Wednesday, February 27, 2013

Real Analytics for Real Business Partners

I am pleased to have two awesome guest bloggers this week.  Scott Mondore, PhD and Shane Douthitt,PhD. They are the authors of two bestsellers on talent management and HR Analytics (Investing in What Matters: Linking Employees to Business Outcomes and Business-Focused HR: 11 Processes to Drive Results) and the managing partners of Strategic Management Decisions, the only talent management platform with integrated business outcome analytics.  So, in other words, not only are these guys my friends, but they know what they are talking about!!

It has taken almost 20 years for HR analytics to become an overnight sensation. There is a huge opportunity for HR to use its biggest advantage (data about all employees) to show its impact on the business. But before analytics becomes a poorly-defined, consultant-driven topic (see employee engagement), it is important to get out in front and set some clear parameters for HR Analytics:

HR analytics must be show a connection to business outcomes (e.g., sales, quality)
If we only look at analyzing HR data in a silo, then there will be no business impact. We have to start showing how employee data drives relevant business outcomes.  We know that our business partners don’t really care about things like days to fill or engagement.  We must do a better job of connecting people focused data to what our customers (i.e., business leaders) are focused on (business outcomes).

Analytics CANNOT be limited to “slicing-and-dicing” HR data
We all know what this will mean: MORE REPORTS! We have to end this end-of-the-month, mad dash for numbers that are mostly meaningless to our business partners.  Simply creating prettier reports or slicing HR focused data in a different way, is NOT going to get our internal clients excited about HR.

Analytics must be true cause-effect and predictive
To make it through the c-suite gauntlet of analytics pushback, we can’t be armed with gap analyses and correlations. Too many holes can be poked into these types of methodologies—use structural equations modeling to get as close as possible to cause-and-effect and allow your team to demonstrate a strong expected ROI calculation. Don’t let the statistics scare you—there are plenty of grad students that can help you and costs of using consulting firms for this work are dropping.

Analytics must be reported and actionable to all front-line leaders
There are plenty of analytics companies that tout the ability to work with data and produce beautiful charts, pictures and PowerPoint slides. However, the impact of analytics will be limited if your front-line managers aren’t shown exactly what they need to be working on that has a business impact AND the specific actions they should take to make it happen. Fancy PowerPoint’s for the CEO are nice but will not add front-line credibility for HR.

There are no magic metrics
The metrics that you track should be based completely on the HR business drivers that you uncover in YOUR organization. What works at Google may not work at your organization. We need to move away from only looking at HR Efficiency metrics and actually look at HR Impact metrics. Ask yourself these questions when building your HR scorecard/metrics:
  • Can I articulate why this metric really matters to the business? 
  • Do I know what a good number should be (not based on generic benchmarks! 
  • Can I articulate the business value of moving this number 
  • Why would senior and front-line leaders care about this metric?
Show your actual impact/ROI in 6-months to a year later
Making predictions with strong methodologies are nice, but taking action on what drives the business and showing the actual ROI after implementation is where the real rubber meets the road. Showing the change in your business driver and the corresponding change in business results is the most straightforward way to show real ROI.

Making it happen:
You don’t have to boil the ocean and look at all of your HR data right out of the gates to have an impact. The lowest hanging fruit are Performance Management and Employee Surveys. For Employee Surveys, line up the data (store-level, unit-level etc) with the key business outcome(s) that you want to drive. Use the appropriate stats methodology and this will tell you the exact survey items that will have the biggest business impact! Create the initiatives and show the ROI. If you use a survey vendor, make sure that they can do this analysis AND they provide these analytics in all manager reports. Remember, a fancy c-suite PowerPoint will have limited impact.

For Performance Management, make sure that you collect competency ratings during the review process. Then, align the competency ratings with the important business outcomes. Follow the same steps from the employee survey process.

You will be a real business partner when you start bringing people strategies to drive sales, profits etc with the evidence to back it up. Make the evidence practical and actionable for front-line leaders, and you will be the HR Rockstar!

Wednesday, February 20, 2013

Going from "I Think" to "I KNOW" with HR Analytics

For the last few days, I have been co-facilitating a workshop with Scott Mondore, PhD and Shane Douthitt, PhD called "Becoming an Effective HR Business Partner Using Metrics."  We had some very smart HR professionals in the room.

As I sit here listening to the last day, it dawned on me that really where HR wants to be is in a position to say I KNOW what drives XYZ, rather than I THINK this is what drives XYZ.  Where XYZ can be employee engagement or regrettable turnover or sales, or profit.

Can you imagine as an HR professional going to line management and saying any of the following:

1) I analyzed your engagement, performance and turnover data and I have identified a group of employees that are at risk for leaving the organization.  And oh, by the way, here are the 3 reasons why they are at risk and here is a game plan to correct those issues.

2) I analyzed your problem with shrinkage in your stores and I know the top 3 employee drivers that impact shrink.  If you do these 3 things it will reduce shrink by X%.

3) I analyzed your competency data and found out that these 3 competencies are driving productivity in your group.  I also looked at the scores of those competencies for your people and 30% of them have a skills gap in one or more competencies.  Let's work on a game plan to close these gaps.

So after the manager picked himself up off the floor, you will be an HR Rockstar in his/her mind.

I know you are asking yourself how can I be an HR Rockstar?

It's all in the metrics and analytics.  You can't hardly get away from the "big data" discussion unless you go to a different planet.  HR has been discussing metrics for years and years...just ask Dr. Jac Fitz-Enz.  It's really time to move away from data/metrics and talk about analytics.  Analytics get you to the "I KNOW" and the "OMG, I DIDN'T KNOW THAT."

What I know for a fact is:

1) You don't have to be a statistician/PhD to get to the analytics listed above in 1-3.  Yes, statistics are used, but if you/your HR department doesn't have that skill, you can find that skill set either internally in the organization or externally with consultants and/or stat students.
2) You DO have to be curious, understand the business you support, and have data accessibility.
3) An analytical/technical focus is a plus!
4) You need the basic data like turnover, performance data, competency scores, training data which is usually tracked in many organizations.

The demand for people analytics is going up on a daily basis.  Now, more than ever CEO's are making decisions based on data.  The time is now...go and be curious.  Find a business problem and solve it with data you already have.

Tuesday, February 12, 2013

Are Line Managers the NEW Employee Relations Managers?

I have been asked the same question several times over the last few weeks.  The question goes something like this:
In moving from a more transactional HR model to one that is more strategic, how does HR handle all the Employee Relations issues?

Here is my answer...tell your employees to behave themselves.  LOL

This question has come up in our "Becoming an Effective Business Partner Workshops."  It is such a good question.  The transactional HR activities still have to be done.  Employees have to be paid and benefits have to be administered.  Employee issues have to be addressed.

Obviously, a HR transformation is not something that happens overnight.  It's definitely a journey that takes time for everything to fall into place.  Granted, it is a deliberate journey, but a journey none the less.  It is very difficult to be strategic when you are constantly putting out fires.

During the journey we do the usual tasks like:

  1. Assess the workload and type of work performed by HR to understand what needs to stay in-house and what can be effectively outsourced.
  2. Skill sets of existing HR professionals need to be examined and matched with organizational needs and balanced with career goals of the HR professional.  
  3. Educate and communicate to the business what will be different and what types of business issues HR will be assisting with.
  4. Align HR strategy with organizational strategy

I think what gets forgotten is the defining of the role of HR and the role of line management and what that looks and feels like in the organization.  It's hard to get any work done, much less strategic work if line managers are still coming to HR for approval and as a sounding board for routine issues like attendance, tardiness and simple disciplinary write ups.  It's a cultural shift, going from "you have to run all decisions past me," to one of "autonomy within these parameters."

I have seen larger companies, where it makes sense going to a shared services model even for Employee Relations issues where routine issues are handled immediately and more complex issues are escalated up to the appropriate person.

I happen to think it's time for line managers to be responsible for their own talent.  HR needs to let go of some control so we can do bigger and better hiring the right people on the front end so we can reduce ER issues!

What are your thoughts?  Are you ready to cut those ER cords yet?