Implementing an evaluation process for measuring human capital analytics can be a challenging prospect. I had a chance to sit down with Gene Pease, CEO of Capital Aanalytics, to explore this topic:
Where should people get started in their human capital analytics journey?
If the organization has any kind of dashboards or scorecards, the first place to start is to look at those and see if you can find any patterns over time of what those metrics are telling you. If you don’t have dashboards or scorecards then I would begin to identify the first few metrics that you think are important that you could begin to track, things we would call activity metrics. For example, in the learning area, that could be, how many people enrolled in training and how many have completed training.
Explain the human capital analytics continuum at Capital Analytics why “the mountain climber” in your description?
Capital Analytics developed our own version of the human capital analytics continuum because we hadn’t seen any continuums that worked for HR. If you think of climbing a mountain, the higher you get, it gets harder to climb, but the view is much better and that is what the analytics continuum is trying to show. The bottom of the mountain describes anecdotes (normally captured through surveys), then a little further up the continuum are scorecards and dashboards which typically are activity-based metrics. Some organizations use that data to benchmark against their competition or industry. These types of data are correlated, meaning they are somehow related, but we really don’t know why. An example is that we deployed sales training and sales increased, but was it because of the training, the introduction of new products, a change in sales persons’ compensation, or the competition faltering?
The way we have developed the continuum, there is a cliff to climb just past correlations. This is where the really hard work comes. Climbing that cliff by using data from multiple systems, including operational and performance, and applying advanced statistical methods including isolation, allows you to move into causation. Causation shows evidence that a specific investment or investments have certain outcomes. Once you understand how an investment(s) has achieved true impact, you can move to the pinnacle of the mountain: optimization and predictive analytics. If you can really understand what is affecting outcomes, then you can begin to understand how to improve those investments. This is the “Holy Grail of Human Capital Analytics.”
What is the number one excuse people use to explain why they don’t need human capital measurement?
There are two excuses I hear frequently. The first excuse is “My bosses aren’t asking for it, so why do it?” I don’t buy this excuse, it is a lazy answer. You don’t know how you are doing without measuring. Even if your bosses are not asking for measurement results, you should be proactive in this environment to stay competitive. Keep track of what you are doing and the investments you are making no matter who is watching.
The second excuse I hear is that “Measurement is hard.” Yes, it some cases the data isn’t organized well. But you can get started in the activity metrics! Pick a small area and start keeping track and when you gain confidence in that small area you are able to graduate into more complicated types of measurement.
If you were graduating college today, what opportunities would you see in business?
The world of HR, has moved from the art of HR to the science of HR. Human capital is the most important asset to a company, so we are now beginning to see HR executives that are having tremendous influence over strategic outcomes and they are becoming critically important to the C-suite. Someone that understands the art and the science of HR analytics has an unlimited career path in today’s competitive business world.
Gene Pease is cofounder and CEO of Capital Analytics, a consultancy revolutionizing the way companies evaluate their investments in people. He is the co-author of Human Capital Analytics: How to Harness the Potential of Your Organization’s Greatest Asset (John Wiley & Sons, 2013).