By giving up the quest for ROI, can HR make itself indispensible?

For too long HR has laboured under the belief that if it can somehow conjour up tangible performance figures, it’s future as a strategic influence on the organisation will be guaranteed.

A recent HR Magazine article by Chris Roebuck highlights the ongoing search for hard numbers to back up the continuing existence of the HR function:

“How many HR functions have presented a clear case to their FD on the financial value they are likely to be adding? How many have identified specific initiatives that have delivered specific value to improve service to end users or customers?”

In seeking to show value, the result is that HR practitioners have been taking a macro view of the organisation, striving to provide a similar service to the organisation as the finance department in terms of crunching numbers and applying a uniform approach to their areas of responsibility, hiring, firing, talent etc.

Without doubt, analytics are here to stay and are likely to play an increasingly important role in organisational planning and development. For example, Cathy Missildine-Martin has a blog post about a recent HR Magazine article by Dave Zielinksi that looks at the composition of Google’s HR team:

“ 1/3 of the HR team have HR backgrounds and bring expertise in employee relations along with other specialist expertise like benefits and compensation. 1/3 of the HR team has little or no HR background and come from strategic consulting firms or internally from Google’s sales and engineering departments. These individuals are embedded in the business as consultants. 1/3 of the HR team are the quant jocks. They are statisticians, PhD’s in finance and organizational psychology. Their job is organizational analytics especially the predictive kind.”

There are a couple of interesting things, firstly that 1/3 of the HR team has little or no HR background. This emphasises the fundamental need for a commercial understanding of the business. Secondly, the analytics are supplied by specialists in esoteric and complex areas such as cognitive heuristics. I was particularly interested in the emphasis on predictive analytics. This flies in the face of the traditional dashboard type information gathered and processed by the HR department. Unfortunately most HR departments don’t have the budget, infrastructure or data required to appoint such specialists.

A further example of the role analytics are here to stay and that advances in technology and creative thinking are bringing new insight into organisational performance are highlighted in a blog post by Gautam Ghosh:

“Many companies favor job candidates with stellar academic records from prestigious schools – but AT&T and Google have established through quantitative analysis that a demonstrated ability to take initiative is a far better predictor of high performance on the job.”

However, no matter how smart you are, the use of such analytics is unlikely to move HR up the corporate totem pole. Furthermore, the majority of HR professionals lack the necessary skills to drive this forward. Analytics are here to stay, but only as an offshoot of the HR function.

A question we keep coming back to is, is there an argument to be had that the way to get a strategic role is to give up the macro, organisational wide view and instead concentrate on micro issues? Alternatively, by giving up the quest to show ROI, can HR instead make itself indispensible?

This entry is an extract from Four Groups’ Quarterly Update, originally posted here.

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