Archive for the ‘Metrics & Analytics’ Category

 By Dr JT Kostman, Global Leader of Human Capital Analytics at AIG and speaker in the ‘Metrics & Analytics’ stream at HR Change & Transformation 2013, 26 September, London

It turns out that in business, as in life, Darwin was right. Those organisms best able to adapt to their circumstances are the only ones destined to survive.

As the world becomes increasingly complex, and the resources needed to ensure survival become ever scarcer, species have a tendency to divide along preordained lines. Some adapt, thrive, and survive – while others simply go the way of the Woolly Mammoth. Large, lumbering, and unable to accommodate to a new way of life, the unfortunate non-adapters wallow for a short time in antiquated obsolescence, and then… poof. On to the next species. History simply turns the page.

Over the past hundred years or so, the Human Resource profession (as it is called in its current incarnation) has undergone more changes than most organizational functions. From humble beginnings as a part of Payroll at the inception of the Industrial Revolution, Labor Relations took center stage in response to increased unionization in the 1930’s, while the birth of Personnel Departments coincided with increased opportunities for employee exploitation in the 1940’s. It was nearly 1950 before the American Society for Personnel Administration (ASPA) gave way to the Society for Human Resource Managementand those 28 founding fathers began to sound the clarion call for a newly formed “profession” that should claim its “rightful seat at the table.” Despite a brief blip from the Positive Psychology folks at the beginning of the extant century (in efforts to cash in on the Maslovian notion of Eupsychian Management, and its modern incarnation, Employee Engagement), that is where things have stood – with one notable additional wrinkle.

Sometime in the 1970’s (no one remembers exactly when; we were distracted by dangling disco balls, powerful pharmaceuticals, and polyester suits), the corporate world was beset by the PC Police; and Political Correctness, in all its ignominy, found its home – guess where – in HR. With corporations reeling from the social salvation brought about by Civil Rights Movements, Feminism, and Fair Employment Legislation,  companies were finally being brought to heel and made to account for their historical inequitable treatment of… well, everyone; with the possible exception of the middle-aged well-educated white males who held every position of economic worth. In capitulating to this overdue shift in attitudes, the Titans of Industry did what they do best; they threw money at the problem, closed their collective eyes, and hoped it would go away.

HR Departments, it was decreed, should serve as ex officio ombudsman for the exploited masses yearning to be free – while keeping the peasants as far from the corporate castle walls as practical. While the resultant democratization of opportunities proved to have a positive impact on most areas of organizational life, in HR itself, the pendulum seems to have swung too far afield.

HR, let us agree, has perhaps the most crucial charge of any function in a modern economy. When the means of production, profit, and perpetuation of the organization shift from land to labor, people are the indisputable profit drivers. Whether the product is a product, knowledge, or service, the sole strategic differentiator in most modern organizations rests with the skill and will of the workforce. So if HR services have become so crucial, what are the reasons – as Fast Company deputy editor Keith Hammonds offered in a 2005 cover story – Why We Hate HR.

While Hammonds’ article still bears re-reading (despite countless panel discussions, the profession still seems to have not heard his message), there is an additional reason for the increasingly institutionalized contempt for Human Resources that Hammonds failed to cite, and which many of our colleagues have failed to consider: The revolution of evolution.

Every corporate function that has proven its continued worth has eventually matured to realize a degree of specialization; an ability to blend with business needs to occasion a sort of managerial meiosis. Consider the bifurcations that have been occasioned within most of the critical corporate functions: Payroll spawned a complement in Finance; Sales begat Marketing; Technology gave rise to Analytics; and the spinoff of the CEO’s operational responsibilities found a much needed home under the auspices of the COO. In a similar vein, it is long past time for HR as a profession to introspect and examine what it does well – and divest itself of its complement.

While the increased egalitarianism that has come to pervade most modern organizations has made an indisputably positive contribution, the increased maternalization of the HR function in many organizations has left them with little more than cloisters of nattering nannies that bear a disturbing resemblance to a perpetual episode of The View. With a seeming self-anointed charter to infantilize employees, tell everyone to eat their vegetables and not run with scissors, and cluck knowingly at the “children” in their charge, many HR Departments have lost sight of their raison d’être; to serve as facilitators for effecting profits through people.

While this trend has become increasingly prevalent in organizations that have succumbed to ad infinitum meetings of the HR equivalent of the Red Hat Society®, there are those who have resisted institutional emasculation and are increasingly coming to embrace their role as true stewards of Corporate Human Capital.

The Corporate Leadership Council recently reported on a growing contingent of CEOs and Senior Executives in the most forward-thinking organizations who have “seen the light”; supplementing the transactional necessities of traditional HR with the transcendent and transformational capabilities of metrics and analyses via Human Capital Analytics (HCA). Organizations in every sector – from Financial Services and Pharmaceuticals, to Consumer Products and the Public Sector – are increasingly following the lucrative lead of thought-leaders at companies like Google, who now ensure that, “All people decisions . . . are based on data and analytics.”

While the transition from the traditional perspective of policing, punishing, intuiting and assuming, gives way to the transformational tools of science, analyses, and understanding, there will no-doubt be holdouts.  As Upton Sinclair once offered, “It is difficult to get a man to understand something, when his salary depends on his not understanding it.” But as CEOs and Senior Executives increasingly come to recognize the extraordinary benefits that come from a rigorous approach to Human Capital Analytics, the jig may be up for those HR Departments that stubbornly cling to the past – and inevitably become extinct.


JT Kostman PhD, July 2013

Speaking at HR Change & Transformation 2013, London – download the full brochure

Dr. JT Kostman is an Industrial & Organizational Psychologist, Mathematician, and Data Scientist. He recently served as Global Leader of Human Capital Analytics for AIG – that is, until he saw the light…