HR Analytics: Are You In or Out?

Productivity was the hot topic in the 1970s. Back then I asked the chief human resources officer of a prominent company what HR was doing to support the productivity initiative in his company. He replied, “Nothing. It’s a business, not an HR issue.” Within a year he called me looking for a job.

Today, the hot topic is analytics, particularly human capital analytics. I’m not going to claim that if you don’t develop a human resources or human capital analytic capability you will be fired. What I am stating with total conviction based on mounting evidence is that if you don’t adopt analytics, you won’t be a party to any significant business discussions.

Within the past five years analytics has become the common language used across the organization. It is proving useful because it is being applied to all types of disciplines, from finance and operations through marketing, IT, customer service and increasingly, human resources. It is bias-free since it depends on logic and statistical methodology.

Harvard Business Review, Fortune, CFO and M World are a few of the journals committing large sections to topics such as big data, measures of success, predictability and data scientists. In November, Dun & Bradstreet Chairman and CEO Sara Mathew said in The CEO Forum that data is not a technology issue. It is a business issue: “How do I uncover the value in my information? How can I make my data a strategic asset to drive growth?”

Organizations such as The Conference Board, i4cp, ROI Institute and most recently American Management Association have launched research into human capital analytics. All of them are offering support via publications, workshops, conferences or study groups devoted to analytics. Likewise consulting, assessment, training and research firms are rushing to market with products and services to advance human capital analytics. You are not alone on this journey.

Although analytics is being applied to human resources services and human capital investments, quite often the HR function is only tangentially involved. Many companies that have organized a human capital analytic function are locating it and staffing it outside of the HR department. If this eventually becomes the common practice it will serve to cement HR’s image as being little more than an administrative expense center.

The good news is there is no reason to let this happen. Analytics is not an arcane, mystical, occult pseudo-science. The process starts with basic questions about the forces that act on a given topic such as staffing, development, engagement or retention. Done properly, analytics looks simultaneously for connections to structural and relational variables that also affect human performance. Once the components of an issue have been identified, often the decision of what, how, where and how much to invest becomes obvious.

In larger, more complex questions such as the efficacy of a performance management system or the design of a cultural transformation initiative, statistics may be necessary to uncover causal relationships and predict success. Don’t worry — you can always hire statistics experts to carry out the experiment.

Never in the history of industrial relations, personnel or human resources management has the ground been so fertile. Managers at all levels from middle to C-level are accepting that the human factor is critical. The cost of people and the return on that investment are now front and center from first level to the board of directors.

The insanity and losses behind dotcoms and the failed manipulations of the finance sector have turned management’s attention toward human motivation, skills and commitment. They are coming to understand that their people are, and must be, the stable center of the organization. All other assets can only be leveraged through people’s actions. With analytics you have the power to focus investments where they will earn the greatest shareholder return as well as make the organization a great place to work. Are you in or out?

Jac Fitz-enz is founder and CEO of the Human Capital Source. He can be reached at editor@talentmgt.com