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Leverage 'evidence-based HR' to measure strategy

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By Richard Stolz
September 15, 2009

People are too precious a resource to squander. While no HR or benefits executive would dispute that assertion, many may harbor doubts that their strategies and programs harness human capital in a way that maximizes its capacity to achieve organizational objectives.

It doesn't need to be that way.

"Evidence-based human resources", tapped by a handful of progressive companies, such as Google, Hewlett Packard and Capital One, is an analytical framework used to assess HR's efforts in a meaningful way, according to John Gibbons, a senior research associate with The Conference Board, the New York-based business research organization.

Gibbons, a former HR practitioner who has put EBHR to work with prior employers, lately has been surveying EBHR's application by U.S. employers and promoting its value. He and colleague Christopher Woock recently authored a Conference Board-published guide to EBHR, distilling lessons from the experiences of HR executives who have been pioneering evidence-based methods of assessing their efforts.

"HR talks a lot about 'alignment,' and we've done a great job of setting expectations for our senior leaders and putting together strategies that are aligned with the strategy of the business. But that's not quite sufficient," he says. Nor is HR's ability to "empirically justify the effectiveness of their functions" with measurements limited to cost or efficiency.

"What we don't measure very well," he says, "is impact - what is it that we in human resources do in the management of talent that actually has an effect on things that matter most to the CFO, COO or CEO?"

That's the stuff of EBHR.

The good news is that the raw ingredients of EBHR often are readily at hand from enterprisewide management systems, encompassing operational, financial and HR data.

"Unfortunately," Gibbons adds, "there are not a lot of human resources people trained to look through all three of those prisms at the same time; they tend to look at HR data in isolation, or maybe at correlational stuff, but don't necessarily say, 'Which caused which?'"

Harnessing EBHR requires "knowing which questions to ask," Gibbons says. Looking for correlations between, for example, a new health promotion program and a reduction in health care expenditures "is the first level of determining whether there is an empirical link" between the two.

"Then you need to go to the next level: Is there a lead/lag relationship? Did one thing happen before the other?" he says.

The final step, often neglected, Gibbons says, is where the analytical heavy lifting occurs: "Trying, as best you can, to explain additional variables that may be impacting either the human resources or the business performance data."

That analysis, applied to employee benefits, isn't a simple matter.

"It's a multistep process, because employee benefit programs are linked to a lot of programs for the workforce as a whole," Gibbons says. "If you put together certain programs, you should see certain causal links between them and retention of certain kinds of employees, or the attraction of certain kinds of employees" - and ultimately the business impact of the retention or recruitment of those employees.

Tips on implementing EBHR from The Conference Board's practitioner's guide:

* Identify the organization's key performance indicators. Often they can be found in corporate-level balanced scorecards, the executive compensation section of a public company's Schedule 14A, or its strategic plan.

* Infuse the HR department with talent from elsewhere within the organization. "These new team members will naturally induce a process of 'cross-pollination,' reminding the HR team that there are concepts and priorities ... that are important to business."

* Develop a "show me" mentality. Using the "knowledge of the standards of causation and the scientific method" allows practitioners not only to assess their own programs, but to pose questions to vendors "that allow them to truly understand what value [they] are adding."

* Start small and keep it simple. Beginning an EBHR initiative with an individual plant or division may be preferable to build experience.

* Value trial and error. Experimentation is a valuable tool for HR; it does not require sophisticated experimental designs and can allow organizations to "work the kinks out" of a new initiative.

* Build cross-functional partnerships. By allowing HR's thinking "to be profoundly influenced" by non-HR colleagues, HR "will be able to define successes in the context of the success of the enterprise as a whole."

* Cultivate a tolerance for failure. EBHR "requires challenging conventional wisdoms and even practitioners' personal preferences about particular management interventions." Implementing EBHR may "unexpectedly uncover weaknesses in long-held assumptions about human resources management."

* Don't discount intuition. "We need to use our intuition to come up with the questions that we need to be answering to begin with," Gibbons says. At the same time, avoid "selectively attending to information that confirms what our intuition tells us, and not all the information that may be relevant to the situation at hand."


Richard Stolz, a former EBN editor and publisher, is a freelance writer based in Rockville, Md.

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