Maximizing Metrics
Al Adamsen, a presenter at this year's HR Technology Conference®, believes focus and commitment are two keys for getting the most from one's workforce-analytics efforts.
By David Shadovitz
HR leaders have been slow to embrace workforce analytics, but that's finally beginning to change. And none too soon, says Al Adamsen, who will explore the value of this approach to measuring and allocating resources during a session entitled "Let's Finally Get Cracking on Workforce Analytics" at this year's
HR Technology Conference
®, Oct. 15 through 17, in Chicago.
Adamsen, founder and managing partner of People-Centered Strategies LLC in San Francisco, believes that, when done right, workforce analytics can provide businesses with a huge competitive advantage.
He notes that analytics needs to be a priority for HR leaders. "If it's not deemed a priority, if there isn't someone dedicated to doing this work, then the value that can be achieved isn't going to be realized," he says. "There's a huge risk in not doing it because many organizations are wising up to the value that's there, and an organization that isn't doing it is going to be at a competitive disadvantage."
If anything, Adamsen says, that's amplified when the economy hits a rough patch, as it appears to be doing now. "Analytics informs how leaders allocate their scarce financial and human resources," he says. "If they don't have a data-driven approach to allocating those resources, they end up making a lot of presumptions based on their experience, what they're hearing from their direct reports and what they're reading in newspapers and magazines.
"ut if they include analytics in that equation, they now have a much greater probability of allocating those scarce financial and human resources to areas that are actually going to drive business results."
Before founding PCS, a firm that assists companies in their workforce-analytics efforts, Adamsen worked at companies such as Charles Schwab, Ernst & Young and Gap Inc.
Human Resource Executive® Editor Dave Shadovitz recently spoke to Adamsen about the current state of workforce analytics and what lies ahead, both topics he plans to touch on at the October conference.
How would you define workforce analytics?
Workforce analytics is essentially why things are happening. It's looking back at history and finding out not only what went on but why it went on.
Do you believe most HR departments have had a difficult time articulating their business value?
I think HR has had an extremely difficult time and the reasons are quite simple: I think it's because there's been a lack of focus and commitment to communicate and measure the value.
What I mean by that is there are a lot of priorities, and those priorities are based primarily on the transactional processes for which HR is responsible. The real value, however, is not necessarily in those transactional systems, although that's clearly necessary, but in the data that resides within the systems and the [ability to link that data] to downstream outcomes such as turnover, customer satisfaction, sales and profitability.
There's been a lack of focus and commitment to measure those linkages over a period of time to show cause-and-effect relationships.
Would you say that HR leaders are getting better at setting the right priorities?
There are some companies that are more strategic than others. I think many are implementing [good] systems, but they do not have a documented vision of how they're going to bring it all together to tell the stories that need to be told to inform better decision-making.
I think it's typically more about solving one kind of HR-related issue as opposed to how we are going to impact business performance from a strategic perspective over the longer term. So in terms of setting priorities, what needs to be fixed the most is all fine and good, but I think there has to be an additional perspective [focused on] where we need to get to two, three or four years down the road and whether or not that's going to put us at a competitive advantage in terms of how we attract and retain talent.
If HR executives were to ask me how they should set their priorities, I would ask them to identify the business challenges that are foremost in front of that particular organization and how HR can bring people capability to the fore to address those challenges.
What are the common mistakes employers and HR leaders tend make as they build their workforce-analytics capability?
Many view workforce analytics as a highbrow activity that is nice to have and not an essential piece of how they formulate strategies. So that's mistake No. 1, undervaluing what analytics can deliver.
Another common mistake is not engaging the right people to execute on it. In their defense, there are not many people around who understand what the work entails because there is a large data-management component. That, obviously, is where HR starts and stops. Because once they can't get past that, which is very formidable, then nothing is done.
It goes back to what I said before about focus. Someone needs to be dedicated to do this work. It can't be someone's part-time job. It has to be someone who formulates the strategy, who enlists the resources to execute on it and [who has] the wherewithal to roll up his or her sleeves and do the work, meaning manage and analyze the data.
I think there are a lot of great insights sitting in computers and lying on shelves and in trash receptacles because they have not been packaged and communicated in an effective and timely way. By timely, I mean the insights need to line up with existing decision-making processes. You can't have people saying, "This is great, but I wish I had known this six months ago."
Finally, there needs to be a commitment. Commercial enterprises are driven by results, which I certainly respect and appreciate. That has to happen. However, in doing analytics, you go down a certain road, you test a certain set of hypotheses and [the process] might deliver marginal value or tell a story that leaders don't want to hear. So there has to be openness [among business leaders] to true learning, because they might not get the results they want.
You mentioned the importance of having a dedicated person doing this. What kinds of competencies should this person have?
First and foremost, an extraordinary sense of how the enterprise makes money. Does he or she understand how people drive the economic engine of an enterprise? Second, this person needs to have a very strong understanding of HR technologies and associated processes, and how to bring disparate data sets together in an analytical tool.
Which brings me to a third competency: He or she would have to be an exceptional communicator. A lot of great insights have never seen the light of day because they were not effectively communicated. So this person has to have a great deal of credibility within the organization, and must be able to effect change with executive and managerial populations.
It would seem to me that such a person might be difficult to find.
Yes, absolutely. It's a very difficult role to fill.
I think if organizations are going to fill this role over time, they have to nurture such an individual internally, and that individual would want to have a reasonably long tenure in that role. In other words, they would have to commit to it.
You asked about mistakes earlier. I've seen many organizations try to make this analytics role a hypo position, where someone takes it for just a year and moves on. I don't believe that model works.
Should HR leaders look outside the function for that person, and if so, where should they be looking?
Yes, they should be looking outside the function. Ideally, I think the person should come from operations, particularly if he or she has held a leadership role and intimately understands how leaders' behaviors and decision-making affect employee engagement and behaviors.
Finance obviously is another place. I'm a little bit hesitant [to say that], because I don't think this role is exclusively about data and numbers.
How would you describe the quality of the technology tools that are available to HR leaders today?
I think the tools to address certain processes are good or very good. I think the tools to bring it all together -- such as statistical software tools including SPSS and SAS -- are also good or very good. These are typically utilized by marketing organizations and finance organizations, not by HR.
So you're suggesting that that these same tools should be used in HR?
In terms of doing linkage research and validating the relationships among metrics, you would have to employ something like an SPSS or SAS to make such a thing happen.
Is there room for improvement in terms of what these tools can deliver to businesses?
I'm not a big evangelist of trying to create a better mousetrap. Ultimately, the flexibility of the tools is more important than the functionality of tools.
As organizations become more unique and dynamic, meaning they change work structures and they change processes more frequently than they did in the past, the flexibility of tools is going to be paramount.
The tools that I'm aware of seem to accept that reality and are heading in that direction, but obviously that affects their economic model because they don't necessarily get the economies of scale of having something they can replicate.
When I hear HR leaders say, "We can't do this because our technology systems don't support it," I cringe, because I think leaders must make their requisite investments to tell the stories they want to tell. Technology shouldn't be an excuse not to manage human capital.
August 1, 2008 Copyright 2008© LRP Publications
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