Why measure HR?
The most frequently used analogy when it comes to measuring human resources is that of driving without a speedometer on your car: how would you drive if you did not know your speed?
However, the deeper we look into HR measurement the less satisfying this analogy becomes. The basic premise that you need information to perform well is correct. However, when you have a speedometer and you are going too fast, your next action is obvious: you take your foot of the gas pedal.
This direct link between information and action is not the same with HR. When turnover is too high within an organization, it is not always obvious what the action should be. Do we increase salaries? Do we increase our benefits? Do we hire different people? Do we change our management group? All of these could have an impact on moving our dial.
It is this uncertain link to action that has us searching for a better analogy. The starting point is to determine exactly what type of system we are measuring. A car, for example, is a fully rational system. It obeys the laws of physics and, under specific circumstances, it will act more or less the same way every time. Human systems are not purely rational, they are made up of agents who choose to change their behaviour on a daily and hourly basis. This is why the speedometer analogy is insufficient.
A more rewarding analogy is that of a doctor understanding what is going on with a patient. HR does not work on a rational system in the same way that finance and operations do. HR works on a social system or an ecosystem. Employees have choice and do not always behave rationally, therefore the system that HR measures is more complex, nuanced and require considerable expertise, just like a doctor who is measuring the human body.
Here is where the analogy becomes more rich. When a doctor detects a raised heartbeat, it is a signal. There are a lot of reasons you could have an elevated heart rate: maybe you just ran for a bus or maybe your arteries are clogged and your heart has to work harder to keep you alive.
Similarly, an increase in voluntary turnover is a signal, and there are a number of possible reasons for it. Perhaps the job market has suddenly taken off with a new competitor opening its doors, or a new CEO has arrived and uncertainty is high. The role of HR then becomes just like the doctor: watching for and interpreting the signals.
HR is also like a doctor in terms of applying expertise to know what else to look for and how to build a clear picture of what is happening within their ecosystem so that they can make the right sort of intervention. For example a doctor measuring a constantly elevated heart rate is also likely to look at the person’s overall weight, level of physical activity, blood pressure and so forth to determine if the signal is temporary or chronic. The doctor is also likely to look at the patient’s history to determine the underlying condition that is causing the symptoms.
To get at the underlying cause of an increase in voluntary turnover, an employer can look at other symptoms through exit interview data, breakdowns in metrics data such as voluntary turnover by age or seniority, or financial data that suggest employees know something is wrong that management has yet to spot.
This is why we measure HR. It is not simply to understand how fast we are going and whether or not we should slow down. The human system at play within every organization is too complex for that. We measure to gain a clear insight into the effective and ineffective functioning of the core of our organization, the dynamic activity of the people. We measure for the same reasons as a doctor because it is hard to tell what is wrong or right with someone simply by looking at them from the outside. We measure because the information, once gathered, analyzed and interpreted over time, leads to powerful insights that can not only identify and fix issues, but also provide an understanding of potential competitive differentiators and the capacity to shape, influence and enhance organizational outcomes.
Despite broad advances, human resources measurement is still in its early stages. We are like a doctor with only a stethoscope and a thermometer. Nevertheless, the results gained through this measurement, and the potential for even greater results in the future, suggest that growth and improvement will be fast and those who embrace this field will soon have tools equivalent to an MRI in diagnostic power.
HR also needs to measure in order to gain respect as professionals with expertise and a deep body of valuable knowledge. Research and measurement are slowly proving this to be the case. Ultimately, we want to be seen and understood to have the same standing in a business as a doctor does among the public.
Conversely, when HR lacks measurement tools and skill, we are at best tolerated as potentially effective but incomprehensible. If you think about it, this is like the status often given to the witch-doctor or shaman of old.
Ian J. Cook
HR Metric Service