Beyond HR Metrics

The evident lack of preparedness in managing the present economic upheavals around us has brought renewed interest in the science of Performance Analytics particularly the predictive aspects of Analytics. Within the larger umbrella of Performance Analytics lies HR Analytics, an area that is well worth the while for HR professionals to study and adopt.

We are all familiar with HR metrics that are more commonly used in organisations today - Headcount change - hires and terminations, time to delivery of results- be it recruitment, development, programs etc, trends in disciplinary & grievance cases, quality of hires, changes in people related costs, training day per person, cost per training day etc. All these focus predominantly on reporting status or trends and at best on alerting a shift in pattern or trend. The limitation of such metrics is that energies get directed towards resolving the problems that we face today or encountered yesterday rather than being directed towards proactive preparation for tomorrow. HR Analytics goes beyond reporting to forecasting, predicting, optimising and providing gainful insights into how to manage the people facet in delivering business goals . It signifies a shift to being more forward looking and more strongly business value focussed.

Imagine being able to relate & quantify how key vacancies being unfilled for continuous period impact business, or how attrition beyond a minimum acceptable level in the Sales organisation today is likely to impact new sales pipeline and therefore revenues tomorrow. Imagine an HR dept which is able to establish linkages amongst projects with high re-work, customer profiles of those projects and people attrition and recommend a customer qualification system.

Take the case of a service organisation that was vexed with the spate of exits in their Client servicing team. Over the last two years key personnel had left- the once strong service team had become a pale shadow of mediocrity. Hefty pay increases given generously over the years did not stem the exits. The ragged pieces of data put together suggested a pattern that prompted further exploration. Further analysis indicated that a combination of nature of engagement – the client and tenure, the age of the employee and project management dynamics tended to impact a team’s level of association and alignment and more often than not resulted in exits of key personnel which in turn fuelled more resignations from the team. The interesting part was that the HR team had an intuitive feel of the situation but could not convincingly present their case to the Division Head. In such a situation Analytics could have aided objective and convincing presentation of the case and ensured proactive strategies & effective intervention to address the issue. The insights provided by the data analysis prompted the organisation to change the way they deployed teams to Client engagements- age profile and experience set were factored in allocation to long tenure engagements making for greater continuity in the team and stronger Client satisfaction.

HR Analytics helps to put the focus on being better prepared to deal with business situations, pre-empt adverse consequences and thus develop an orientation towards creating a desired future state. More importantly, it brings more energies to work as individuals become more conscious of the magnitude of impact that their actions can have on the business success , the critical levers that are in their control and therefore get motivated to direct energies more appropriately.

It is well recognised that people make the difference in what is a good organisation and what is a great organisation. It is important for organisations that seek to be great to understand the different aspects of the people dimensions at work and to know what is critical to creating future success and in managing possible failure. HR Analytics provides a tool for organisations to better understand HR strategies and measures that could impact business performance. Importantly it is also a check for HR in ensuring that its strategies, programs and initiatives deliver real business value.

Adopting HR Analytics however requires a good understanding of business, clarity on factors that impact business, the doggedness to look beyond the obvious to link the metrics and see the relationships and a culture for continuous improvement.

HR folks looking to embark on the road to Analytics could look at the following steps in their journey
• Identify key business success metrics and understand the factors that impact the identified business success metrics
• Focus on collating & tracking the right data in respect of each relevant factor; ensure quality of data by defining source of data, periodicity of measurement ; standardise the data nomenclature;
• Ensure that data is collected over a period of time;
• Analyse the data for each factor in terms of its impact on business; analyse trends- recognising factors which have a greater power to impact and those that have lesser power to impact business objectives; Understand what drives business performance; what are the causative relationships between factors.
• Ensure that the organisation has the systems to measure relevant metrics; Technology can facilitate this process. Integrate the information sources available within existing systems instead of creating new systems. Minimise the data sources to ensure information accuracy and validity.

For those interested in understanding and delving the area of Analytics there is a lot of interesting information and material on Analytics on the web. I came across this interesting presentation by PA Consulting on how HR Analytics can be used. Infohrm is another firm that appears to have done a lot of work in the area check it out; it goes beyond technology to presenting frameworks & methodologies for implementing HR Analytics.