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(solution) his is chapter 2 of an HR book that needs to be summarized into


his is chapter 2 of an HR book that needs to be summarized into two to three pages. I just need a brief summary that can be handed in as a business report not an academic paper.

please see the attached file. 


Human Capital Analytics: How to Harness the Potential of Your

 

Organization?s Greatest Asset

 

By Gene Pease, Boyce Byerly, and Jac Fitz-enz

 

Copyright © 2013 by Gene Pease, Boyce Byerly, and Jac Fitz-enz. 2

 

Alignment A s enior manager hoping to in uenc e behavior has no

 

s tronger lever than his or her c hoic e of meas ures .

 

Scott Anthony, Mark Johnson, Joseph Sin eld, and

 

Elizabeth Altman, An Innovator s Guide to Growth 1 A lignment is a popular topic of conversation in human resources

 

today. Yet few HR leaders are able to follow through on true

 

alignment with their business. So what is alignment? Alignment

 

is a plan that explicitly connects investments to strategic goals via

 

the metrics. Alignment is about nding the relevant stakeholders

 

in the company and connecting them to the parts in that plan.

 

Alignment positions human resources as a strategic partner in support

 

of the business. To follow through on alignment means that HR

 

understands and helps drive business goals (rather than the converse,

 

where business drives HR goals). It requires a fundamental shift in

 

thinking from HR as a cost center to HR as an investment, a business

 

partner, and an important seat at the C-suite table.

 

It is crucial for HR to design people investments that drive business

 

goals. We do not think HR can design those investments without

 

systematically evaluating and improving on the impact of those

 

investments on key metrics. For human capital investments to be truly

 

successful, they must be aligned with business goals and, ultimately, to

 

the organization s strategy. Organizations spend billions annually on c02 24 September 2012; 12:11:40 human capital investments. All too often, HR interventions are

 

designed without business outcomes in mind. Although they may be

 

worthwhile investments, in and of themselves, the money is wasted if

 

the investment does not make a strategic connection back to the

 

business.

 

The value of alignment is multifaceted. To be considered a strategic

 

partner is certainly good for HR s reputation, but more important, it

 

ensures that HR is driving business performance. If you investigate

 

leading companies, you will learn that the vast majority of them

 

have aligned their HR functions with business strategy. Laurie

 

Bassi has de ned the good company as an organization that is a

 

good employer and a good steward for the interests of its community.

 

Bassi puts this concept to the test by managing an investment

 

fund, Bassi Investments, that has invested in these good companies. Its

 

fund has outperformed the S&P 500 during the last 10 years. Her

 

conclusion is that companies that invest in their people outperform

 

their peers.2

 

Finally, alignment enables you to measure and improve the

 

investment s impact. The alignment process outlined in this chapter

 

involves de ning success for an investment, gaining stakeholder buyin to the indicators of success, and ensuring that success is measurable.

 

Doing so reduces the risk of the investment by designing for the outcomes you want to drive and assuring the support of your business

 

partners whom will be impacted.

 

Not every human capital investment is going to drive bottom-line

 

pro tability. For example, many investments are purely to satisfy

 

compliance issues. There are also cultural investments that contribute

 

to maintaining corporate values and a certain type of workplace. These

 

are seen as worthwhile if the business leaders have placed an emphasis

 

on these types of cultural issues. Also, a strategic connection back to

 

the business does not have to mean pro ts. Succession planning and

 

leadership development initiatives are vital to the future of any

 

organization, but they are more dif cult (although not impossible) to

 

link to a nancial metric. We still consider this a type of alignment,

 

even though the investments to which the key performance indicators

 

link are intangible. c02 24 September 2012; 12:11:41 THE STAKEHOLDER WORKSHOP: CREATING THE

 

RIGHT CLIMATE FOR ALIGNMENT

 

At the beginning of a measurement project, we gather key stakeholders together for a formal stakeholder meeting to ensure that

 

people investments are aligned with business outcomes and strategic

 

goals. Typically a half-day in duration, these meetings use a guided

 

discussion format to de ne measurable success for the investment and

 

collaboratively design the measurement plan (details of which will be

 

addressed in Chapter 3). Gaining the key stakeholder insights is critical

 

for making sure your HR investments are aligned with organizational

 

goals, but it also has a secondary purpose that is equally important. A

 

goal of the discussion is to gain the key stakeholders buy-in to the

 

investment itself and the logic underlying the plan for measurement.

 

Doing so ensures that stakeholders are part of the process, rather than

 

potential critics later on. The guided discussion follows the Measurement Map process (also described in Chapter 3) as a way to visually

 

describe the chain of evidence from investment to business impact to

 

strategic goals. An important point here is that the discussion does not

 

begin with the question, What metrics do we need to track? Rather it

 

is about de ning measurable success rst and creating causal links

 

between the investment and the strategic goal(s). Once that is done, it

 

is relatively straightforward to identify the metrics and data sources

 

needed for measurement. ALIGNING STAKEHOLDERS

 

Stakeholder alignment is HR s tool for aligning with the business.

 

Aligning the stakeholders allows you to bene t from the expertise of

 

the people affected by the human capital investment, while gaining

 

their buy-in to the investment and its measurement plan. Stakeholder

 

alignment ensures that the logic behind your study design will resonate with business outcomes. Stakeholder alignment offers a forum for

 

hearing the stakeholders individual issues and concerns. Stakeholder

 

meetings can also tell you if the links between leading indicators and

 

business results are accurate. The important issue is that stakeholders c02 24 September 2012; 12:11:41 need to discuss the behavior they need from their employees, the

 

observable (that is, measurable) parts of a business process, and how

 

the parts can inform actual strategic decisions and behaviors. You will

 

also need their help to get the necessary data. You may be surprised by

 

how much you learn from their collaboration for many companies, a

 

measurement stakeholder meeting is the rst time these particular

 

individuals have been in the room together (or on a Web conference,

 

if they are in dispersed locations). By initiating this type of crossfunctional gathering, HR can play a role in breaking down organizational silos and encouraging collaboration among business units.

 

Stakeholder alignment is best sought at the outset of planning for an

 

investment. Even if you did not get stakeholder alignment before

 

deploying the investment, stakeholders participation in developing a

 

measurement plan is still essential to successfully evaluating business

 

impact.

 

Stakes are high simply because people in complex organizations

 

have different points of view and biases. Bringing them together may

 

surface the hidden con icts, so you must be able to navigate a variety

 

of opinions and skepticism. Sometimes people disagree over how to

 

de ne success, hesitate to commit to speci cs, or disagree over what

 

metrics should be involved. This can re ect a hesitancy to have one s

 

own work reviewed. Others show a well-meaning but misplaced

 

respect for individuals and their privacy. Statistics are about how

 

groups of people are likely to perform, not a judgment on individuals.

 

When group impacts are measured through optimization, an investment is usually of value to at least some of the groups being measured.

 

Groups that do not bene t may be relieved of having to participate in

 

training that doesn t help them or may receive some new investment

 

tailored to help them succeed.

 

As you lead a stakeholder meeting, our preferred method is to

 

lead an appreciative inquiry into the interests and contributions of

 

the group. Appreciative inquiry (AI) is an organization development

 

method that emphasizes what an organization does well, rather than

 

eliminating what it does badly.3 AI asks questions such as, What is

 

working well? and What is good about the current set up? AI

 

focuses on three key activities: discovering, dreaming, and designing.

 

Bringing out those aspects and addressing sources of con ict and c02 24 September 2012; 12:11:41 skepticism will create buy-in and enthusiasm for the investment and

 

its attendant measurement plan. WHO ARE YOUR STAKEHOLDERS?

 

There are several components to planning a successful stakeholder

 

meeting, beginning with the attendee list. An incomplete gathering of

 

stakeholders may result in a measurement plan that is incomplete,

 

which weakens the evidence of business impact. The attendee list for a

 

stakeholder meeting will understandably vary, based on the structure

 

of the organization and the investment itself. In general, the stakeholders are those interested in the outcomes and improvement of

 

the investment, as well as those who can help identify and gain

 

access to the data necessary for a measurement initiative. They will

 

be drawn from both the solution providers (e.g., the HR practitioners

 

who are responsible for the investment) and those who bene t (e.g., the

 

operations managers whose departments participate in the investment).

 

There are several main reasons to include individuals from outside

 

the HR group:

 

Alignment is about getting the company to work together as a

 

team. The process requires information and buy-in from

 

different areas about what the strategic goals are, what the

 

outcomes are, and how they can be measured.

 

People outside HR may have expertise (and strong feelings)

 

about the objectives of the human capital investment. Both

 

their expertise and their feelings are important. Representation

 

of the group or business unit whose investment is included is of

 

particular importance.

 

Data can come from multiple places in the organization, and

 

different stakeholders can provide access to it.

 

There are people outside of HR who make decisions, such as

 

whether to cut, maintain, or expand funding. They are likely to

 

be interested in the results of the measurement project. Some

 

people like to be surprised with results from a study. Most

 

people do not like to be surprised with results from a study, so

 

including them at an early stage is important. c02 24 September 2012; 12:11:41 Cost and valuation issues may be crucial for gaining acceptance

 

of the results of the impact study by anyone outside of HR. If so,

 

your estimates and assumptions should be vetted with the

 

parties who have expertise and a stake in the process.

 

Remember, although your analysis techniques may be beyond

 

the understanding of the audience for your eventual report,

 

value estimates almost never are. A dispute over a value estimate can derail an otherwise excellent report on the impact of

 

an investment.

 

Consider which stakeholders are appropriate for the particular

 

investment. If you are designing a new immersive sales training

 

simulation, you will want to consult a few of your colleagues in the

 

sales department. After all, they are the ones sending their direct

 

reports to the training and are hoping to realize a bene t from it. For a

 

leadership development investment, consider who will feel the effects

 

of the program division managers, perhaps? Beyond these specialty

 

participants, involve representatives from nance, business operations,

 

eld operations, and IT (as they are typically closest with the data you

 

will need) as applicable. Consider everyone who will be directly

 

touched by the investment and those whose cooperation you will need

 

to obtain data.

 

In general, participants for the stakeholder meeting will come from

 

HR department (including training personnel, if applicable)

 

Subject matter experts

 

Finance

 

Operations/IT

 

Management

 

Most measurement projects will offer opportunities to express

 

results nancially. When you design a measurement plan, strongly

 

consider your source for nancial information and involve a knowledgeable stakeholder early in the process. For example, if the investment

 

is a sales training program, you should involve the VP or the director

 

of sales someone who understands the metrics the sales department

 

uses to measure the performance of its people. Bringing these individuals on board early in the planning stages either for the investment c02 24 September 2012; 12:11:41 itself or for the measurement project enhances credibility and

 

cooperation within an organization. Disagreement about nancial

 

assumptions can challenge the credibility of the results of any measurement project, thereby calling into question the credibility of the

 

investment itself.

 

When building a stakeholder meeting invitation list, it is important

 

to ask high-level stakeholders about the source of their data. It is often

 

the case that a trusted subordinate has been providing business intelligence to an executive for some time; if that is the case, that individual

 

should be included. These subordinates may have the word analyst or

 

database somewhere in their titles and know what data are available in

 

the organization, as well as how and from whom to get data. Once you

 

have attained the political buy-in to gain access to data, the person

 

with his or her hands on the data is the most direct route to receiving

 

what you need. When the data analyst working with you connects to

 

this person, that s when a project really shifts into high gear. WHAT SHOULD YOU ACCOMPLISH IN

 

A STAKEHOLDER MEETING?

 

Participants will often say that the stakeholder meeting is one of the

 

most productive working sessions they have attended. We prefer the

 

word workshop, because it has a collaborative, exciting feel. It would

 

seem obvious to get people together from disparate parts of the

 

organization to occasionally compare notes, but, as you likely know,

 

other priorities often interfere with doing so. After all, getting eight

 

people together for a four-hour meeting is almost a week s worth of

 

productivity. The conversations on business processes that occur during a stakeholder meeting can reveal new relationships and viewpoints

 

with bene ts well beyond the investment and measurement project.

 

Human resources and learning functional units hear their goals being

 

stated in clear, unambiguous language that speaks to the concerns

 

of the business as a whole and moves beyond the day-to-day details of

 

managing a department. The units of measurement are one of the best

 

ways to talk about what concrete aspects of behavior are desired.

 

Aligning an investment in people with business outcomes and

 

communicating about those goals in a common language is the chief c02 24 September 2012; 12:11:41 accomplishment of a productive stakeholder meeting. These goals are

 

what we refer to as the de nition of success for the investment.

 

A stakeholder meeting should leave everyone with a clear idea of what

 

needs to be measured, the value of that information, and what could

 

be done with it. When the meeting is complete, there should be a clear

 

understanding of the following points:

 

The intended outcomes of the investment.

 

Who the participants in the study are (i.e., the audience for the

 

investment).

 

The relevant metrics and sources of data.

 

What demographic variables (e.g., tenure, location, education)

 

are useful, in the sense that they

 

Affect the values of the metrics.

 

Are fair game for decision making.

 

Mediate or affect the value of any interventions being

 

studied.

 

A list of existing data within the organization relevant to the

 

project, as well as any data that need to be collected for the study.

 

Hypotheses about the measurement project that make concrete

 

predictions and can be veri ed or falsi ed.

 

A whiteboard or a ipchart is invaluable for capturing progress and

 

creating the measurement map of your goals. At the end of the session,

 

a camera phone can be used to capture the material written on boards.

 

Keep in mind that any information generated can be useful in some

 

way, even if there are important questions that cannot be answered.

 

Many organizations simply accept missing data, instead of formulating

 

a plan to collect and share that data. However, you may be in a

 

position to propose new data collection mechanisms. Situations with

 

important missing data represent opportunities for improvement.

 

A simple question can open the conversation: What would you

 

like to see people do differently as a result of this investment?

 

The answers will start broad; for example, for sales training, we want

 

to see our reps sell more products. For a leadership development

 

initiative, we want to see our managers become more effective c02 24 September 2012; 12:11:41 leaders. For a performance management program, we want people

 

within disparate divisions to feel like they re part of a uni ed whole.

 

Don t worry if, at this early stage in the meeting, these goals are vague

 

and unquanti able. At this point, you want to get your stakeholders

 

ideas owing and ensure that everyone has a common understanding

 

of what the investment is trying to accomplish. Once you have gained

 

agreement on these high-level goals, you can take steps to make sure

 

they are measurable.

 

Once the big ideas are on the table, probe deeper. If managers

 

complete the leadership development initiative and become more

 

effective leaders, how will we know it? What types of things might

 

they do differently than they are doing now? What business problems

 

related to the targeted audience s performance would you expect this

 

intervention to solve? A good motivator is to ask whether the stakeholders believe that investments cause desired change simply as a

 

matter of pure faith or whether there are things they see in the world

 

around them. Pure faith, for business initiatives, is never the answer.

 

Once observable behavior or facts become the focus, the necessary

 

attitude is in place to follow those changes.4 A simple question to ask

 

is, How would you know if that happened? These objectives can be

 

organized into measurable and nonmeasurable outcomes.

 

Measurable outcomes are those that have some speci c quantity

 

that can be counted. You may describe your goal as improving sales

 

without describing the exact variable to be considered. Study other

 

bene ts as well, such as retention or increased engagement. Although

 

these may not be built into the fabric of the program, they are typically

 

effects of a successful investment.

 

Our process focuses on tangible, quanti able outcomes, but there

 

are plenty of good reasons to invest in people that are not so measurable. If there are nonmeasurable outcomes, explicitly list them. Just

 

because they are not measurable does not mean they cannot be

 

articulated. Some nonmeasurable outcomes would include

 

Transforming company culture

 

Improving communication skills

 

Enhancing leadership skills

 

Gender and diversity awareness c02 24 September 2012; 12:11:41 Sometimes when articulating the nonmeasurable outcomes,

 

metrics may become apparent. This allows you to move them to

 

measurable outcomes. The best approach is to assume that an outcome

 

is measurable and give it considerable thought before determining

 

otherwise.

 

Once the goals are clear, it is important to gain agreement on an

 

estimate of how much of a difference in impact or behavior is expected.

 

What performance improvements can be realistically expected from

 

various investments? Could a job aid reduce errors in a call center by

 

5 percent? Is a sales increase of one unit per person, per month possible

 

because of the investment? Committing to speci c numbers may make

 

your stakeholders uncomfortable, but it is an important discussion to

 

have. First, it makes the stakeholders articulate and visualize what they

 

hope to achieve with the investment, so it will create subtle changes in

 

how they feel about the investment itself. Second, if the project does not

 

produce signi cant results in a particular area, there are methods for

 

examining the data to determine what results could have been detected.

 

For example, when you know a little about the data and some statistics,

 

you could say that a 5 percent improvement could have been detected or

 

a 15 percent improvement could have been detected, but not smaller

 

ones. That allows you to have a broader, more interesting dialogue about

 

sample sizes, as well as whether the training might be producing positive

 

results, but ones that are too small to appear in your analysis.

 

It is best to phrase these changes as hypotheses so that speci c

 

questions can be answered in a concrete way, rather than simply

 

talking about investigating areas and seeing what arises. Your

 

hypotheses should be able to be proved or disproved with data.

 

Writing hypotheses makes everything more concrete: What data need

 

to be collected? What questions need to be answered? What actions

 

are foreseeable after analyzing the data and answering the questions?

 

Rather than saying, I want to know if sales training works, think

 

about some focused questions:

 

Does the sales training produce an increase in units sold?

 

Does the sales training produce an increase in per-unit

 

pro tability? c02 24 September 2012; 12:11:42 Is sales training more useful for associates in large stores or

 

small stores?

 

Can salespeople relate positive anecdotes about using something they learned?

 

From these business questions, you may develop as a hypothesis:

 

Sales training will produce an increase in units sold and per-unit

 

pro tability. Once all hypotheses are de ned, you are ready to start

 

discussing what, speci cally, to measure. DECIDING WHAT TO MEASURE WITH YOUR

 

STAKEHOLDERS

 

There are a number of curious facts affecting measurements. First, the

 

fact that people know they are being measured tends to make them

 

behave differently. This was rst noted during a study at AT&T s

 

Western Electric plant in Cicero, Illinois, and is referred to as the

 

Hawthorne effect.5 Workers who were subjected to better lighting

 

conditions improved in productivity. The rst assumption was that

 

better lights were responsible until a control group that received

 

poorer lighting also improved. Further manipulations con rmed that

 

the workers simply responded to the attention that they were receiving.

 

When measurement is mixed with incentives, the measurement

 

itself may become questionable. If you incentivize for the wrong thing,

 

the results can be disastrous. The Department of Defense once measured programmer productivity by the number of lines of code written.

 

On some level, this may be useful, although software engineers have

 

long known that for any given problem, concise, elegant code beats

 

redundant, sloppy code any day of the week (although sloppy code has

 

far more lines). One company rewarded programmers for the number

 

of bugs xed in the common code library. This led to programmers

 

checking their code into the common library early so that bugs they

 

would have xed previously on their desktop could be credited in

 

their metrics.6

 

Measurement can happen at many levels and in many ways.

 

Consider customer satisfaction: you can count retained customers, c02 24 September 2012; 12:11:42 count the number of new referrals, send out a survey to customers,

 

interview random samples of customers, count hits on the support

 

section of the website, or count the costs on returned products. Metrics

 

that have a concrete count and a dollar value are business metrics, and

 

those that predict or indicate the underlying phenomena, such as

 

potential sales in a pipeline, are leading indicators.

 

An important point to remember here is not to limit yourself to the

 

data you think are easily accessible. Consider the broader scope of what

 

you would like to learn (i.e., your hypotheses) and what data sources

 

are needed in order to do so. The data may come from across the

 

business not just within the HR department. Gaining an understanding of what information is available and what is required to

 

gain access to it is another key goal of the stakeholder meeting.

 

Ideally, you should pull together the owners of the necessary data or

 

at least the people who can make political connections for you to

 

gain access to it. We explore this in much greater detail in Chapter 4.

 

When an investment has a direct line of sight to business goals, it

 

is rather easy to ensure business alignment. For example, sales

 

training is generally deployed to increase revenue, new accounts,

 

and/or gross margin. Customer call center training is intended to

 

decrease average call-handling time or escalation of calls to a

 

supervisor or to up-sell a product or a service. In each of these cases,

 

the value of the desired business result is rather easy to calculate. Yet

 

how do you align investments that have an indirect line of sight (i.e.,

 

the softer HR investments)? Leadership development programs

 

generally take a long time to deploy and have less obvious business

 

outcomes. The same could be said for mentoring...

 


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