In this Jeitocast, Karen Beaman interviews Dr. Jac Fitz-Enz, President and Founder of Human Capital Source on the subject of using human resource metrics to determine business value. Dr. Jac is working on the next generation of workforce analytics by investigating what effects investing in people have on the business because, as Jac says, “it’s people who make the difference.”

His Workforce Intelligence Report (published twice a year) surveyed 750 companies, supported with data from 70 research institutions, to discuss how, when, where, and in which way investments in people are making a difference. The report provides many examples of business value being created through investments in human capital.

Dr. Jac’s latest project is the Predictive Initiative, which is developing a Predictive Model, along with applications, implementation tools, and a measurement system that focuses on future. The goal of this initiative is to understand how to predict what is most likely to happen if we try one thing or another… because “the only thing you can manage is the future. You certainly can’t manage the past.”

To get started with HR metrics, Dr. Jac describes three levels in demonstrating business value:

1- Internal Efficiency looks at the efficiency of the human resource operation — what does it cost to do the things we do, e.g., cost of hire, cost of training programs, total compensation as a percent of revenue, time various processes take, quality in terms of errors, customer reaction.

There are five ways to look at HR services: cost, time, quantity, quality, and human reaction. If you build a matrix with these categories across the top as columns and with the various HR services we provide (staffing, compensation, benefits, employee relations, learning and development) as the rows along the side, you end up with set of cells which can be evaluated in terms of internal efficiency.

2- External Effectiveness assesses the overall effectiveness of the internal metrics, e.g., handling calls quicker, answering calls more effectively, reduced number of call-backs.

3- Business Outcomes determines the effect of HR activities on the business financials through margin improvement, revenue growth, customer retention, etc.

Dr. Jac explains that the biggest obstacle to success with metrics is the HR department themselves: “we have found the enemy and he is us.” HR has to get over their own prohibitions in order to be successful with metrics. HR needs to learn that it’s not a great mystery, it’s very doable, it needs to be done, and it’s all learnable. (Dr. Jac himself was a political science major.)

 

 How do I use my human resource metrics to determine business value? [20:19m]: Play Now | Play in Popup | Download