Most HR professionals are stuck in second gear in their use of human capital metrics. They need to rev up their use of numbers to analyze not just what the organization has done but also what it should do to improve.
That is the message that seminar presenter Joanne Bintliff-Ritchie was driving home in a sold-out, three-day professional development program titled “Human Capital Analytics: Using HR Metrics to Drive Results,” offered June 25-27, 2011, in conjunction with the SHRM 63rd Annual Conference & Exposition.
Lots of organizations measure, said Bintliff-Ritchie as the seminar got under way June 25, 2011, at The Venetian hotel. But by themselves, individual statistics “are not really useful.” Many more organizations produce metrics, which compare two or more measures, such as the ratio of average time spent per hire.
But not enough organizations produce useful analytics, she said. To do so, HR professionals must convert metrics into decision-supporting insights for their organizations, such as by comparing turnover of high-performing employees to that of low-performing employees and helping guide strategic decisions to boost the bottom line.
Bintliff-Ritchie, founder and president of JBR and Associates, a consulting firm, used data from SHRM’s customized benchmarking service to demonstrate some of the complexities regarding analytics that HR professionals must consider. Standard HR metrics such as cost to hire, time to fill a position and net income per FTE (full-time equivalent employee) show significant differences when broken down by industries such as financial, high tech, manufacturing and government. Bintliff-Ritchie asked attendees what might explain the variations.
“Some industries require a lot more capital than others to operate, while some are more labor-intensive,” offered one participant. “Location might be a factor,” commented another.
Bintliff-Ritchie used the examples to underscore how important it is for HR professionals to understand the data they have—and its limitations. Yet she noted that they should not worry too much that the data they have might not be perfect.
“Sometimes, you just have to pull the trigger, to get it out there,” she advised. Using questionable data can help jump-start the process of finding better numbers. If an organization has many temporary employees and uses independent contractors, it should become obvious that metrics that encompass only people on the permanent payroll won’t do much good.
Bintliff-Ritchie took seminar participants back in time to the late 1970s and early 1980s, when HR information systems “started to become commonplace.” By the mid-1980s, benchmarking became widespread. That was followed by the scorecard phenomenon, which promised to create line of sight between the workforce and business results.
Today, “most organizations use metrics for basic operational reporting. They spend a lot of time measuring HR processes.” One of the most basic uses is to “defend things.”
But there are better uses for analytics, such as “to improve things. Where are we not hitting our targets?” As HR professionals gain experience with analytics, the more they see the value of using measurements to improve as well as defend.
Seminar attendees noted some barriers to good use of metrics. “Our culture is still in the 1980s,” conceded one participant. Silos hinder progress. HR’s credibility can be an issue.
“You cannot do analytics without change management” or the findings of the analysis might land on deaf ears, noted Bintliff-Ritchie. “Stop and question everything you are doing” to ensure that the data is meaningful and the results “will make a difference in the business,” she stated.
Steve Bates is manager, online editorial content, for SHRM.