By Brad Minor, M.Ed. Candidate in Human Resource Development, Peabody College of Vanderbilt University
One of the most elusive tasks facing human resource (HR) professionals today is figuring out how to accurately measure and report information about the value of people to organizational decision makers; reporting this in a form that is useful for strategic decision making is even more difficult. Tackling this topic and applying it in the workplace requires a quantitative skill set that many HR professionals do not possess, so it is reasonable to assume that building skills in this area might make us more valuable on the job market and more useful in the eyes of future employers, especially as the HR profession continues to move beyond tactical and transactional functions.
If we are to prove our worth as strategic business partners, we must speak in terms that executives understand and value: numbers and results. Human capital analytics is our best vehicle for doing so. It is referred to as a field, in the singular, so the question in the heading above would properly read, “What Is Human Capital Analytics?”
A Few Definitions of Human Capital Analytics
There are quite a few definitions of human capital analytics (hereinafter referred to as “HCA”) floating around. Jac Fitz-enz (2009), who is widely acknowledged as the father of HCA, defines it as “simply a method of logical analysis that uses objective business data as a basis for reasoning, discussion, or calculation” (p. 1). A consensus definition by participants in a 2007 Society for Human Resource Management (hereinafter referred to as “SHRM”) symposium is: “The process by which the value of an organization’s people is measured and improved for the purpose of enhancing organizational performance.” This group further agreed that HCA should be used to “create predictive business indicators” that could then be used to make good decisions (SHRM, 2007).
Measurement, Metrics, and Human Capital Analytics
It is important to clear up the subtle differences between a few words that are often used interchangeably: measurement, metrics, and analytics. These terms are very closely related, but not interchangeable; the distinct nuances of each term are important to understand. The aforementioned SHRM (2007) symposium participants made these differences very clear, as follows:
- Measurement is data gathered regardless of reason.
- Metrics involves measurements for specific reasons.
- Human capital analytics are metrics that are analyzed to create value.
Note that the key distinction that sets HCA apart is the analytical component. We can measure things constantly, but these measurements will not create value unless we analyze them and figure out how to use this information to make better business decisions.
Human capital analytics is all about asking the right questions. It makes sense that the right questions are those that connect HR information to business results. This is how we contribute to the bottom line of our organizations rather than simply conducting transactions and reporting our productivity.
Fitz-Enz, J. (2009, Autumn). Predicting people: from metrics to analytics. Employment Relations Today, 36(3), 1-11.
SHRM (2007). Symposium defines HR analytics, envisions greater usage. Retrieved 11 21, 2010, from shrm.org: http://www.shrm.org/hrdisciplines/orgempdev/articles/Pages/SymposiumDefinesHRAnalytics.aspx