Blame it on the balanced scorecard. Though not the first to devise a business scorecard, Robert S. Kaplan and David P. Norton set off a flurry of interest in people-related metrics with the publication of their 1996 book The Balanced Scorecard: Translating Strategy Into Action. In a Kaplan-Norton type scorecard, there are four buckets, one of which is for people. "That bucket is usually handed to HR to populate with data," says Alec Levenson, senior research scientist at the University of Southern California's Center for Effective Organizations.
"That leads to a metrics treasure hunt," says Levenson, "which may be well-intentioned but is the wrong reason for collecting metrics. Scorecarding exercises often lead to existing data, when instead, you should be asking what the right measurements would look like."
Levenson believes that the renewed interest in metrics today comes from the need for HR and training people to be strategic and relevant and show where training makes a difference. "It's partly defensive and partly wanting to do the right thing for the business. The work I do helps people understand how to structure their measurement to get a sense of impact," says Levenson, who has been conducting research in human capital and HR analytics for many years.
He counsels firms to begin by defining strategic objectives and letting those tell you what kinds of measurement you need. "Then you must engage in analytics to figure out what the measures should be. That process will help determine what's actionable."
A plethora of players
Efforts to link learning metrics to strategy and business results have prompted numerous consultants, suppliers, and industry groups to get in the game with standards, software products, and research designed to take metrics to a new, more practical level, and to slake the thirst for measures that are more predictive and better at showing real impact.
Early out of the gate was Laurie Bassi, CEO of McBassi & Company. Since 2001, her consulting firm has been creating customized analytics to help organizations understand with rigor and precision the human drivers of their business results and get to a fact-based business case for their human capital strategy. "We are human capital auditors," says Bassi, an economist known for her research linking learning investments to the performance of publicly traded companies.
"A gap exists in learning-related metrics for investors," says Bassi. "They need standard metrics to make judgments about the people side of the business." Bassi chairs the Investor Metrics Workgroup, part of a standards-setting effort by the Society for Human Resource Management (SHRM). The group includes HR professionals and accountants and is recruiting people from the investment world. They expect to recommend a small set of metrics that publicly traded firms should make available to investors.
Bassi believes that the time is right for better human capital metrics for many groups, not just investors. "A convergence of economic, social, and political issues has put a focus on employers and how they create value on the people side of business," says Bassi who believes that such a development is essential to thoughtful economic evolution. "The globalization of the economy puts a premium on human capital management, on highly skilled people, and on good people management. That requires data analysis and attention to strategy."
A key player in the quest for more meaningful human capital metrics is the 40-year-old Institute for Corporate Productivity (i4cp), a large corporate network focused on unearthing the practices of high-performing companies. Their Evidence-Based HR Exchange is a group of 15 corporate peers (no vendors or consultants are included) working to increase business acumen and use data to evaluate and support HR programs.
A webinar in April 2011 addressed "Evidence-Based Human Resources: The Next Generation of Analytics," and a free white paper, "The Metrics of High-Performance Talent Management: Quality of Hire" covers a metric that many of i4cp's member companies regard as most telling about the impact of people processes on their businesses.
A proliferation of standards
Establishing standard metrics for the HR profession will be part of a large project undertaken by SHRM under the aegis of the American National Standards Institute (ANSI), whose proposal to create International Standards on Human Resource Management was recently accepted by the International Organization for Standardization (ISO).
Advanced to ANSI by SHRM, the proposal defines technical activity that will offer broad, coordinated guidance to human resource practitioners and will "harmonize disparate practices for the benefit of organizations and their employees." SHRM is an ANSI member and accredited standards developer currently working to develop a body of national standards for the HR profession.
In a press release, Lee S. Webster, SHRM's HR standards director, said that "leading the creation and deployment of HR standards will advance the profession by setting the agenda on what the standards are for HR organizational success within the profession and will elevate the view of HR practitioners as a vital, learned group of business professionals."
The SHRM standards will cover a range of topics. One of the first areas to be targeted will be a voluntary uniform standard for cost-per-hire - a measuring tool for analyzing recruiting effectiveness.
Another group intending to set standards for the profession is KnowledgeAdvisors, developer of the popular software product "Metrics That Matter," used by companies to analyze the business impact of learning. The company recently announced that it is developing a standardized framework for reporting on the state of talent development within an organization. Known as Talent Development Reporting Principles (TDRP), the effort is already supported by some of KnowledgeAdvisor's top clients.
In a recent webinar to introduce the standards-setting effort, KnowledgeAdvisor's CEO Kent Barnett likened it to the Generally Accepted Accounting Principles (GAAP) used by accountants since the 1970s. Unlike GAAP, which accountants created through the not-for-profit Financial Account Standards Board (FASB), TDRP is the creation of a for-profit company guided by an advisory board of consultants. KnowledgeAdvisors will expand its Metrics That Matter software line to support data analysis and reporting around the standards it creates.
When asked by an audience member how the proposed standard-setting, reporting, and analysis differed from the ASTD Workplace Learning and Performance Scorecard, Dave Vance, a consultant who chairs the TDRP advisory board, replied, "It's complementary to the ASTD Scorecard."
The ASTD Workplace Learning and Performance Scorecard was developed in 2002 as a benchmarking, diagnostic, and prescriptive tool for learning. It incorporates a standard set of indicators and reporting frameworks to monitor and compare the alignment, efficiency, effectiveness, and sustainability of the learning function across organizations. Firms that provide data receive either a scorecard that compares their data to other organizations' data or an index report that includes recommendations for how to improve aspects of their learning efforts. The WLP Scorecard covers these areas:
- percentage of learning delivered by various methods
- direct learning investment
- external services expenditure
- learning hours available
- learning hours used
- indirect learning investment
- learning staff size
- net profit
- total revenue
- tuition reimbursement expenditures.
ASTD is currently assessing the scorecard in light of research into qualitative metrics that hold promise for showing the business impact of learning.
Inside job
While professional organizations and suppliers are hastening to improve learning metrics for everyone, individual firms are looking to their own sets of measures and their analysis for business purposes.
In some industries, "the turning of the economy has prompted people to look ahead," says Deb Wheelock, partner and global talent management leader at Mercer. "The discussion of the talent shortage has heated up, and even though the pain hasn't happened yet, people are using the time to prepare for the recovery. They're asking, 'What metrics should I look at, and what do the measures I have tell me?'"
There is a wealth of data available to most companies about their HR practices and processes, but Wheelock believes few people are able go beyond the numbers to translate their meaning in terms of impact on the business.
"The challenge for many companies will be to capture the relevant metrics that will lead to actionable conclusions," says Wheelock. "Are the people with access and familiarity with the data able to compile their conclusions in a compelling way that helps senior executives make decisions? It boils down to two things: bottom-line business orientation and persuasiveness. In this regard, the objectivity and business experience of an outside consultant can be of great assistance."
Wheelock suggests looking for practices and policies that, when flexed, could have different types of effects. Does more training make a difference? How about more developmental assignments? Does training help keep people and influence the bottom line?
Showing plenty of willingness and ability, JetBlue University has created a center for Assessment, Measurement, and Evaluation (AME). "Our strategy is to educate and build evaluation capacity throughout the organization," says Teri Schmidt, manager of the AME team. Located within the College of Learning Technologies, one of JetBlue University's seven colleges, the three-person group helps supervisors, managers, directors, and vice presidents turn data about learning into action.
Jason Lei, senior analyst with the group says, "We help them generate and analyze data about their learning efforts." At quarterly roundtables, managers share evaluation success stories or ask colleagues for help with particular challenges. The AME team also offers workshops, webinars, and job aids on such topics as stakeholder involvement, needs assessment, evaluation, and effective data visualization, all geared to promote evidence-based decision making.
In addition, every two months, they meet with the directors of the JetBlue colleges to review data, identify trends, and help them make decisions regarding learning. Recently, they developed a certification program in assessment, measurement, and evaluation for leaders and analysts at JetBlue who need to do assessment and evaluation.
Get serious
The search for better metrics promises to make more provable the assertion so popular with economists and CEOs, that as other sources of competitive advantage such as capital and technology move quickly around the globe and exhibit a shorter half-life, people really are the only sustainable competitive advantage. As Bassi reminds us, "Getting serious about maximizing the competitive advantage of people requires getting serious about analytics. And you can't just dabble in it. You must do it regularly."