Analytics is to HR what Google Paid Search was to Advertising
We have all heard the joke where the CEO is asked about the effectiveness of his company’s advertising programs and says “I know that half of my advertising works, I just don’t know which half”. This adage was sadly true for most of the history of modern advertising. Companies knew that they needed to advertise and spent a lot of money doing so, but didn’t know what worked and what didn’t. Sounds a lot like HR training programs today, right? But then Googles innovation around “paid search” changed the advertising industry forever. Even though the old adage is still true for many forms of advertising, advertisers now know that it is at least possible, using paid search, to fully track ones ad buy and measure its effectiveness. If I sell boots I can easily measure the effectiveness of my ad spend on Google – someone searches for boots, clicks through to my site and I pay Google for the “warm lead”. Simple and transparent.
People Analytics offers the same promise to HR.
If we jump back about 100 years we see the birth of the modern organization as we know it today. As corporations moved from a founder/entrepreneurial one to a larger organization exemplified by the likes of Ford and Standard Oil, managerial needs changed. Out of this evolution arose two forms of Human Resource Management Theory. The first, Scientific Management sought to break each job down into its smallest component and then “scientifically” calibrate each of those tasks to achieve maximum efficiency. This worked great in the factories of the time where people performed very specific jobs on an assembly line. Today scientific management is the key to many retail jobs. The efficiency of movement and action in a McDonalds restaurant means the difference between delivering a meal to a customer 5 minutes after they order or 10. It is the difference between customer satisfaction and customer alienation.
A second management theory that was also born in the early to mid 20th century was called the “Human Relations Movement” and was based on the theory that workers needed to be happy, teams needed to have strong communication, employees needed to be engaged by their work, leaders needed to exhibit certain traits and so on and so forth. The thousands of hours employees spend doing team building and leadership training and the like are all based on, and stem from, the theories found within the Human Relations Movement.
And similar to advertising before the disruptive innovation of paid search most of us as business leaders find it hard to measure the impact of these programs. Like the CEO referenced at the beginning of this post most of us would say “I know many of these HR programs work, I just don’t know which ones work, who they work for or when they work”.
One of things that analytics promises us is the ability to measure and track the effectiveness of these programs. This will allow us to invest in programs that will deliver the most bang for the buck and impact the bottom line and to cut those that are a complete waste of time. Analytics will help us understand not only “what” programs work but “when” they should be applied. The possibilities are tremendous and will have as dramatic of an impact on the HR field as paid search did for advertising. It is truly revolutionary.
