Are Your Human Resource Metrics Relevant?
– Originally published in: http://www.the-decisionfactor.com/performance-management/are-your-human-resource-metrics-relevant/
There are many presentations and discussions about how analytics and “Big Data” can improve decision making—a simple Google search on the terms returns over 23 million results. Organizations find their workforce analytics especially challenging as human resources (HR) departments attempt to grow beyond creating reports for the sake of reporting. When you think about it, on any given day, HR gets many questions about your workforce that data could address or improve. But which do you try to answer?
Sales, marketing, and finance have leveraged analytics successfully as part of their toolkit for some time, but as research points out, only best-in-class organizations have processes in place to understand and leverage workforce data to drive better business decisions. Why can’t this scale to all organizations?
It can scale—if HR takes a more methodical approach to workforce analytics, and starts small.
Start Small with Specific Questions
HR has always had an abundance of workforce data, but how do you make progress in how you are using this data? It’s important to point out that technology and data aren’t enough—data needs context and qualification.
Analytics should be targeted. Analytics shouldn’t be an open-ended exercise in data-mining, especially for firms and HR organizations that have limited resources with analytics skills. You should be able to ask specific questions and answer them with data.
The information presented should tell a story. The story should be compelling, one that connects the data to its audience. It must be relevant to the issue at hand or tied to the priorities and challenges faced by a business leader—what really matters. This is why it’s critical to start with the business issue, not by randomly searching for data.
Build an HR Framework
Establish a framework from an HR perspective by determining relevance so that you don’t get the question “why are you telling me this?”. Begin by answering the following basic questions:
- What business outcomes are we trying to impact? Profitability, margin rate, revenue/budget-to-goals, customer satisfaction, and operational excellence are some examples.
- What are the human capital drivers of these outcomes? Engagement and motivation of workers, capabilities and performance, and retention have direct impact on the business outcomes.
- What is our current state of our workforce compared to the optimal state?
- What talent strategies drive these outcomes? Recruiting, training, mobility, performance, and staffing mix optimization are examples of strategies utilized by HR that can be leveraged to impact behavior.
Use a Line of Sight Visual
A line-of-sight visual helps to draw the link between metrics and relevant business issues, or vice versa, cascading from business strategy down to metrics. It’s very simple, and can be very effective.
Mick Collins and Jaye Tanner, in their 2013 HCI Workforce Planning and Analytics Conference workshop on Actionable Analytics: From Big Data to Better Data, shared a very effective example of a line-of-sight-visual. This simple representation shows how selected metrics are relevant and important to keep in view as you work through specific strategies and initiatives as an organization.
A clear line of sight means that you’re able to map every metric you report on and demonstrate its relevance directly to the business objective. Whether a senior business leader needs to look at dashboards of metrics, or an analyst needs to pull required data together—both will have a clear understanding of the context and the story.
Actionable Analytics Present Choices
In order for analytics to be considered actionable, it must present choices clearly. These choices will result in decisions being made and action being taken. The information provided becomes transformative, resulting in actions that lead to a change in people’s behavior in order to “move the dial.”
This basic framework helps to get the most out of people’s time, energy, and talents by moving the conversation focus from data and metrics definitions to answering “so what?”, discussing prospective actions, identifying those responsible, and allocating resources.
Analytics helps build credibility for the HR function, and positions HR as an agent of impact. HR’s role as a strategic partner becomes prominent as it provides guidance on best course of action.