Pixentia is a full-service technology company dedicated to helping clients solve business problems, improve the capability of their people, and achieve better results.
Most of the barriers to adoption of people analytics have been overcome. Modern technology platforms provide robust analytics. An entire industry has sprung up, with helpful tools to cleanse, prepare, and manage data. HR leaders understand that they need not be data scientists—they only need the expertise on the team, and it doesn’t have to be full-time help.
One barrier that remains is what Douglas W. Hubbard calls the illusion of intangibles.[1] When we talk with people about measuring what is important to the business, they voice confusion in what to measure and how to measure it. Our answer is that we should measure what is relevant to the business. However, that doesn’t move the conversation forward until we agree on what measurement means.
What do you think of when we ask what measurement is? If you are like most people we talk to, you think of exact numbers: using a tape measure, computing values, or collecting scores. If that were all there is to measurement, we wouldn’t be able to measure much of anything in business.
Think about these examples:
Business leaders are mostly risk-averse. If you can reduce the uncertainty that a business initiative will fail, you are providing a valuable service. Likewise, if you can show them that by spending $40,000 on a talent management initiative that has a 95% certainty of improving business results by $2,000,000 over five years, you are likely to get approval. You don’t need analytics to give you absolute measurements to make decisions. You only need to reduce the risk.
“Measurement. A quantitatively expressed reduction of uncertainty based on one or more observations.
- Douglas W. Hubbard, How to Measure Anything
We express the certainty of future events as a probability. Statistics can tell us what happened, how, where, when, and why. Probability says with a degree of certainty what will happen.
One failure in people analytics is the billions of dollars spent trying to measure and improve employee engagement. There have been successes, and correlation analysis show us that companies with high engagement also have high profitability. However, in the aggregate, most of the investment has been wasted.
If you are asking in a survey how people feel about the workplace, are you getting actionable information? Do good feelings cause better performance?
If you ask instead what people and their managers do, you get useful information. Gallup reported in 2015 that managers account for 70% of the variance in employee engagement. We can show that specific behaviors affect employee productivity and retention.
So, it might be better to measure employee development. No, you say. It’s too “fuzzy.”
Stop and think what activities and behaviors make up employee development. We can track coaching sessions, feedback, learning opportunities, and participation in learning. We can use these measures to understand the probability that improving managers’ ability to coach and develop their employees will have an impact on retaining productive people.
The perception of difficulty in measurement can create significant barriers to action. We can overcome them by taking a systematic approach to a decision. Hubbard recommends asking these questions:
At that point, the decision comes down to whether the value exceeds the cost, but there are many ways to control costs.
The purpose of analytics is to reduce uncertainty in business decisions. Bench marking, “best practices,” and gut instinct informed by experience can lead you to a decision. When you are embarking on important initiatives that affect your entire organization, it pays to understand the risks and to reduce them as much as possible.
Let’s form your team and get started.
References:
1. Hubbard, Douglas W. How to Measure Anything: Finding the Value of “INTANGIBLES” in Business. John Wiley & Sons, Inc. 2014.
Pixentia is a full-service technology company dedicated to helping clients solve business problems, improve the capability of their people, and achieve better results.