By Sarah Dobson

The importance of HR metrics has been growing dramatically as HR professionals realize the value and potential of looking more closely at the numbers behind people initiatives.

But is HR stepping up and taking ownership of metrics? If not, it’s quite possible other groups such as finance might take over, leaving HR to fall back to its administrative role, according to Ian Cook, director of research and learning at the British Columbia Human Resources Management Association (BC HRMA) in Vancouver.

“The most likely scenario (is) if an organization has built a business intelligence group and invariably it’s replacing a strategy group or becoming part of a strategy group where that analytical capability is housed in one team, the HR data will just get rolled over to that team and they’ll process it.”

CGA Ontario, for instance, recently approached BC HRMA to ask about training for its members around HR metrics.

“They see the need for helping their finance folks get on top of this,” said Cook, who is also director of the HR Metrics Service, a collaborative venture by BC HRMA, the Human Resource Management Association of Manitoba (HRMAM) and the Human Resources Professionals Association (HRPA).

Finance may start to pay attention as it is more exposed to the data available, he said, citing finance leaders who are heading up HR to bring a numeric approach to the role.

“So is finance saying, ‘Hey, give us the HRIS, give us access to all that data, we’ll start crunching the numbers and put the financial information alongside the talent information and we’ll become the source of strategic insight that will maintain that position?’” said Cook.

But that kind of approach doesn’t necessarily make sense.

“The risk is that they haven’t got the psychological background, the sort of social understanding of people, to do it really well, the new group, and HR ends up having to do what that group comes up with. So we stay trapped in the ‘We just take orders’ position,” he said.

It’s quite easy to just consider a number as a number, and it’s also dangerous, said Gail Evans, president of management consulting firm the Wynford Group in Calgary.

“You have to understand where that number comes from,” she said. “Even in the work we do, (employee) survey stuff, where the real value-added is not just producing a metric, it’s actually understanding what the implications are or what drives that or what can be changed. That’s where you really need the HR people. It’s really a combination of people, so that you can put the appropriate programs together. Finance should not be taking it over — there should be some joint effort but not wholesale.”

And the loss of metrics could happen, said Evans.

“If human resources practitioners and executives don’t really embrace this, it will be taken over by somebody else and by the financial groups.”

However, Ruth Wright said she couldn’t imagine handing over HR metrics to finance. Instead, it should be about collaboration.

“When we’re talking about strategy and execution, what organizations are striving toward is more integration — you can’t do strategy at a high level in silos. So you need to start speaking the same language and finance can be helpful,” said Wright, associate director of leadership and HR research at the Conference Board of Canada in Ottawa.

“Finance can be helpful to HR but I also think HR can be very helpful to finance — it’s reciprocal and I prefer to see it as integrative.”

Traditionally, people have been looked at as a cost item by finance but there’s an education involved in building workforce capacity and thinking about people from an investment perspective, said Wright.

“You lose that perspective if HR isn’t at the table,” she said. “The organization is going to miss out on some critical insight that should be driving decision-making and investment decisions overall.”

To effectively take ownership of metrics, the HR department needs to realize it sits on an enormous amount of data about exits, absences, promotions and performance, and the analysis of that data has enormous business value, said Cook. If HR isn’t bringing the people data to the table, business leaders are going to ask who can, so HR should include someone with analytical capability, probably from social sciences, he said.

“We don’t need everybody to produce charts and graphs and the numbers. It’s a particular skill. If you’ve got the skills that go with recruitment, then it’s not typical for you to be fascinated in regression analysis — they just don’t go hand in hand. But what is important is that people have the broad acumen to interpret the information so when you see a chart, you know what it means, you can ask reasonable questions and actually understand how the evidence would shape your practice.”

Higher value-add type of work is an emerging function in HR, said Wright.

“In some cases, organizations are pulling people in with good business acumen and skill with data and analytics. In other cases, younger people coming out of school now are trained in statistical methods and processes,” she said.

“A lot of people in HR come, for instance, out of disciplines like psychology and sociology where you learn that stuff and we just haven’t been leveraging some of the skills people have been bringing into organizations. Now they are.”

The education around metrics is definitely coming along, said Cook. Seminars on the HR Metrics Service are quickly sold out, he said, while schools such as the British Columbia Institute of Technology in Burnaby, B.C., and the University of British Columbia in Vancouver are building analytics into their MBA and HR education programs.

Reprinted by permission of Canadian HR Reporter
© Copyright Thomson Reuters Canada Ltd. – January 2012 – Toronto, Ontario
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