Question Details

(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




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




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




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








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




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




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




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




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




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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