Tag Archives: HR analytics

Just run that HR hypothesis by me one more time would you?

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When HR tries to measure itself it always ends in tears and not just the ones running down the cheeks of the HR department: every executive who has had to endure yet another HR presentation, supposedly demonstrating its incredible value proposition, will know only too well what it feels like.  It would not be so bad if HR had learned from its previous mistakes.  Measurement is a golden rule for any organisation but the measures must be meaningful to the business and they have to follow the #1 Golden Rule, often ignored by HR departments, of sticking to a well-conceived hypothesis.

Is HR theory and practice founded on sound hypotheses?  The list of activities regarded as the unquestionable and indispensable orthodoxy of HR, the ‘givens’, includes -

  • Competence frameworks
  • 360° feedback (but including 180°, 540° and 473.5°) – OK, that last one was a joke
  • Leadership development
  • Engagement
  • Talent management
  • Diversity

All of these have been around for a while now so maybe it is about time someone checked out whether they are under-pinned by any sound hypothesis.  Let us take a fresh look, using the logic of EB-HR, to see if any of them really hold water?

The Competence Hypothesis

Every EB-HR hypothesis has to start with an intelligent question about an identified problem: this is called root cause, or cause and effect, analysis.  Presumably those who install competence frameworks believe they have a problem with the effects of management incompetence?  Yet cause and effect analysis demands that the ‘effect’ be measured, so they can only say they have a problem with incompetence if they have already measured it.  That conclusion, in turn, requires them to produce a very specific definition of competence and logically leads into that dreadful labyrinth comprised of the myriad of competencies supposedly exhibited by a multitude of managers in an infinite array of combinations or clusters. Now, even if they were able to unravel this Gordion knot of their own making, there is the equally important question of whether there is any close causal connection between these competencies and performance?  This will require an analysis of the competencies of high performing managers, showing how being competent in certain areas (e.g. negotiation, organisation, delegation etc.) causes their performance to reach a level superior to their competence-challenged colleagues.  Of course, to do this they would need a definition of performance based on a balanced set of performance indicators that could be compared between two distinct groups of managers over time (performing and non-performing) and we all know how problematic performance measurement is don’t we?  This is because performance itself is subject to the vagaries of organisational planning and market dynamics, which never stay constant long enough for meaningful comparisons to be made. These environmental complications then ultimately defeat any attempt to run a controlled experiment where answers to the original questions can be found.  Nevertheless, if the HR team soldiers on and somehow identifies a group that need some competence improvement they then incur the next practical problem of how to design individual, competence development programmes.  Plus, they would simultaneously have to run a control group of managers, who would be left to their own devices, while the target groups (incompetent and competent) were monitored. Phew!!

If this hypothesis strikes you as simple, and easy to explain to any serving manager, then good luck with your competence framework.  But remember – if your competitors are doing exactly the same then neither of you gain a competitive advantage after all this effort.

A simpler hypothesis, that addresses all of the complexities more directly and efficiently, is to regard each manager as a unique individual with their own unique combination of abilities and talents that you will never have the time or energy to fully fathom, explicate, delineate or codify.  So instead, why not just ensure each manager is regularly asking themselves a set of simple evidence-based questions:

  1. ‘What evidence do I have of our performance level today?’
  2. ‘What measure would I choose to indicate an improvement?’
  3. ‘What do I require to help us achieve that improvement?’

Please note – if the answer to question 3. is something as broad as – ‘restructure the whole department’, ‘re-design the system‘, ‘re-think the process‘ or ‘change our marketing strategy’ – then this suggestion needs to be treated with respect, systematically analysed for validity and resolved.

This hypothesis is based on 3 assumptions -

  1. We are always willing and able to improve.
  2. Everyone is allowed to voice their conclusions from asking these questions, without fear, through a systematic process for organisational problem resolution
  3. If we keep improving we will read that as evidence that we are becoming more competent.

This evidence-based hypothesis leads me to recommend that you consider ditching your existing competence framework.  Would anybody like to submit a better hypothesis for competence or any of the other ‘givens’ on the HR list?

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A travesty of EB-HR principles – A book review of Transformative HR* by John Boudreau and Ravin Jesuthasan

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Book titles can be very misleading and we are all used to reading management books that never come close to delivering on what they promise but I think this book deserves a special award for – ‘The Most Perverse use of Evidence’.

Its full title is “Transformative HR. How Great Companies Use Evidence-Based Change for Sustainable Advantage” and, by an amazing feat of inverse logic, offers the Royal Bank of Scotland  as one of its ‘great companies’ – a too-big-to-fail bank that had to be sustained by UK taxpayers because it collapsed in 2008.

Such stark evidence of failure is just brushed aside by the two authors who are blinded by the need to get this sales brochure from Towers Watson out into the burgeoning market of evidence-based HR before it is too late.  The critical reader will see that it shows serious deficiencies in the claims made by its protagonists – but then Towers Watson (or at least Watson Wyatt as was) and the University of Southern California both have previous form in this respect.

According to a 2001 Watson Wyatt survey of more than 400 US and Canada-based companies, in support of their earlier doomed product – the Human Capital Index -

“there was a clear relationship between the effectiveness of a company’s human capital and shareholder value creation. This relationship we found is so clear that a significant improvement in 30 key HR practices is associated with a 30% increase in market value.” 

This is typical correlation-speak passed off as causation but actuaries like Watson know better so they had to admit, in a similar report they produced in Europe (“HCI – European Survey Report 2000”), that while their data in North America

“… demonstrates a very strong correlation between effective people practices and shareholder value, on its own it does not prove a causal link”.

So don’t be surprised if you get different answers from different people in the same firm. I guess they realised us Europeans were not so easily fooled and so had to come clean; all the while hoping their HR clients were either too disinterested or innumerate to notice their contradictions. If you visit Towers Watson’s site today you will be treated to similar double-speak in a video from Ravin Jesuthasan himself.

Meanwhile, over in Southern California  John Boudreau, who proves that the title ‘professor’ brings with it no guarantees of academic rigour, should still know better than to say RBS clarified (p.208) -

“…the causal connections between people data and business data”

when the evidence he presents does no such thing; but then he comes from the same ‘misleading correlation’ school as Ed Lawler III who happily offers his endorsement that these are-

“two of the most respected thinkers in HR”

- without, of course, offering any evidence to back up such an assertion.

Presumably they are respected by the sort of people who provide the other testimonials for the dust jacket?  People like Stephen Corrone of Sara Lee, Brian Schipper of Cisco, Lynn Tetrault of AstraZeneca (“chairperson of the board, HR people and strategy” no less), Elaine Arden of Royal Bank of Scotland (do I detect a note of bias here?) and David Farrant of Nomura; all of whom don’t seem to mind risking their careers by associating themselves, and their employers, with such obvious nonsense.  Maybe they are just deluding themselves that this has something to do with evidence-based HR or possibly it is the sort of flannel that got them to where they are in the first place?

Perhaps it is just what their CEO’s want to hear: which is much more worrying. CEO’s of very large companies can be incredibly illogical and downright crass when it comes to strategic HR matters.  Apparently the current CEO of RBS, Stephen Hester (weho is otherwise well respected), is getting in on the act of using the wrong evidence for the wrong purpose (p.210) –

“A good deal of the communication about results of employee listening (sic) comes directly from Hester, the CEO.  That sends a message to staff that RBS takes the information gathered from employees seriously.”

Yes I think it does and it also tells them, and any investment analysts watching, that he has taken his eye off the ball of transforming the bank into one that can relieve UK taxpayers of their present burden (all £45 billion of it).  Even the CEOs of successful companies can make themselves look particularly stupid when desperately trying to be politically correct, rather than evidence-based.  Here is a quote from CEO of Coca Cola, Muhtar Kent (pp 138-139) –

“I looked at who was buying our products and found that 70 percent of our shoppers were women.  Then I looked at our workforce …. and saw a huge mismatch”

- such imperfect logic and superficial analysis led Coca Cola to create

“several programs to attract, retain and develop women leaders including the Women’s Leadership Council”. 

I am sure the women of Coca Cola are not at all patronised, and the men not insulted – at least those who were not removed to make way for the women, by such inane and misguided thinking about diversity.  Presumably they also do not mind having to have their own council or being allowed to break through the glass ceiling by dint of the fact that ‘women buy Coke’, rather than through their own efforts or abilities.  If this logic holds and women stop buying Coke does this mean the policy will go into reverse?

The architect of all HR data gathering at RBS is one Greg Aitken, who was amassing meaningless HR data at RBS as far back as 2001 – has no one told him the bank has since crashed – and did he have anything to do with it?  His sort of data has as much to do with business strategy as train-spotting has to do with the punctuality of trains.  This obsession with so-called ‘HR analytics’ completely misses the point of EB-HR and has spawned Mickey Mouse jobs for a new breed of HR-analytical nerd at respected companies like Walt Disney Studios (my apologies Disney for that awful pun but you wrote the job advertisement).

This book is a travesty – especially for those of us who want to raise standards of professionalism in HR by basing our decisions on evidence of value. For anyone who falls into that category I do have one recommendation for you – buy a copy of this book and send it straight to your competitors, if they are gullible enough it will transform them into misguided, data-chasing automatons while you steal a march on them by putting proper evidence to good use – value creation.

*“Transformative HR. How Great Companies Use Evidence-Based Change for Sustainable Advantage” John Boudreau (Professor of Management & Organization at the Marshall School, University of Southern California) and Ravin Jesuthasan (MD of Towers Watson’s Talent Management Practice)

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The devil is in the concept – A book review of ‘The new HR Analytics’ by Jac Fitz-Enz

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I have been providing an on-going critique of Jac Fitz-Enz’s work, openly and very vigorously, ever since I became aware of it nearly 20 years ago because it was so obviously limited by looking only at inputs and ‘measuring HR’ rather than business value.  In my view his work never warranted a second glance but very recently a new client sought my help on ‘HR measurement’ and asked me what I thought of this book – here is my answer.

Fitz-Enz started his Saratoga ‘HR metrics’ business in 1980 (now operated by the clones at PwC) after having worked in HR since 1969, but he never seemed to acknowledge that his data always failed to answer the simplest but most important question of all – does HR add value?  Here he continues to stumble on resolutely, blindly and with characteristic humility declaring (page 88) that -

“Adhering to my vision and sticking to my model led me to develop a worldwide reputation for measuring human capital management that endures to this day”

Not quite the assessment of his legacy reached in 2009 by The Conference Board’s report into Evidence Based HR -

“Since Fitz-Enz introduced measurement to the HR function in the 1980’s most of the focus has been primarily on measuring the efficiency of HR functions. This focus fails to address the more meaningful issues of how human capital creates value and how HR interventions serve as catalysts for improving business outcomes.”

It is rare to hear Americans admit they got it wrong but in this case even the Conference Board seems blissfully unaware of its own ‘deliberate’ mistake – one cannot judge the efficiency of something if one has not established its value – junk mail is junk regardless of the efficiency of its delivery.  So the first thing to say about this book is that Fitz-Enz has failed yet again to define the word ‘value’ even though its subtitle holds out the false promise of predicting “the economic value of your company’s human capital investments”.

So is he any more insightful in defining human capital?  If you read page 304 he describes it as -

“your employees and active contingent workers”

Hardly the “breakthrough” that this book purports to be and, after calling employees ‘human resources’ for so many years, he offers no explanation as to why this new term of ‘human capital’ is necessary or indeed what innovation it might herald.

Perhaps even more worrying for the serious reader is his attempt at distinguishing ‘analytics’  from ‘analysis’ by using both words interchangeably (page 4) describing analytics as -

“the science of analysis… the process of dismantling or separating into constituents to study.   …… analysis is taking something apart to understand it better”

There is no new analytical method on show here, just conventional, analytical thinking applied to HR.  Yet he conveniently sidesteps the most intractable issue – studying the behaviour and management of human capital in the workplace does not lend itself to conventional, simplistic, deconstructive thinking.  Reducing the psychological contract, for example, into its component parts is like separating mayonnaise into eggs and oil.  What you end up with is a mess that is less than the whole – try pouring raw eggs and oil over your salad and you will get my drift.

Let’s face it, what Fitz-Enz is doing here, and has always done, is to shamelessly product-ize (HCM:21) what should be a very serious subject.  Only the most gullible and hopelessly innumerate HR people will believe it has anything to offer them or their organisation.  More importantly, their CEO needs this diversion like a hole in the head.  Maybe that is why, amongst all of the “Praise for The New HR Analytics” shown on the inside cover, not one testimonial is from a CEO of a company that actually produces anything?

Don’t expect to learn anything new or valuable from Fitz-Enz’s “New HR Analytics”. The details in the case studies provided only serve to point up how full of holes and inconsistencies the whole concept is.  Fitz-Enz and his supporters (Dave Ulrich among them) have arguably done more damage to the cause of measuring human capital value over the last 20 years than anyone else.  So this is not a time to mince our words: unless anyone wants my third hand copy it is destined for the trash can.  Anything this far past its sell-by date is not worthy of the shelf space next to any half-decent management text.

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Judge HR by the ‘metrics’ they choose

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One of the most common HR ‘metrics’ cited by HR people is the number of HR people per 100 FTE’s (full time equivalents – employees) and this is used by HR itself and auditors (see “Primary Indicator 2″ on page 13) as a benchmark to suggest how well they are doing.  The perspective of an EB-HR manager would suggest the exact opposite.

The PwC/Saratoga/audit ‘school of thought’ – that’s being generous, it’s more a mentality – encourages HR departments to choose these ‘metrics’, presumably, in the belief that either: -

a. There is an ‘ideal’ ratio to aim for (based on what?) or
b. HR is a necessary evil that should aim to eliminate its cost (otherwise known as HR’s suicide note)

The thinking EB-HR manager does not adopt either of these views.  To them it is a meaningless ratio that tells them everything they need to know about HR teams whose primary focus is activity rather than value.  Such ratios can only have meaning when allied to indicators of output.  So the EB-HR Manager asks each member of the team what they are contributing?    Let us compare a couple of possible answers.

1. ‘I deal with 100 managers’ queries a day’

EB-HR manager’s response? - ‘Let’s seek to remove all of the causes of those queries’.

This does not endear them to the HR team, or their line managers, who have become ‘HR support junkies’.  However,  this will not deter the EB-HR manager from adopting a two-pronged approach in removing transactional inefficiencies whilst resolving the underlying, strategic causes.  For example, if one of the ‘queries’ is to do with union issues it is because the HR Strategy has failed in some way.

2. ‘I’ve been working on re-designing team roles to increase efficiency, improve customer service and save us about $100,000 a year’

EB-HR manager’s response? - ‘Great. Can I see some of the detail of how things are going? What other plans have you got and do you need more resources?’

The choices are that stark and that simple; regardless of how difficult it might be to gauge value added.  Now take another staple HR activity – hiring – and ask yourself three questions: -

a. Which ‘metrics’ should be at the very top of the priority list?
b. Which are the easiest to gauge?
c. Which would your CEO most like to know?

  • The average time it takes you to hire someone?
  • The average cost of hiring someone?
  • The industry benchmark?
  • The number of applicants per vacancy?
  • The performance of the new hires?
  • Job offers turned down?
  • How often you get the hiring decision ‘wrong’?
  • How much value they add?

The choice is yours.

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HR playing the Fool

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I was sorely tempted to write an April Fool’s piece today but instead I opted for a history lesson on ‘The HR Department’.  In case you were still wondering, this is not a site for HR people – or at least not the majority of those in conventional HR roles.  As far back as I can remember there were soothsayers predicting that HR was at a ‘crossroads’ and had to decide which path to take.  In 1991 I decided to take a very different path to the one that the other 99% of the ‘HR profession’ thought was a safer bet.  So let’s go back 20 years and remind ourselves what the current thinking was then.

1991

The precursor of the UK’s CIPD was the IPM (Institute of Personnel Management).  Its president was Barry Curnow who wrote a piece for Human Resources magazine (Summer issue) entitled -

“Measuring the intangible – performance criteria in jobs without a bottom line”.

Barry, obviously having a penchant for self-immolation, did not present the most positive face that one might expect from a professional body’s titular head.  But even in 1991 Barry was totally out of touch with the real world, which was increasingly demanding a ‘total quality’ approach to management that had to exclude all muda (a Japanese term used in the Toyota Production System for an activity that is wasteful, unproductive and adds no value) and personnel people were definitely starting to be seen, at best, as a necessary evil and, at worst, as the PC (political correctness) police.

1993

Two years later I was asked to speak at the IPM’s annual conference on the radically new theme of ‘The added value of Personnel’ (HR was still not on the scene).  Someone had finally decided that the Personnel department should at least acknowledge it had a bottom line.  Although it had not yet registered with the 500+ members in the audience: the majority of whom had bemused looks on their faces, as though I were speaking a foreign language.

The keynote conference speaker that year was Dr. Richard Pascale (“The art of Japanese Management”)  who told his audience -

“In the US people in personnel take on a psychological contract to be a victim.” (reported in Personnel Today, 9 November 1993).

So the US experience was no different apparently.

1995

By 1995 the response from beleaguered personnel departments, to all of this damning criticism, was to re-invent themselves as ‘HR’ – because it sounded more like the sort of department that might actually have a ‘bottom line’.  Yet the guy who had taken over Barry Curnow’s role, the infamous Geoff Armstrong, was having none of it.  In a book review in Personnel Today (23 February 1995) he predicted –

“In my view, it is wrong to tie strategic people issues to the HRM bandwagon.  They were around before HRM was invented, and will still be around long after its faddish label has faded.”

Whilst over-staying his welcome at the CIPD, and building a sycophantic regime that even Colonel Gaddafi would envy, Armstrong arguably did more damage to the cause of business-focused HR professionalism than any other person.  Certainly it set back the CIPD’s development by at least 10 years, IMHO.

1996

Meanwhile observers such as Thomas Stewart in Fortune magazine (15 January 1996) had a simple solution to the HR department ‘problem’ -

“Why not blow the sucker up?”

and added -

“Human resources has come to the proverbial fork in the road.  One path leads to a highly automated employee services operation…. The other leads straight to the CEO’s office.”

What he didn’t cover in any detail was what the HR director would do once they got there (having never been a strategic HR director himself).  Stewart is now the MD and editor of Harvard Business Review (HBR), a journal that has also failed to come up with an answer to maximising HR’s impact on the bottom line, despite publishing many questionable ‘solutions’ in the meantime (Prahalad and Hamel’s ‘core competence’ theory being probably the worst culprit, IMHO, although W. Chan Kim and Renée Mauborgne’s piece on ‘Blue Ocean Strategy’ gets my personal award for the most crass HBR article of all time).  I think it’s high time he blew that sucker up as well.

1998

Then Dave Ulrich turned up on the scene with his own HBR article entitled “A new mandate for human resources” where he argued -

“In recent years, a number of people who study and write about business have been debating whether we should do away with HR. The debate arises out of serious and widespread doubts about HR’s contribution to organizational performance. And as much as I like HR people, I must agree that there is a good reason for HR’s beleaguered reputation. It is often ineffective, incompetent, and costly; in a phrase, it is value sapping. But the truth is that HR has never been more necessary.”

This was a very clever article.  Ulrich knew his audience.  At a single stroke he wrote off HR departments as ineffective but then held out the prospect of a promised land, for the very same people who were so obviously ineffective, with his magic wand that would transform them all into strategic, business partners. He also remembered that when ‘personnel’ people were struggling in 1991 they were happy enough to just change their name rather than their modus operandi.  So he offered them an opportunity to pull the same stunt again, with new titles, only to suggest a full decade later, in …

2008

… at a conference hosted by PwC, that HR had failed to make his model work, rather than admit he had produced a seriously flawed model (which remains fundamentally flawed despite his more recent amendments).

Which roughly brings us up to the present day.

2011

So what are the key items on the organisational, HR agenda now, when HR no longer pretends it does not have a bottom line?*

  • Human capital management and reporting
  • Evidence based (HR) management methods
  • Tougher professional standards for HR people (SHRM is currently working on this)
  • Demonstrating added value and ROI

So, after two decades, HR has arrived right back at the same historical junction.  Of course, some HR departments have already tried to get away with their re-naming stunt once more – this time calling themselves ‘Human Capital’. Others are stuck on a vicious, circular path that always leads back to the transactional ghetto still fooling themselves that efficient transactions have something to do with value – but they are no longer fooling anyone else.

For personal development linked to this topic visit the Consummate Professional Series

*But see Ulrich’s 2003 book “Why the bottom line isn’t!”

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The un-balanced scorecard needs that human touch

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Anyone who entered the world of management within the last 20 years will have come across something called the ‘balanced scorecard’ and might even have felt its cold, damp hand on their shoulder.  Those of us who have been in management for more than 20 years saw how cruelly exposed traditional approaches to financial management, auditing and performance management were when faced with the pressures of rapid globalisation.  So we knew the foundations of management had to fundamentally change.  The main problem with change being forced though is that you tend to fall back on what you know best rather than think differently, outside of the box.  Business had become addicted to measurement and decided that the only way forward was even more measurement and this time around the balanced scorecard appeared to offer more intelligent measurement.

The history of scorecards actually goes back much further than you might realise (at least to the 1950’s) and early attempts included the notion of a ‘dashboard’ of measures; just as a pilot needs a whole array of instruments to fly a plane. The eventual popularisers of this new game were of course Kaplan and Norton (‘Putting the balanced scorecard to work’ Harvard Business Review, Sept-Oct 1993) but eventually even they realised that more measurement wasn’t the answer.  Instead of re-thinking the design of their measurement machine though they compounded their crime by bolting on an ugly, ridiculously complex and totally unnecessary gadget called the “strategy alignment map” (the one thing you could not fault Kaplan and Norton for was their alchemic ability at turning goose eggs into gold).

So why is the balanced scorecard concept still so popular today?  Obviously some of  those who use it say it works – without realising that they are not actually using a balanced scorecard (* see below).  My guess is that it allows managers to look intelligent while behaving simplistically; that’s a very clever trick to pull off.  They keep believing that as long as they follow their own set of ‘balanced’ measures they must be doing something right.  This is exactly the opposite of what it was designed for – to get managers to use their brains and think things through more holistically rather than mechanistically – to create long term value rather than short term profit and long term value requires a long term HR strategy; and appropriate measures to match.

We hear the phrase ‘human capital’ used very glibly these days (except in this series of course) as though we are all mature managers now and understand how to get the best out of this most problematic resource.  Kaplan and Norton’s nod to the problem of people management revealed itself in their ‘innovation and growth’ box of measures. Yet Norton himself confessed, in a foreword to ‘The HR Scorecard’ (another Harvard ‘golden egg’ by Huselid, Becker and Ulrich, 2001) that it is always this ‘people measures’ box that companies find the most difficult -

“ … the worst grades are reserved for their understanding of strategies for developing human capital.  There is little consensus, little creativity, and no real framework for thinking about the subject.  Worse yet, we have seen little improvement in this over the past eight years.”

Of course he didn’t offer any solution during those 8 years to the very problem that he and Kaplan had set for their clients.  If he took another look today he would find the situation has not improved and his endorsement of the ‘HR Scorecard’ proved to be yet another empty promise.  So the performance management ‘experts’ (sic), who still promote the balanced scorecard, dashboards and prisms have yet to provide the right ticks in their own boxes. *This means that after nearly twenty years there has never actually been a balanced scorecard – only a three-quarters, unbalanced version.

The real irony here is that the ‘people box’ has to be the most important ingredient in all performance measurement and management systems, so human capital measurement and reporting is the only genuine innovation to have arrived on the scene in the last 50 years.  But because HCM is about human beings, who don’t always want to be measured or made accountable, and would rather play the system than make it work – it will never succumb to a simplistic, tick box mentality.

So, in summary, the balanced scorecard -

  • Doesn’t balance – and doesn’t acknowledge that value management comes from the whole system working well, not just its component parts
  • Emphasises the need for innovation and growth (and therefore organisational learning) but doesn’t offer any way of capitalising on the latent, creative and innovative behaviour of human capital and
  • Tries to deconstruct what creates value but, in doing so, often destroys it (you try putting deconstructed mayonnaise on your burger and see how you like it)

But apart from that it’s a really great idea.

For personal development linked to this topic visit the Consummate Professional Series

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EBM is not an academic exercise

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Whatever EBM is or isn’t, in the absence of any universally accepted definition, it is safe to say it should be about improving outcomes, results and value.  While none of those words are explicitly mentioned in the title of this new discipline we should assume that ‘evidence based’ means improved performance and ‘management’ is the means to this desirable end.  However, management practices have to be applied in the real world rather than academic theory.

Academic research and studies might have a very important part to play in EBM but the evidence-based manager will be acutely aware of the difference between evidence-based HR theory and evidence-based HR practice.  In order to highlight the difference let us look at one particular study sponsored by the Work Foundation – “People and the Bottom Line” (Report 448 – P Tamkin, M Cowling, W Hunt; Institute of Employment Studies, 2008).  This is a 222 page report which concludes (page xvi) that its findings: -

“demonstrate that organisations that adopt an integrated range of HR practices, captured by the 4A model*, are likely to perform better on key indicators like profit and sales growth”.

(* their own model)

So is this an example of EB-HR Practice, EB-HR Theory, both or neither?

The answer is very simple – causality is everything to the EB manager (they want to know what works) and this research fails this most basic of tests because it was based on a questionnaire after the ‘HR practices’ had already happened – it was an ex post survey.  Yet to be a true EB-HR study it would have had to be ex ante; that is, HR practices would have to have been specifically designed to have a direct, causal influence on existing Baseline measures of ‘key indicators like profit and sales growth’ before any questionnaires were sent out.  This most obvious, founding principle of EBM – gather your Baseline data first – seems to have completely eluded the writers of this report

Then there is the ancillary question of when, if ever, does a report like this actually change management practice? If an employer read this report, and decided that the ‘4A Model’ had something to offer, they might try to put the model into practice, for example, by looking at Table 1 on page xv – “The Key 12 Measures” where they would spot -

“Ability – 4. Proportion of workforce that have a current personal development plan”

- and probably then give every employee a personal development plan (assuming they knew what an effective PDP looked like and were skilled enough in producing one).

Or they could go to page xvi and look at “Table 2 – Key processes” showing -

“Ability 1. The organisation evaluates development in a systematic way”

- without any guidelines from the authors that ‘systematic evaluation’ has to start with a Baseline measure – thereby encouraging more management activity rather than evidence-based practice.

The paradigm for this sort of pseudo-science is riddled with flaws but the oddest feature of all is this – why would a company already using HR practices be willing to let a quasi-academic body tell them whether their practices are working or not?  Either management trusts its own practices (in which case they don’t need approval) or they don’t (so why are they doing them in the first place?)  The world of non-evidence-based-HR can seem quite bizarre at times but the reasons why such odd behaviour persists is quite plain when you look at the motives behind the protagonists.

Governments around the world still generally subscribe to the notion that all education and training is ‘good’. The key sponsors of this particular research include government departments responsible for business and enterprise (BERR), Innovation Universities and Skills (DIUS) the University for Industry (UfI) and Skills for Business as well as the UK-government funded Investors in People. Most of these owe their very existence to such simplistic concepts that equate ‘good’ people management with good performance. This explains the following admission in the report (p.5): -

“Inevitably there are compromises between what ideally we might wish to measure and what is possible. For example:

Qualifications are used as a proxy for skill, and a broad brush one at that. Not all investments in education are considered equal in the labour market e.g. arts degrees have much lower returns than science degrees.” **

- and explains why the report is obsessed with asking questions such as: -

“How many of your managers are educated to degree level?”

So if the report is not about EB practice can we at least assume that it is on firmer ground, theoretically at least, with its methodology for statistical analysis ? Apparently not – their conclusion on page xvi also states that: -

“Whilst this research was not intended to demonstrate causality, it has laid the ground for future work that could do so by providing a tested set of measures that were both acceptable to employers and shown to relate to performance.”

In essence, they infer that their statistical analyses point to a correlation between HR practices and performance. They then hold out the forlorn hope that enough correlations will eventually demonstrate causation. Well, there might just be a strong correlation between the number of academic studies purporting to show that HR practices affect performance and the number of HR practices in use.  However, a better explanation might simply be that this is just a circular argument – researchers choose companies that are performing and assume it must be something to do with HR practices, because if it isn’t then they are out of a job – otherwise known as you scratch my back and I will scratch yours.

So what did you expect from non-evidence-based academics, researchers and politicians – integrity?

** compare with ‘New Report Smashes Skills Gap Theory’

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