At HCMI, working with and talking to HR and business leaders around the world, I am frequently asked “what is the best metric” or “what is the most important metric” with which to measure the workforce. This seems to fit the state of business today, best represented by HR and business leaders thinking, “I just need a quick answer or a quick win”, which could be loosely translated as “there is not enough time to invest in this issue so please just give me the bottom line answer now.” What is missing is the reality check to say, there is no magic metric that will do it all, show the value of HR, link business to financial results and be the perfect HR scorecard measure. This mindset of the quick and dirty metric that meets the need now, would certainly never fly in a hospital emergency or operating room or for diagnosing illnesses.
In fact, this search for the magic metric seems to be founded more in expediency and self-interest than in any established practice. It starts to make sense however, when one considers the typical organization, with complex HR systems, a wealth of unreliable HR data, no metric standards and no in-house expertise to shine a light of reality onto the situation. As a career analyst, former CFO and long time practitioner of HR workforce analytics/measurement let me offer a simple point of clarity. There is no magic bullet, especially for a difficult journey without standards (think no road signs, pavement or lights) and more importantly, taking shortcuts saying you don’t have time to do it right, trust me, will leave you plenty of time to redo it again and again later when the quick win fails.
Why not? Why can’t there be one metric that works for everyone? Well, what if we think of the workforce as a multidimensional collective group of unique yet similar productivity generating resources, aka a highly complex system, like the human body? Well what happens if we were to ask a doctor what is the 1 magic organ and if we were to take care of and carefully measure one and only one organ in our body what organ should it be? The doctor might say something to the effect of, “there are many critical organs in the body all operating in harmony. A problem with any one organ can be fatal or can cause other organs to malfunction any one of which, can be fatal.” Really, who among us trusts or wants our health measured by a single metric. I know I don’t. So why would we try that in human capital analytics or workforce planning?
How about if we start to think about workforce analytics, HR measurement and workforce planning as more of a holistic, inter-related web of dimensions with specific metrics and measures identifiable along the way much like an interlaced web. In this manner, a significant change in one area of the workforce via an HR intervention, policy or practice would have a ripple effect on other areas of the talent management life-cycle. Thus a change to pay practices would affect hiring, retention, internal mobility and engagement. A change in internal mobility could impact hiring, retention, engagement and ultimately conflict with the compensation practice change, like freeway lanes running into each other, causing career collisions and adding to the perception that HR is siloed, disconnected and clueless.
How to fix that? Align HR practices with key strategic business goals as unified HR, not functional HR, map out likely workforce impacts by life-cycle dimension in modeled scenarios. Oh yes, modeling future based scenarios and their impact on important metrics. Sounds hard, not really, it’s just a different approach – called workforce planning, and that, is the magic.