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HR analytics: gunning for a medal

Peter Reilly  20-10-2016

The Military was one of the first users of analytics to improve decision making under the auspices of operational research. About a thousand staff were so engaged during World War 2. A whole range of studies were successfully conducted especially on the optimal deployment of forces and effective use of weaponry. They also produced a famous counter intuitive conclusion for RAF Bomber Command. The Air Marshals wanted more armour be added to the most heavily damaged areas of returning planes. The OR group pointed out that it was the planes that did not return that were relevant: damage in those that returned could obviously be managed. They suggested putting armour where there was no damage in the returning bombers. The RAF chiefs were guilty of what has become known as ‘survivorship bias’ focusing on the visible (survivors) whilst ignoring the invisible (failures). Rafael Behr comments in The Guardian ‘This turns up in politics as a habit of looking for the key to future success at the site of victories, while neglecting evidence buried in the rubble of defeat’[1].

Increasingly these days analytics is being used in sport to improve performance. Take two examples. On his success at golf’s US Masters, the winner Danny Willett credited the firm the 15th Club for their help. The latter company grew out of football analytics and now helps golfers with such things as on course ‘strategies’ – eg based on performance statistics of past results when it is prudent to ‘lay up’ short of the hole or when is it worth going for broke by ‘attacking the green’.

The advantage of using data is that it makes decision making more reliable less subject to whim. South African golfer Bobby Locke (four-time Open winner) used to say ‘drive for show, put for dough.’ But the facts do not bear this out. Prof Mark Broadie of Columbia Business School has researched this topic and concluded that the effective use of irons and woods matters more than putting. This is because professional golfers can nearly always ‘make’ short puts and generally miss long 21 foot plus puts. It is only the medium length ones where there is variation.

Another relevant sporting example is Sir Dave Brailsford former head of UK cycling and now Director at Team Sky. He believes in the benefit of the “aggregation of marginal gains”. This suggests that real attention to detail (regarding riders’ equipment, clothing, health and facilities) can yield cumulative benefits through a series of small performance improvements.

So what do these examples from the military and sport tells us about HR analytics? Firstly, many organisations do not make fact based decisions. They do not gather evidence to guide their strategies. They rely on anecdote, manager gut feel or prejudice. How many organisations using appraisal based performance related pay can show how they drive improved organisational performance. Many managers believe their PRP system to be effective without any proof[2]. As American consultant Andrew Lebby put it: ‘Just as it is easier for some parents to show love with gifts rather than hugs, it is often easier for organisations and managers to show gratitude with money than with words’[3]. This is despite the fact that research suggests that performance ratings ‘reveal more about the rater than they do about the ratee'[4]

What about absence. If there is a problem, does HR know whether high levels are due to a small number of employees with lots of absences or a large number of staff with few absences. A client organisation of ours had a major attendance issue but could not answer this basic question making its attempts to solve the problem speculative at best.

Another illustration of the absence of fact based decision making comes from resourcing. How often do organisations look to see how effective their recruitment process is? So, do they test say over five years not only how many staff remain but have they met their diversity targets, as well as performance and potential expectations? A cohort study we did for a financial services company revealed a serious case of cloning whereby all the non-standard staff (by gender, ethnicity, age, qualifications etc) disproportionately resigned leaving only those who looked like the corporate norm: the company was blissfully unaware of its diversity failures.

Secondly, how many organisations work hard enough to counter half-baked management theories, as the OR team did to challenge the RAF top brass? For example, some organisations believe you should only hire the best ‘talent’. Enron offers a cautionary tale of simply recruiting good people without thinking through how best to use them[5].Minbaeva and Collings[6] name this as one of the ‘myths’ that afflicts talent management: thinking of the workforce supply and ignoring demand. As they point out, you have to think about how to deploy people in a way that is good for them and for the organisation.

Thirdly, do organisations properly interrogate the data to understand correlations let alone causation. Take employee surveys, too often there is superficial and high level analysis. So we know staff do not feel well paid but this differ by age, gender, grade, occupation, service etc. More detailed enquiry might turn up that some groups are more satisfied than others and this might give a clue as to how to make things better for the majority. A London borough we worked with did just that in an employee value proposition survey and was able to pinpoint who was disengaged and on what.

Finally, how often oriented are we to small improvements to help continuously improve our performance? I suspect we rather prefer the silver bullet to solve all our problems. Instead, as we are told about management and leadership capability: ‘There is no single form…that enhances performance in the same way in all situations, and no single way in which management and leadership development creates this capability.’ [7] Where there is some hope it is in those improvement methodologies that dig deep to find answers (like a well executed Six Sigma exercise). Here, if followed through there can be the in depth analysis of a work area and detailed proposals on how to remove redundant activities and enhance others.

Both the sporting world and before that the military demonstrated that the pressure to succeed drove them to find solutions to problems impacting performance or to find ways of achieving results better. The HR function could learn the same lesson that organisational performance can be enhanced by focusing on the pressing workforce problems, coming up with evidence based decisions and my seeking continuous improvement (revolutionary incrementalism[8]) rather than big bang interventions.

[1] Behr R (2016) Labour’s answers lie in its losses, not its victories, The Guardian, 25 May

[2] Pfeffer J and Sutton RI (2006) ‘A matter of fact’, People Management, 28 September

[3] Lebby A (1993), ‘Rethinking rewards’, Harvard Business Review, November-December

[4] Mount M, Scullen S, and Goff M (2000) Understanding the latent structure of performance ratings, Journal of Applied Psychology, vol 85, # 6. And London M eds (2001) How People Evaluate Others in Organizations, Psychology Press

[5] Gladwell, M. (2002) ‘The talent myth,’ New Yorker, 22 July

[6] Minbaeva D & Collings DG (2013) Seven myths of global talent management, The International Journal of Human Resource Management, 24:9

[7] Burgoyne, J, Hirsh, W and Williams, S, The Development of Management and Leadership Capability and its Contribution to Performance: The Evidence, the Prospects and the Research Need, Research Report 560, Department for Education and Skills, 2004

[8] After Prahalad CK and Hamel G (1990) Competing for the Future, Harvard Business Review, May/June. They argued for business transformation that was ‘revolutionary in result and evolutionary in its execution.’

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