HR Metrics are so yesterday!
HR professionals have grappled with what to measure and how to display data over the last 10 years at least. Now, just when the profession is paying more attention to metrics, it’s time to move on.
Analytics are the new metrics.
I believe a couple of definitions need to be cleared up before I discuss roadblocks. Metrics and analytics are used almost interchangeably, but I feel there is a definite difference.
Metrics are simply measurements. For example, “Our average engagement level is 80%,” “Our annual turnover is 50%,” “Our average performance score is 60%.”
Metrics tracks activity. They don’t describe causal relationships. In other words, metrics won’t tell you what impacts engagement, what causes turnover, and what drives performance.
In HR terms, one could say human capital analytics examine the effect of HR metrics on organizational performance. In more general terms, analytics look for patterns of similarity between metrics. For example, do high performers leave at a higher rate than low performers? If so, what is driving that turnover? Statistical tests are necessary to get to those answers through analytics.
Analytics sound great. The process can uncover relationships, drivers, causal relationships, and can give insight into what really impacts business results. So, why aren’t we all analytics devotees?
In my experience, I have seen the following roadblocks when trying to move from metrics to analytics: (these are in no particular order.)
“I don’t have the analytical talent.” I hear this one very frequently as HR professionals haven’t been known for their analytical muscle. So when you start discussing statistics and measurement, it makes some HR pros nervous.
Solution: It doesn’t take a PhD to do a lot of this work. Half the battle is having HR professionals that understand the business and ask really good questions. These days, technology makes the math pretty easy, and math interns are easy to come by.
“I don’t have the technology to display the data.” Technology is definitely a consideration in the process, but the absence of technology should not stop your efforts.
Solution: We do have powerful desktop tools that allow us to do many type of analysis. Excel has add-ons that can run correlations and regressions pretty easily. The issues become one of a central repository for all data and the cleanliness of the actual data itself. I believe the technology consideration should be done on the front end, but many times HR needs to make the business case for resources first. As the effort gains momentum, other more sophisticated technology tools can be added which makes visualizing the data so much easier.
“I don’t have the upper management support for analytics.” I believe the time is right to garner upper management support as leaders are definitely less risk adverse than they were prior to the recession. I see more leaders making data-based decisions as a result of recent economic conditions. I believe they want more people data and want to understand how their people investment is paying off. You can’t show this ROI by tracking time to fill and turnover. You have to use analytics.
Solution: Start small. For example, you can begin evaluating what is driving turnover in the organization and designing solutions to lower turnover thus saving dollars. By analyzing a business problem and showing leadership something they didn’t know, HR will go a long way in gaining future support for an analytics focus.
Next, try and uncover your CEO’s top, most pressing business issues. Figure out how to use data and analytics to help solve the issue or shed some light on the problem. For example, if the organization is losing market share in a certain region of the country, go to the data and see what the trends are saying. Where is market share being lost? What is going on with the sales staff? Find out if it is a turnover issue, a skills issue, or a product or service issue. Look at customer data, to see if there are any insights gained from that data especially as it relates to customer service. Be a detective and just keep asking questions until you get to the root cause.
I believe we have long past our goals to be strategic, I believe we have entered an age of HR influence. What better way to influence our organizations’ business results than by analyzing what is driving those business results so we an do more of those activities and less of the activities that don’t add to the bottom line.