Moneyball Management – HR Analytics

HR professionals are constantly challenged to contribute to business results in a more tangible manner and have a tendency, as a consequence to latch on to new ideas that appear to be able to support that endeavor.

These ideas start in the minds of a few consultants, evolve into must have techniques and services and then morph into one-size-fits-all commodities just prior to the trend blowing out. They for sure leave their mark and always an opportunity to learn.

For most companies HR Analytics is an early stage concept and has much appeal; an evidenced based approach to talent management based upon numerical indicators is attractive to senior management. It offers an objective perspective compared to anecdotal decision making about people but is it a game changer or another fad?

Many HR teams would argue that they already use people metrics; turnover, absenteeism, and recruitment ratios to determine how HR meets the needs of the business. Some would say they go further with people to sales and people to profit ratios. The analytics movement however proposes to track indicators beyond these and position their use more prominently in talent management.

Other departments use predictive indicators to track whether the organization is producing as planned. Finance, IT, and Marketing all have their own – so why not HR? Not an unreasonable expectation for a CEO we would suggest?

Analytics provides a way of looking at the effectiveness of people and how line managers use their resources. In the long run, they will produce a trending picture of areas in the organization where leadership can be improved e.g. professional development, identification of best practice etc.

Like all great new initiatives this is compelling and potentially powerful. Whether and how management embraces it will likely frame the future of HR. HR Analytics are a source of insightful indicators that will help frame people decisions. We may however, need to apply caution before embracing analytics as the brand new testament:

• The ability to access large amounts of data stems from widespread adoption of Enterprise Resource Planning (ERP) systems. If your organization doesn’t have an ERP it doesn’t mean that that you cannot employ analytics – quite the contrary (although ERP developers would probabaly disagree)
• In most cases management already refer to HR metrics. You know what the important indicators are for your business at its stage in its cycle. Just because you can produce more data doesn’t mean you should. Avoid being overwhelmed rather than remaining focused. Think first about improving the insight and quality of what you have and track the impact of data based decisions
• Human beings are fickle and their behavior is influenced by social change, the media, and their relationships with each other. They are not mechanical with uniform performance trends. People behave in unpredictable ways and intervention is tailored to personalities and circumstances. John Burdett founder of Orxestra Inc. reminds us in his book “The Empty Suit” not to forget the art of HR as we spend more time focussing on the science
• Metrics are based on past performance but people, unlike other parts of the operation do not always operate in a steady state and the past in this instance, may not be a good indicator of the future
• Workplaces have been tailored to engage multi-generational and diverse workforces. A “by the numbers” approach should tread cautiously when addressing already productive workplace cultures
• Once an organization becomes more inquisitive does HR risk becoming focused on the best looking dashboard and the cleanest data.  Consider the impact on the function and art of HR and people management