchase. Lee says banks can fine-tune their models to minimize those errors.

She also notes that the same approach could eventually be used for other types of loans, such as mortgages or auto loans. Combined with her earlier research showing that grocery purchase data can predict defaults, the findings strengthen the case that shopping behavior can reliably signal creditworthiness.

“If you tend to buy sale items, you’re more likely to be a good borrower. Or if you often buy healthy food, you’re probably more creditworthy,” Lee explains. “This idea can be applied broadly, but models should still be customized for different situations.”

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This article originally appeared on Rice Business Wisdom. Written by Deborah Lynn Blumberg

Anderson, Lee, and Yang (2025). “Who Benefits from Alternative Data for Credit Scoring? Evidence from Peru,” Journal of Marketing Research.

XSpace adds 3 Houston partners to fuel national expansion

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Texas-based XSpace Group has brought onboard three partners from the Houston area to ramp up the company’s national expansion.

The new partners of XSpace, which sells high-end multi-use commercial condos, are KDW, Pyek Financial and Welcome Wilson Jr. Houston-based KDW is a design-build real estate developer, Katy-based Pyek offers fractional CFO services and Wilson is president and CEO of Welcome Group, a Houston real estate development firm.

“KDW has been shaping the commercial [real estate] landscape in Texas for years, and Pyek Financial brings deep expertise in scaling businesses and creating long‑term value,” says Byron Smith, founder of XSpace. “Their commitment to XSpace is a powerful endorsement of our model and momentum. With their resources, we’re accelerating our growth and building the foundation for nationwide expansion.”

The expansion effort will target high-growth markets, potentially including Nashville, Tennessee; Orlando, Florida; and Charlotte and Raleigh, North Carolina.

XSpace launched in Austin with a $20 million, 90,000-square-foot project featuring 106 condos. The company later added locations on Old Katy Road in Houston and at The Woodlands Town Center. A third Houston-area location is coming to the Design District.

XSpace condos range in size from 300 to 3,000 square feet. They can accommodate a variety of uses, such as a luxury-car storage space, a satellite office, or a podcasting studio.

“XSpace has tapped into a fundamental shift in how entrepreneurs and professionals want to use space,” Wilson says. “Houston is one of the best places in the country to innovate and build, and XSpace’s model is perfectly aligned with the needs of this fast‑growing, opportunity‑driven market.”