The document discusses HR's value and the level of organizational maturity needed to properly measure and analyze HR's impact. It argues that immature HR focuses too much on easily measurable activities and outputs, while more sophisticated analysis requires viewing HR through the lens of business objectives. True value is determined by factors like quality of hires, integration, and long-term human capital development. The document advocates adopting standards and principles from fields like medicine to bring more scientific rigor to HR measurement and establish causal links between people practices and business outcomes.

1. HR Norge – ‘HR Analyser’ – 4th June 2014
‘Analysing HR’s value’
Paul Kearns
Chair
IHRM
www.hrmaturity.com

2. “… everyone rushes out to do
everything and produces a huge
amount of information that isn’t
very useful. We stopped doing a
lot of data reporting because it
was meaningless. We were
creating reports that no one read.”
“The temptation can be to develop
a swathe of reports based on
information that is easily
accessible, but this sort of
information can be of limited value
and the volume of it can
overwhelm and turn off business
users.”
“HR for HR’s purpose as opposed
to business purpose. ….HR is
about supporting the organisation
to be better, and the purpose of
the organisation is inevitably to hit
business metrics.”
http://www.hrmagazine.co.uk/hr/features/1144056/hr-add-value-analytics

3. HR’s value is determined by the level of organizational maturity

4. What is HR’s Value?
Value is the provision of a product or service
that satisfies a human (societal) need: from
cans of beans to treatments for disease.
Added Value means : -
• Providing more of these products/services (more
beans, more treatments) per $
• Reducing the cost of these product/services
• Achieving a higher price (more revenue) for them
• Improving their quality (nicer beans, more effective
treatment)
©Paul Kearns 2014

5. SOCIETAL
VALUE
Professional
Standards
Better
‘Scientific’
Analysis
Evidence-
Based
Measures &
Indicators
A Professional Measurement Framework
©Paul Kearns 2014

6. “Some years ago a senior executive in charge of talent
management ….called me to request my help as she
set about, at the request of her CEO, to design a
program for the bank’s “high potential” people.
‘Why did she need a program?’ I asked. Was there
evidence that the bank was losing more talented
people than in the past, or more than its competitors -
in other words, was there any evidence of a problem?
That’s the state of play in human resources today -
mindless imitation of what others are doing, little to no
systematic evaluation of the effectiveness of
management practices and programs, infrequent data-
driven diagnoses of the problems HR is expected to
address - in short, little of the professionalism now
almost taken for granted in medicine, to take just one
example.” Foreword by Professor Jeffrey Pfeffer
Evidence-Based HR/Management

7. International ‘HR standards’ – SHRM/ANSI/ISO TC260
or ‘Investor metrics?’
Measure HR activities?
Norway is one of 23 participating countries

8. UK - CIPD/BSI – Attempting to set human capital standards

9. Ask questions
Do background research
Construct hypothesis
Test with experiment
Analyse results:
draw conclusion
Report results
Think!
Try again
Hypothesis is true
Hypothesis is false
or partially true
HR must adopt a
Scientific Method

10. • Why measure? (Management of standards,
compliance, value and added value)
• What to measure? (Regulations, minimum
standards, added value)
• How to measure?
• Who should measure?
• What to report?
Intelligent Measurement – simple rules

11. Measurement - principles and language
It’s not so much about ….. But more about …
Data Evidence
Information Decision-making
Analytics Analysis
Correlation Causation
Metrics Measures
Numbers Indicators/contraindicators
Historical Predictive
Performance Value
©Paul Kearns 2014

12. • Why measure cost? – should it go up or down?
• What to measure ? (1) – should it be the quality
of the person we hire?
• What to measure? (2) – or should it be how they
are performing?
• What to measure? (3) – or maybe how well they
are integrated and managed?
• How to measure? – do we measure past
performance or predict future performance?
• What to report? – the value of human capital
Is ANSI ‘Cost per hire’ (47 pages) a good ‘metric’?

13. Stage 2
Good
Professional
Practice
Stage 3
Effective
Management
Stage 4
Human Capital
becomes integral
to business
operations
Stage 5
Transition:
operational
to strategic
focus
Stage 1
Personnel
Administration
Board & Executives resistant
to measuring human capital
value
Stage 6
Organisation
becomes a
whole system
Stage 0
No Conscious
People
Management
©Paul Kearns/IHRM
STRATEGICREACTIVE
HR Maturity Analysis
http://www.hrmaturity.com/a-simple-introduction-to-the-maturity-scale/

14. Six Stages of mature HR measurement – ‘Hiring’
• Stage 0 – Vacancies filled
• Stage 1 – Cost per hire/Time to hire
• Stage 2 – Suitability & Quality of hires
• Stage 3 – Performance of hires in position/team
• Stage 4 – Level of integration into processes/structure
• Stage 5 – How hires are developing/progressing
• Stage 6 – Whether hires are reinforcing whole system?

15. So where is HR analysis today?
“Incorporating ESG and human
capital into company analysis and
valuation”
www.omratings.com
Stage 6 = AAA