Jeremy Shapiro

Why Managers Don't Use HR Metrics

What HR can do to get the most from their metrics

HR can produce compelling metrics for the enterprise, but many times the data are ignored, unappreciated, or unused, and fail to help companies, no matter how detailed and accurate they are.

According to Jeremy Shapiro, Senior Vice President, Hodes iQ, if you understand why managers don’t use HR data, you can change the way the company operates. In his recent article for IHRIM.link, Please, Stop Running Work Force Analytics!, he outlines the three main hurdles to properly utilizing HR metrics. 1) Managers’ preference for narratives over numbers, 2) A reluctance to measure human capital, and 3) The lack of any lasting effect of reports on senior staff.

We stopped by the Hodes Corporate Offices in New York to talk with Mr. Shapiro about numbers that lie, building trust, and the importance of black swans.

Q. Why should HR care about management using the metrics that they provide? What’s in it for HR?

That’s a legitimate question. Across most corporations, there is a buzz about the concept of “business intelligence,” which is the use of data within a company to create strategic advantage. They do this by using data to create better insights than their competitors. Marketing uses business intelligence to better target profitable clients. Operations uses it to understand where there are breakdowns in processes causing inefficiency.

Human Capital data is not measured as thoroughly, however human capital is a major component of any company’s operation. If HR can’t speak the language of business intelligence in the coming years, we may get left at the door within the executive discussions we need to be in. To compete, we need to provide actionable insights to management about the state of human capital: and that’s all about metrics.

Q. You talk about data losing the conflict with managers’ intuition. In the business world, shouldn’t numbers always win?

I’ll tell you what, I’m a metrics guy, and I’m not willing to cede my job to a spreadsheet. Data, even when presented with the best of intentions, can lie. Experienced managers know this. For example, if you look at a pipeline of new business and you see that the pipeline is 5MM over your projection, should a manager celebrate? It depends… if the 5MM is all from 1 prospect with a 10% chance of closing, then no. If it’s due to 100 prospects, then yes. That’s why managers don’t trust data without context.

We do the same thing with HR metrics – we show the manager an incomplete picture of HR data, that doesn’t lend itself to actionable intelligence. Time to fill is a classic example of this. We present a number for the entire company for time to fill. How is that an actionable number? It’s not, and managers know it. Present them with a department by department time to fill and you may see changes in the organization.

Here’s the difference between an effective presentation of information vs. an ineffective one: effective presentations show a manager the context of the metric, how it was analyzed, what the goal was, and some intuition on what to do next.

Q. You mention in the article that trust is an important component in ensuring that managers use HR data. Why is that?

Turns out that all of us humans tend to act like humans. And trust is important in everything that humans do when they have to depend on each other. Remember that trust game where you fall backwards and people need to catch you? If I’m about to use someone else’s data to make a career altering decision, you’d better believe that I’m going to need some degree of trust in your capabilities and the quality of the information that you’ve provided to me. If you expect me to act on your data, show me that you know what you’re doing so I don’t make the wrong decision.

Q: Are there any practical suggestions you can make to an HR user without a lot of technology or a ''reporting expert'' supporting them?

Sure. And by the way, most of us don't have reporting support anymore. I actually started my work in HR metrics about a decade ago after I realized no one else was producing the metrics we needed to compete for and retain our talent.

First, keep your metrics simple and clearly show what formulas and assumptions you are making when sending out a report. Next, I always like to open up the raw data on averages like time to fill to look for nonsensical data, like negative time to fill. Did we go back in time and hire someone?

My last quick idea is this: learn pivot tables in excel. A lot of people fear pivot tables. However, it’s not too hard to grasp the basics, and when you don't have a lot of technology to lean on, it'll save the day. Honestly, even if you use a full ad hoc tool like we use in Hodes iQ, pivot tables are still a great help. Once you get the hang of them, you'll never let go.

Q. How do you ensure that the data gathered is going to be useful and relevant to senior staff?

By taking the time to ask them what’s important. Usually, we take the reports we happen to have and send them to everyone. You can formally determine the critical metrics management needs, or do it informally.

Also, if we only look for what we expect to find we miss out on discovering something new and perspective-changing, the black swans of HR metrics.

Q: You mention black swans a lot when talking about the usefulness of data. What do birds have to do with metrics?

That caught your attention, huh? I’m a big fan of Nassim Nicholas Taleb. He wrote a book (The Black Swan, Taleb, Random House) about understanding information we receive about the world in a different light. A Black Swan is a totally unanticipated event that changes the way that we think about a certain topic, whether it’s in business or in the world at large. We all expect that swans are the color white, until the first time someone sees a black swan.

It occurred to me while reading the book that we need to rethink how we use data to build insights. Sometimes we lose valuable information about the future by relying on bell curve-based statistics. (I’m personally on an anti-“mean average” rant because I think it doesn’t do HR one bit of good reporting time to fill and voluntary turnover data the way we do.) It’s a fun read – even for a book about statistics. By the way, there really are black swans. They live in Australia.

Jeremy Shapiro is Senior Vice President at Bernard Hodes Group, where he co-manages the Hodes iQ Talent Management Suite, an award-winning e-recruiting tool (www.hodesiq.com). He is co-author of the HR Metrics book Ultimate Performance (Wiley, 2007). He has guided hundreds of companies in implementing talent acquisition systems and has collaborated with dozens of clients to get the most out of metrics tools using the Hodes iQ product suite. Prior to joining Hodes, he worked for Agency.com and HarperCollins. He holds an M.S. in Information Systems from NYU Stern and a B.A. in Economics and History from Rutgers University.