HR Strategy

From Metrics to Meaning: Finding Value in Evidence-Based HR Systems

HR has always been about the numbers. Now, evidence-based analytics are allowing savvy HR practitioners to separate the nuance from the noise.
— By Sharon Ross

For decades, executives around Canada have been able to rely on their HR partners for numbers. How many employees were hired last year? What are the turnover rates? How many met their goals? What is the variance to budget on the wellness program? Yet for all the numbers HR teams provided, when it came time to make decisions or strategic moves, it often still felt like organizations were operating in a “gut instinct” and reactive model.

The numbers were noise, basically. Without being analyzed and interpreted, activity reports and budget metrics could not stand up to an influential executive’s view or inform a harried manager’s rewards program. Fortunately, a new shift toward evidence-based practice in HR offers the chance for companies to change the quality of the conversations with their HR partners and dramatically improve their bottom-line outcomes.

What’s the Evidence Saying?
According to the Institute for Employment Studies, HR teams typically operate with few resources, limited time and even more limited information. There is incredible pressure to provide a “quick fix” as soon as possible, even when spending a few moments on the evidence could dramatically change the recommended course of action.

All too often, says ScienceforWork’s Michael Vodianoi, HR teams are facing vehemence or obedience-based management systems. In vehemence systems, a loud, brow-beating executive runs the show, and without hard data to fight back, HR teams get steamrollered. The same goes for obedience-based systems, where “because I say so” is taken as law.

Breaking out of both of these situations – time and resource constraints, plus a lack of executive understanding – requires HR to have a leg to stand on in the conversation. Evidenced-based analytics can provide this foundation by giving HR teams solid talking points, black-and-white illustrations of options, and efficient frameworks to cut through noise. In this way, HR teams can snap out of gut-instinct and reactive, personality-driven decision-making. Plus, studies suggest that it is not just the HR team who benefits from an evidence-based approach.

Who Benefits Most From Evidence-Based Analytics?
Evidence-based analytics, or EBHRM, offers benefits to employees, employers, and key performance stakeholders. Naturally, HR departments benefit as well, since HR Director Canada notes that a move toward evidence-based practice dramatically boosts departmental credibility. However, in this case, it is a win-win for everyone involved.

Employees benefit from evidence-based practices because EBHRM offers meaningful answers to measurable questions. According to Iain McKendrick, VP of HR Strategy and Planning at Volvo, evidence-based practices offer employees solutions that respect their talents. By researching incentive plans at similar employers, for example, HR teams can design more effective and impactful reward systems, giving employees the right kinds of recognition at the right times.

Employers benefit, too, because EBHRM creates competitive advantages. For example, McDonald’s was able to analyze team demographics and determine which mix of ages contributed to a 20 percent rise in customer satisfaction, while the Royal Bank of Canada ran the numbers to determine exactly which C-suite strategies correlated with branch-level performance. More satisfied customers, better business performance … EBHRM can certainly make an employer’s life easier!

Major stakeholders also reap the rewards of EBHRM. By optimizing organizational performance in the real world, evidence-based practices create profits that can be reinvested, more satisfied employees, and sustainable businesses that provide stability and strength to their communities. In this way, shareholders, workers’ families, and the entire economic ecosystem can thrive together.

What’s Ahead for EBHRM in Canada and Beyond?
While KMPG’s most recent analysis of the EBHRM space in Canada still describes it as embryonic, there is already enough of an impact being felt that significant investment is on the horizon. Over the next few years, more than 82 percent of senior executives plan to increase their use of data and analytics. This means expanded systems as well as increased investment in HR teams who understand how and when to apply evidence-based methods.

There is incredible pressure to provide a “quick fix” as soon as possible, even when spending a few moments on the evidence could dramatically change the recommended course of action.
The main roadblock to EBHRM implementation, ironically enough, is a negative perception of the HR function itself. In KMPG’s survey of Canadian businesses, approximately 55 percent of executives declared that they were skeptical of HR’s ability to follow-through on an evidence system. They doubted whether these new, improved systems would make a difference.

Conversely, 32 percent of HR practitioners cite “corporate culture” and executives themselves as the biggest obstacle to establishing a functional EBHRM system. They claim that executive teams fear the challenge enhanced data might bring to the status quo, and fear the potential gaps in current practices that might be exposed with smarter data analysis.

Clearly, trust issues are something both sides will need to work through. The hope of EBHRM champions is that the numbers themselves will be able to do a significant amount of the hard work. After all, even when emotions are running high, metrics and proper data analysis can provide an unassailable third voice … one that may be capable of leading both sides to common ground in the best interests of their organization’s performance and talent.

However, EBHRM is adopted willingly or reluctantly across the board in Canada, but global adoption rates paint a crystal-clear image of the future. Mature markets and firms looking for more efficiency and competitive advantages are voting with their feet and their dollars for EBHRM systems. Talent and capital fly to where they are treated best, and treated with best practices.