An article by Nick Kemsley (above) on Personnel Today earlier in 2013 triggered a debate about whether focusing on risk was putting too much emphasis on negative HR interventions, associated with cost cutting, when HR leaders should be promoting the added value of HR in positive terms. Kemsley is co-director of the Centre for HR Excellence at Henley Business School.
The principles behind Kemsley's practical suggestions apply whether an HR leader puts the emphasis on risk or instead on positive impact when making the business case to chief executives. So there is a case for using risk as a way of gaining the ear of business leaders who might otherwise give HR strategy a low priority. Kemsley's recommendations are not an idle opinion, but based on recent research by the Centre for HR Excellence at Henley Business School . The findings therefore reflect the views of HR leaders and business leaders.
The research found that 90% of HR leaders see leveraging data and metrics as a significant challenge.
In a two-part article published on Personnel Today this month, Kemsley takes a further look at how HR can use data and metrics to boost the value and credibility of the function. He says:
"HR functions need to focus on providing insight, not just information, to align etrics to business goals and to examine outcomes at least as much as process metrics."
Kemsley's aim is not to be prescriptive about what every HR director should do in every organisation or promote a proprietary approach but to:
"...map out a checklist for examining and pragmatically overhauling your approach to data and metrics. These are not so much solutions, because one size does not fit all , but a sensible set of questions and considerations which, if applied, will develop insight and present opportunities for an HR function to add real business insight through data, and therefore build its own credibility."
Other recent research discussed on Employment Intelligence this month has shown that HR is still struggling with proving its worth. The HR's Strategic Effectiveness 2013 Annual Report from HR Insights/World Trade Group in association with the Institute for Employment Studies (IES) surveyed HR leaders in 277 organisations. The study found that 85% of all respondents experienced difficulties in quantifying HR's business impact and were struggling at using data and metrics.
Kemsley's practical approaches fall under six headings, which are explored in more depth in the original Personnel Today article (which is broken into part one and part two):
1. Identify the insight needed to underpin strategy delivery and manage organisational risk
2. Understand the decision making data your Board needs to support shorter term performance
3. Determine the critical gaps between this, and what you currently provide
4. Find the most pragmatic way to plug the gaps
5. Optimise the format in which the data is presented
6. Develop the right skills to analyse and talk about the data
This article is the latest in a series on using data and statistics more effectively in HR, available free on Personnel Today.
To give you a flavour of the Kemsley's practical guidelines, the first step follows:
Identifying the insight required to underpin strategy delivery and manage organisational risk
THE RIGHT QUESTION TO ASK: "What are the organisational risks which can impact strategy delivery, and what is the best way of validating and monitoring them?"
The key words here are organisational risk. Instead of asking "What data do we have which we would like to present?", we instead need to deduce the type and format of data and metrics which will best support an understanding of organisational risk.
When your CEO and CFO talk to analysts, shareholders, potential investors and your employees about the strategy of the business, and make promises about performance, there can be no confidence that any of this will come true without a solid understanding of the organisational risk - since every business has a strategy, and what ultimately differentiates between winners and losers is the ability of a business to activate strategy through organisation.
EXAMPLE - if your business strategy hinges around the acquisition of a more innovative, creative type of person in key areas, then strategy delivery depends on your ability to put these specific skills in place at the right time in the right quantity. Your CEO simply wants to know if this is going to be easy or hard to do, whether it is likely to impact any of the growth promises made, what is happening to mitigate any risk and if these activities are on track.
You need to know if supplying against this skills need poses a significant risk, if you have the downstream talent supply pipeline to attract this kind of person, and the internal culture to retain them. This may require changes to reward processes, flexible working policy, supplier choice and employer branding which mean that you need to start work now, rather than later. Going forwards, you will need to share data on your effectiveness in hiring these specific skills, how employer perception is shifting, and how retention is improving - perhaps at the expense of sharing the earth-shattering news that the percentage of women versus men in the organisation has not changed radically from last month's figures.
It may be that this organisational risk analysis has already been completed in your organisation, but chances are that if you haven't done it, it hasn't been done. The key deliverable for any HR director is a comprehensive view of how people and organisational risk is being managed in the context of the strategy. Yet often, what HR functions present to their boards does not speak specifically enough to the strategic plan, and in some cases it is hard to find a meaningful link at all.
If you wish to gain a top-level view of the organisational risks relating to the strategy, apply an organisational model such as the Seven S Framework based on Japanese management and developed in the 1980s, or similar. It doesn't matter really which one you use since they are broadly similar, but it should allow you to interrogate your strategy/business plan and make a decent stab at the following questions:
• What are the organisational implications of the strategy on resources, structures, facilities, systems, processes, skills, behaviours, employee engagement? This gives you a picture of the key strategic enablers which your organisation has to deliver to support strategy.
• How do these implications compare against current capability, which are the biggest gaps, which are the hardest to bridge? This draws out the critical organisational risks.
• How do these compare against existing support function strategies - this helps you iterate and align HR and IT strategies to better address these risks?
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Comments (2)
Best to leave risk management far outside realm of HR who hardly able to read and interpret financials and very few have had business experience especially in emerging markets as country line mangers will eat HR analytics for breakfast particulary from those with little exposure cross functionally.
Posted by John Ludike | February 20, 2013 2:27 AM
Posted on February 20, 2013 02:27
Rather sweeping statement here, John, although I dare say you're right that this is an area where HR practitioners may have a development need. They might also benefit from exposure to other functions. If the analytics can really be 'eaten for breakfast' then it would be interesting to see some examples. If you want to expand on these comments then get in touch.
Posted by Noel O'Reilly
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February 20, 2013 5:02 PM
Posted on February 20, 2013 17:02