HR Metrics, Analytics Key to Advancing Business Strategy

By Bill Roberts Apr 29, 2009
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HR Metrics, Analytics Key to Advancing Business Strategy
One expert says HR has hit a wall that keeps it from using workforce analytics to determine strategic impact.

SAN DIEGO—After years spent acquiring and organizing gigabytes of data about the workforce, HR’s challenge is to provide business leaders with actionable information that helps them make decisions about people with the same kind of rigor, logic and facts they use to make decisions about investments, marketing strategies and new products.

Supporting these fact-based talent decisions with HR metrics and workforce analytics, especially during a time of economic challenge, was a central theme at the annual conference of the International Association of Human Resource Information Management (IHRIM), held in San Diego April 19-22.

In the opening keynote speech, in many educational sessions and in numerous vendor displays, the spotlight was on effective use of HR metrics and analytics to advance business strategy.

“Business leaders generally think HR does a great job with the portal, the systems, hiring and training. But that is all reactive around services.”

--John Boudreau, professor, USC

“Organizations don’t know yet how to use the [HR] information system, how to make it connect to the kind of things that make HR strategic,” professor John Boudreau of the University of Southern California’s (USC) Marshall School of Business and Center for Effective Organizations, said in his keynote speech.

Boudreau, a metrics thought leader, said HR has made progress using dashboards and scorecards, but has hit a wall that keeps it from using workforce analytics to determine strategic impact. Few HR departments use analytical methods such as regression analysis, causal pathway modeling and predictive modeling to determine the effectiveness of HR practices and to predict their impact on business goals.

Based on surveys and interviews with hundreds of executives, Boudreau has concluded that HR is stuck in the service paradigm.

“Business leaders tell me it is rare that they have an HR leader who helps them think better about people the way the CFO helps them think about finance,” he said. “Business leaders generally think HR does a great job with the portal, the systems, hiring and training. But that is all reactive around services. We’re still in the service paradigm.”

In an interview, Boudreau said neither HR professionals nor business leaders have historically thought about what HR data can really do for them. He urged HR to understand what metrics and analysis can do, and then learn how to help business partners see how HR data can help them solve the people problems that matter to them.

One educational session, about the use of HR metrics at USC, illustrated the impact on managerial thinking, even at a simple level.

“We use metrics to support or refute institutional wisdom,” said Rachel Levy, a USC compensation analyst, who presented the session with USC’s consultant, The Infohrm Group, Inc., based in Brisbane, Australia.

A Metrics Case Study

For example, USC tested the conventional wisdom that it had an aging workforce that would soon retire in droves. It found two significant things. First, its non-tenured staff members are younger. Second, it’s true that its tenured faculty members are older, but they’re not required to retire, and most work into their 70s or later. The fact they’re aging is not an issue, she said.

In another educational session, Jen Frost, global IT project manager at Carlsbad, Calif.-based Life Technologies Corp., explained how the biotech tools developer had built a web-based metrics application, called iView, with the help of Emergent Path, a consulting firm in San Diego.

Frost urged HR professionals not to try to do everything at once. “Just pick a few metrics. We ended up with 12 things,” Frost said.

About 200 HR staff members use iView. “We found a lot of our HR community lacks the skills we wish they had,” Frost said. “We built the tool so it was easy to use.”

That might not be enough, said Joanne Bintliff-Ritchie, chief strategist at DoubleStar, Inc., a West Chester, Pa.-based provider of products and services that help enterprises make human capital decisions.

“We find a lot of HR people, and even line managers, lack strong analytical skills,” said Bintliff-Ritchie, a member of the Society for Human Resource Management’s Human Capital Measurement/HR Metrics Special Expertise Panel.

“We find training has to go way beyond using the tool to how to understand the story it will tell,” she said. “This is decision science, and decision science is not a skill set for most HR people.”

Bill Roberts, contributing editor for technology for HR Magazine, is based in Silicon Valley.

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