Metrics
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Metrics are simply measurements, for example "Our average engagement level is 80%", "Our average employee attrition is 30%", "Our average performance level is 60%" and so on.
The problem with metrics is that they can't tell you whether the number is "good" or "bad" for the organisation. For example, if someone says attrition 30%, that sounds bad. However, if those 30% are mainly low performers, that is probably a good thing. Another example: if average engagement is 80%, is that good or bad? Is it better than engagement of 70% and worse than 90%? You simply can't say until you know for sure whether increased engagement leads to increased performance. For example at Friends Provident, we found that performance peaked when engagement was at 70%, but declined as it increased beyond this level. This may be because excessive engagement leads to exhaustion or because managers are willing to sacrifice high performance in the name of high engagement.
Either way, metrics in themselves don't tell you what actions are needed to improve performance.
Analytics
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In HR terms, one could say that human capital analytics examine the effect of HR metrics on performance. In more general terms, analytics look for patterns of similarity between metrics e.g. do competency levels and retention levels increase at similar rates? Do competency levels and performance levels work together?
If analytics show that two metrics *do not* work together, it is pointless for the organisation to invest in one metrics in order to change the other. For example, if analytics shows no relationship between salary and retention rates, then it would be pointless investing in payroll changes. And it means the organisation must search for metrics that *do* have a relationship with retention. Yet it is amazing how many organisations invest millions in programmes to change some metric (engagement, retention, competencies) without first ensuring whether that metric really does have an impact on performance. This is usually money poured down the drain and are the expensive programmes one hears about that failed.
Bottom-line: Metrics are just measurements; analytics show the relationships between metrics and suggest what organisations can do to improve performance.
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2 comments:
Good definition, Max. I think of analytics as pushing towards the 'why' where metrics stop at the 'what'. In HR, metrics are something like attrition rate or head count, where 'talent analytics' is a specific term focused around measuring the impact of the people on performance. So, you would not just count the number of people who left your organization, but understand what they have in common, the relationship to performance.
Good blog, nice to see more folks talking workforce analytics.
Mike
Thanks Mike. Yes, all sciences start out measuring descriptive statistics (head-counts etc); only when they have enough of this descriptive data can they start "linking" it. And that is the happy point HR has arrived at. Good to hear from you.
Max
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