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MBA Essentials
MAR 28, 2017

How Can HR Speak the Language of Business: HR Metrics and Analytics

By Jun Kabigting
iStock photo/metamorworks

Throughout the 2016 U.S. presidential race, and since, President Donald Trump has been repeatedly called out for giving speeches based on myths, lies, and figments of his own imagination. I think of this as “Trump syndrome”—a simple term for the tendency to speak or pass judgement without the benefit of facts, numbers, logic, reasoning, or science.

Unfortunately, Trump syndrome is a problem many people consider to be an issue with HR.

I teach human resources management (HRM) at GLOBIS University, Japan’s largest MBA school. At the start of the course, I ask the students what comes to mind first when they hear the term HR. Every term, I get the same sets of answers: recruiting, employee relations, compensation, benefits, performance management, training and development, employee engagement, and so on.

Ask the same question about accounting, finance, or even marketing, and most often you’ll get answers like financial ratios, debits and credits, accounts payable and receivable, market shares, market penetration rates, customer satisfaction rates, etc.

This may seem like a fair and equal approach to different areas of business, but look more closely, and you’ll notice something. HR is more associated with the qualitative tasks, while accounting, finance, and marketing are associated with quantitative tasks. That is, HR seems to suffer from a perception of being all about the soft or touchy part of the business.

That is to say, most people think that HR can’t speak in numbers ー arguably the basic language of business.

How did this happen?

For a long time, HR wasn’t even recognized as a profession, especially in Japan. Even today, there are few options to study HRM even as part of a larger program such as an MBA. Most HR professionals in Japan landed there as a random accident of job rotation ー some even because it was simply the last place that would have them. HR is often considered a dumping ground for an organization’s “unplaceables.” (Don’t believe me? Try reading Why Are You in HR?: A Hint — It Shouldn’t be Just About the PeopleThe HR Agenda magazine, Oct-Dec 2013 issue.)

In the absence of discipline that comes with formal academic support, HR has floundered as an industry. Most people try to do their jobs based on gut feelings, hunches, human relationships, established policies and procedures, best practices, politicking, and policing.

In my more than 25 years of HR experience working with various nationalities, I know very few HR professionals who mix their soft skills with hard data such as HR metrics and analytics. HR professionals hardly have the nerdy reputation of engineers or programmers.

Why facts and numbers matter… even in HR

HR deals with people, so why do HR professionals need numbers? The simple answer? Because what you can measure, you can improve. The use of facts and numbers helps us to be more objective. If data and facts are collected in a scientific manner, it adds more credibility to the decision-making process, and business can make informed decisions.

Though they may feel unimportant, HR professionals are stewards of their organization’s most important asset: people. It is a unique position to influence and shape performance using people metrics and analytics.

So how can this be done?

First, if you are in recruiting, cost, quality, and time per hire are just some of the metrics that you need to know to formulate an effective talent acquisition strategy.

Second, in training and development, return on training (RoT) and training effectiveness (TE) probably top the list of the key indicators for how to maximize your investment in people.

Third, and similarly, if you are working with compensation and benefits, knowing the percentile of your organization versus the market will help your organization attract and retain talent.

This may come as a surprise for many HR professionals, but HR can easily be ruled and transformed by numbers. In fact, checking the numbers is the first step in elevating HR to a recognized profession inside and outside of Japan.

Facts and numbers matter—even in HR. When HR bases its decisions on facts and numbers and not just on feelings, broken assumptions, or even cultural inertia, HR can make better decisions. As Jack Welch once said, “Business is about people.”

Edited with permission. Original article can be read here.

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