Out With Metrics ---- In With Analytics!

I read Stephanie Thomas' article We’ve Gone Too Far With Metrics last week and nodded so much while reading it, I ended up feeling like a bobble-head!

Ever since Jack Fitz-Ens began creating “metrics”, HR people have gone nuts over them.   They were fine at first as there were just a few, and they at least gave us something which was better than the nothing we had before.  Four of the most common metrics were headcount, turnover, time-to-fill and cost-to-fill open positions.   

A metric is a fact --- a specific data point.   There’s no interpretation with metrics. They are fixed.  They can be absolute numbers, percentages, ratios, or any other mathematical measure.   The problem is that they only give us a look at what has already happened at a fixed point in time.   Like a company balance sheet.

Over time as more metrics were added, these reports began to look more like HR activity measurement than anything else.   Activity-based reports convinced the CEO HR was busy, but not that metrics necessarily added any value.  Now there are a gazillion metrics.  And they are all pretty “value-less”.  

Okay --- so much for metrics. 

There is another measurement tool called “analytics”.   The two words--- metrics and analytics ---- are often used interchangeably, but they are very different in what they deliver.

Analytics refers to the data mining, measurement and reporting of workforce facts that allow companies to do things like correlations, predictive analytics and “what if” scenario modeling.   They can be very good at determining likely outcomes and avoiding risks. All our knowledge (metrics) has been about the past, but all our decisions (analytics) are about the future.  

Analytics are most useful in business strategy planning when top management is trying to plan for various scenarios in the future --- Plan A, Plan B, etc.  HR analytics can show what each scenario looks like from a workforce perspective and what costs and risks are involved.

The only caveat is not to accept the results of analytics as absolute truth.  As an example of this, think about how HR leaders frequently focus on the level of employee engagement as if it were the cause of business performance when, according to most research, it simply predicts it. But we have all heard people say things like:  By engaging employees our company has improved its profit by ___ %.    As a result, hundreds of millions of dollars are invested each year to "cure" employee engagement problems when more likely the cause for the symptoms of both low employee engagement and business performance is something else entirely.

So let me repeat: The goal of any business analytics project is not to yield absolute truth ---- just truth enough to be useful.    Its use is to help improve decision-making.  And converting raw data into insights, inferences or predictive models can lead to better decisions.  A healthy dose of good judgment should also be involved.

Analytics seems so “cold” to HR people.  They believe it takes them far afield from their very real task of working directly with employees.

There are two camps:

1)    HR people that believe HR should be about “people” and not about numbers

2)    HR people that believe using analytics helps give HR credibility with top management and provides useful data when creating business strategy

I think a whole new function will pop up that may or may not be associated with HR at all.   Its sole purpose will be to define how the company’s workforce data will be captured and used to benefit both company and talent management strategy.   It will be HR at the 30,000 foot level looking to the future, whereas HR at ground level will be dealing with today’s people issues.  Both are very necessary, and both have important work to do.

What do you think?

Jacque Vilet, President of Vilet International, has over 20 years’ experience in International Human Resources with major multinationals such as Intel, National Semiconductor and Seagate Technology. She has managed both local/ in-country national and expatriate programs and has been an expat twice during her career.   Her true love is working with local national issues.  Jacque has the following certifications:  CCP, GPHR, HCS and SWP as well as a B.S. and M.S in Psychology and an MBA.    She belongs to SHRM, Human Capital Institute and World at Work.   Jacque has also been a speaker in the U.S., Asia and Europe, and is a regular contributor to various HR and talent management publications.  She lives in Dallas and has 3 four-legged children and one Chinese daughter (it’s a long story).  She’s had a life-long love of animals and the ocean.   So why is she living in Dallas?

Image courtesy:  ossibankasi.com

Comments

[E. James (Jim) Brennan]

Analytics need not be impersonal and heartless. Of course HR is about people and of course people and things can be counted and measured and compared in various ways without denying their essential humanity. Read "Moneyball" or even watch the movie.

The real dichotomy is not between numbers versus people but whether the analytics are relevant to strategic (mountaintop) or tactical (at dirt level) applications and how the measures are used.

[Jacque Vilet]

Yes I agree ---- as in everything we do in HR, judgment is everything.

[E. James (Jim) Brennan]

BTW, Dr. Jac Fitz-enz didn't create HR metrics, because they were around in the form of tradecraft ratios for ages. Relative performance metrics were also fundamental to Operations Research applications since forever; but he certainly promoted and popularized the "metrics biz" more than anyone else since Deming with TQM and SixSigma. At this point, he has created at least three metrics firms, as I recall, and hasn't stopped yet.

[Jacque Vilet]

I didn't know that. Jack certainly seemed to claim the origin of metrics so I guess he was a good marketeer. Yes, he was at Radford for awhile then I lost track of him.

[Dan Walter]

Analytics and Business Intelligence are the next wave of the future. Son HR data, finance data, operational data and qualitative data (sustainability etc.) will be analyzed as one holistic picture at every company. Currently only a few companies and consultants really focus on doing this type of work, where compensation is included in the results. 10 years from now we will wonder why it took so long for everyone to get on board.

[Jacque Vilet]

Agree Dan. Holistic picture is needed. IBM does this very well for their Business Service group.

Not just compensation --- but the whole talent management spectrun. The "war for talent" is a big piece of analytics --- but compensation is right up there too.

A major part of the problem is the fact that HR has not seen this as a strategic priority and they also don't feel comfortable with "numbers". That's why I believe that rather than spend any more time trying to convince HR of its importance (years have been spent) it will be assigned to a totally different group.

It's sad. HR is missing a real chance to make a real contribution to the business.