Why Having HR Measurements is No Longer Enough to Grow HR's Strategic Role

John Boudreau

Professor, USC Marshall School of Business

When Google Analytics debuted in 2005, the ability to look under the hood, and see who was viewing your website (and for how long), was all at once foreign and exciting. In fact, it was so exciting there was a waitlist to access it—for nearly a year. Over a decade later, our collective obsession with metrics and analytics remains: data reigns supreme across industries with promises to improve strategic decisions.

A common trap with metrics is believing that their mere existence is strategic. Sure, the ability to track things like revenue per employee or time until promotion is enticing, but it's not strategic if these numbers aren't applied in ways that improve strategic value. Often, executives are satisfied with simply having HR analytics platforms—wrongly believing the numbers themselves were the "strategy."

The important distinction between having analytics and getting results with them was clearly evident in the latest round of data from the ongoing survey that I conduct with my fellow USC professor Edward E. Lawler III. For two decades, every three years, we surveyed HR leaders from over 100 U.S. companies about a wide array of features of their HR function, and how those features relate to their role in organizational strategy.

In earlier versions of our survey, those who reported having more measures also reported a stronger strategic role. The measures themselves distinguished HR as being strategic. Our most recent survey showed a marked shift in the pattern: having the measures did not relate to a stronger strategic role, only the results of the measures did.

Why is Strategic HR Associated More With HR Measurement Outcomes—But Not Their Existence?

The strategic role of HR measurement and analytics is maturing. Merely having them used to be strategically distinctive, but now that seems to be a minimum expectation, and it's the outcomes that matter more. The paradox for HR leaders is that it is often much easier to show that the metrics exist, than to show how they create strategic and functional outcomes. The temptation is to equate "strategic" HR metrics with "more comprehensive or available" HR metrics, but our data suggest that is increasingly a false equivalence.

So, how can you create more outcomes with your HR metrics and analytics? One option is to rate yourself on the outcomes we measured in our survey, such as "Connect human capital practices to organizational performance" or "Measure the business impact of HR programs."

The following questions identify necessary conditions for achieving measurement outcomes. Consider which ones you could improve:

Condition #1: Are the key decision makers actually receiving and using your HR metrics and analytics? Who are those key decision makers?

Condition #2: Do those key decision makers use the metrics to improve pivotal decisions? What decisions are improved?

Condition #3: Do those improved decisions enhance your strategic success? What is the strategic outcome?

Creating high-quality and accessible HR metrics is hard work, and it's tempting to assume that simply creating HR metrics leads to strategic partnership. Our research suggests that may have been true in the past, but today, a stronger strategic role requires that you go further — achieving strategic and functional outcomes.

Find out more in Chapter 7 of Human Resource Excellence, my forthcoming book with co-author Edward E. Lawler, III.

Photo: Twenty20

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