HR metrics have come a long way in the last 40 years, but talent leaders still struggle to connect their talent management activities to business impact.
HR metrics are usually top of mind for talent leaders. At least they have been since the ’70s with the publication of Jac Fitz-enz’s “The Measurement Imperative” in the Personnel Journal. Metrics have come a long way since then, with numerous metrics identified and benchmarked and a burgeoning industry of HR metrics conferences and consultants ready to collect and offer decision-making data. But have HR metrics fulfilled their promise, and are we positioned to capitalize on the emergent next generation of human capital analytics?
For some organizations, the answer is yes. IBM leverages HR metrics and analytics internally and also runs a large global human capital analytics and business intelligence consulting practice.
Randy MacDonald, senior vice president of HR for IBM, has been a fervent advocate of HR metrics, beginning with a focus on characterizing labor cost in the early 2000s that guided IBM’s expansion of its global footprint before it was fashionable to place huge bets on India or any of the other BRICs. HR analytics guide people decisions at IBM through use of tools such as comprehensive scorecards that help to keep the company at the forefront of HR leadership and innovation.
Google is also in the vanguard of the analytics movement. Analytics are at the heart of its business model, so the application to HR, or people operations as Google calls its HR department, is a natural progression. At an Institute for Corporate Productivity (i4cp) meeting on evidence-based human resources in June, Google’s manager of people analytics, Brian Ong, identified an analytics value chain (Figure 1), which organizations progress through in their quest to get the greatest return on their investment in HR analytics.
At any given time, organizations rest at varied points along the length of the value chain. Absent standards such as generally accepted accounting principles in finance or regulations requiring the use of specific metrics such as those mandated for proxy statements, there always will be organizations at the opinion end of the chain, many of which aspire to evolve out of it. Other organizations will progress toward the action end of the chain, reflecting the growing trend toward competing on talent analytics.