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Analytics Pioneer Calls HR Execs ‘Stuck in the Past'

In an age when employers are collecting more workforce analytics than ever before, why are some HR departments still frustrated by a lack of usable insights? The answer is that too many HR executives use the data to examine past performance and don't proactively look to the future, says Jac Fitz-enz, founder and CEO of Human Capital Source and a pioneer in workforce analytics.

Question:	You've said that after evolving in the use of basic metrics, benchmarking, and dashboards, workforce analytics "has kind of gotten stuck." What's the problem?
Jac Fitz-enz:	Almost everyone's focusing on the transactional or efficiency measures of HR, such as the cost of hires, how long it takes to fill jobs, how many people you train, et cetera. These are all lagging indicators of what happened in the recent past within the HR department. And that's where companies have gotten stuck. That's not where the game is today. The real issues today is, how do we manage tomorrow?
Question:	How do companies get "unstuck"?
Jac Fitz-enz:	They must develop leading indicators. The interesting thing is that there's a potential to turn some lagging indicators into leading indicators. For example, absenteeism. We know from the studies I did in the '80s and '90s that there's a six-month gap from the time that absenteeism starts going up in an area to when turnover starts going up in that area. So if absenteeism was 2 percent last year, and we see it rising now to 2½ percent, we know that we are going to have a turnover problem of that magnitude. So that's one indicator.
Question:	What other predictors should companies look for?
Jac Fitz-enz:	Turnover also can be a leading indicator. Knowing that turnover is 15 percent doesn't mean anything. But if you analyze it, then you can ask, "What effect has a rise in turnover had on our business in these various units or job groups?" Then we can begin to extrapolate for the future. Let's say that in the technology group the result of higher turnover is that release dates on software are falling behind. We don't have enough programmers and the systems analysts to meet our deadlines because they've quit. So we know that if we act now and we cut that turnover down by doing whatever is appropriate, then we can see an improvement in delivery times and release dates. That turns into more revenue because you've got a product on the market. You begin to see the value of this data for the future as opposed to just knowing that turnover went up 3 percent last year. Other leading indicators are employee engagement, leadership, and market reputation.
Question:	Are tools available to collect and analyze data in the ways you are talking about?
Jac Fitz-enz:	There's plenty of behavioral science and computer technology out there in terms of software and models to do the kinds of things I'm talking about. The issue is that HR doesn't have a single operating model for applying the data. By that I mean that you've got the staffing people doing their thing. You've got the training people focusing only on training. You've got compensation running its show. And nobody is talking to anybody else. Everybody's got tools and capability, if they are smart enough to use them. But they're not used on any kind of integrated basis. That's why we're developing a model to address this.
Question:	Is this an organizational model? How does it approach this integration challenge?
Jac Fitz-enz:	We call it HCMM, for the Human Capital Management model. It looks at external forces, such as competition, how technology is evolving, and the condition of the general economy. Then internally we look at a company's vision, its brand, strategies, and initiatives. We combine these two and analyze what the effects will be on key areas, including the expected effects on executive-level managers, professionals, and technicians. We can look at the organization and ask, "Do we have to go through a major transformation to deal with this, or do we just have to make some small changes?" Then we can look at the methods we've used in the past to recruit and develop people and ask ourselves if they're appropriate in the future.
Question:	What's next?
Jac Fitz-enz:	Once our processes are up to speed we deliver services in an integrated manner. This means that all HR functions plan together, recognizing their interactions and interdependencies.
Question:	Is that where it ends?
Jac Fitz-enz:	There is one more step. That is, measuring performance and looking ahead using leading indicators and intangible metrics. Now, you have a function that is managing tomorrow, today; instead of yesterday.

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