HR METRICS AND ANALYTICS: When Facts and Numbers Matter... Even in HR | HRのメトリクス(指標)とアナリティクス(分析): 事実

Originally written in English

This article first published at The HR Agenda Magazine [November 2016-February 2017 issue].

Are you suffering from the “Trump Syndrome”? Here's how data can save HR from this costly affliction.

For the past 15 months, the world has been a silent observer of probably the most consequential elections in U.S. presidential race. And we did so with great anxiety, concern, and yes, even fanfare especially when Republican candidate Donald J. Trump takes the stage and starts talking. His speeches have largely been discredited by fact checkers as baseless, distorted and contradictory. His statements have been called out for being downright myths, lies and figments of his own imagination. Collectively, I call these the “Trump syndrome” which is really just a simple term for the tendency of a person to speak or make judgements without the benefit of facts, numbers, logic, reasoning or science.

Unfortunately, many people think HR also suffers from the Trump syndrome.

As an example, as many of you know, I teach a required MBA course on human resources management (HRM) at GLOBIS University, Japan’s largest MBA school. At the start of the course, I ask the students what’s the first thing that comes into their minds when they hear the term “HR.” I get the same sets of answers every time: recruiting, employee relations, compensation, benefits, performance management, training and development, employee engagement, and so on.

Now when you ask the same question but this time change HR to “accounting,” “finance,” or even “marketing,” most often than not you’ll get answers around financial ratios, debits and credits, accounts payables and receivables, market shares, market penetration rates, customer satisfaction rates, etc.

So what’s the difference? HR is readily more associated with the qualitative tasks and accounting, finance or marketing with the quantitative tasks. That is, HR seems to suffer from a perception problem, one that stereotypes the profession as only capable of doing the “soft” or “touchy” part of the business. Bluntly speaking, most people think that HR can’t speak numbers — arguably the basic language of business.

How did this happen?

For a long time and until now, HR has never been a recognized profession especially in Japan. In fact, not one school in Japan offers an undergraduate degree in HRM. If HR is taught, it is most likely one of the subjects in another course like MBA, or as part of a continuing education program.

For most HR professionals in Japan, they landed in HR because of job rotation. Some went to HR purely by accident or by chance while others ended up in HR because HR was the last place that they can be placed at, i.e., a dumping ground for an organization’s “basket of unplaceables.” (Suggested Reading: Why Are You in HR?: A Hint -- It Shouldn’t be Just About the People, The HR Agenda Magazine, Oct-Dec 2013 issue)

In the absence of the rigor and academic discipline that goes with a formal study of HRM in a school or university, HR has unfortunately floundered to do its job based on gut feelings, hunches, “human relationship,” established policies and procedures, “best practices,” and politicking and policing. In my more than 25 years of HR experience and meetings with hundreds of HR professionals, I know very few HR professionals who make their decisions based on a mix of “soft” and “hard” data such as HR metrics and analytics. In fact, I haven’t heard of an HR professional being called a “geek” or a “nerd” much like engineers or programmers are most likely to be called as such.

Why facts and numbers matter... even in HR

Simple answer: Because what you can measure, you can improve. In addition, the use of facts and numbers help us to be more objective. If the data and facts are collected in a scientific manner, it adds more credibility to the decision-making process so that business can make informed decisions.

As steward of an organization’s most important asset, its people, HR professionals are in a unique and opportune position to influence and shape performance by using people metrics and analytics. If you are in recruiting, metrics like cost-per-hire, quality of hire, and time-to-hire are just some of the numbers that you need to know to formulate an effective talent acquisition strategy.

If you are in training and development, the RoT (return-on-training) and Training Effectiveness (TE) of your training programs would probably top the list of the key indicators that you need to know and use to maximize your investment in people.

Similarly, if you are doing compensation and benefits, the knowledge on which percentile your organization is paying versus the market (i.e., below, at par, or above the market) will help your organization attract and retain talent.

This may come as a surprise for many HR professionals but in reality, there are numerous metrics and analytics that HR can use to measure and shape the performance of people and the organization. That is, HR can also be ruled by numbers. In this issue of The HR Agenda, we provide some of the most important and useful concepts according to the experts in this field. We are truly grateful for their contributions in helping transform HR from an art to a science, which is really the first step in elevating HR to a recognized profession inside and outside of Japan.

Facts and numbers matter even in HR because when HR bases its decisions on facts and numbers and not just on feelings, broken assumptions or even cultural inertia, HR can make better people decisions which truly matters in business because after all, as Jack Welch once said, “Business is about people.”