Making Human Capital Analytics Work: A book review by Bob Morris

Posted on: August 3rd, 2015 by bobmorris

Making Human CapitalMaking Human Capital Analytics Work: Measuring the ROI of Human Capital Processes and Outcomes
Patricia Pulliam Phillips and Jack J. Phillips
McGraw-Hill (2015)

How to connect HR to business, predict the value of HR initiatives, and optimize the value of human capital

Up front, I want acknowledgement my agreement with comments by Rodd Wagner in his latest book, Widgets: The 12 New Rules for Managing Your Employees As If They’re Real People: “Your people are not your greatest assets. They’re not yours, and they’re not assets. They are someone’s son or daughter, brother or sister, mom or dad. They’re people — people for whom you have a crucial stewardship and with whom you are building a personal legacy that will last long after you have retired. Do right by them, make them happy, and they will be the major force behind the success you share with them, and the best part of being privileged to be a leader.”

Obviously, Patricia Phillips and Jack Phillips mean no disrespect when referring to a workforce as “human capital.” They would be the first to point out that it is no coincidence that most of the companies annual ranked among those that are most highly respected and best to work for are also annually ranked among those that are most profitable and have the greatest cap value within their industry. What is their “secret sauce”? Years ago, then chairman and CEO, Herb Kelleher, explained the secret of Southwest Airlines’ success: “We treat our people great, they treat our customers great, and our customers treat our shareholders great.” Of all the capital or assets an organization can possess, none is more precious than its people.

The Phillipses wrote this book primarily for HR executives, providing a wealth of information, insights, and counsel that would enable them to “place monetary value on the hard-to-value measures, such as employee engagement, job satisfaction, conflict, stress, and teamwork. In addition, it is helpful to understand relationships between [and among] different variables, taking the mystery out of what is causing low productivity, inadequate quality, delayed processes, and excessive costs.”

These are among the several dozen passages of greatest interest and value to me, also listed to suggest the scope of the Phillipses’ coverage during the first five chapters:

o The Expanded Role of Human Capital (Pages 3-4)
o Struggles of the Human Resource Function (4-6)
o Human Capital Analytics: A Briefing (8-16)
o Types of Analytics Projects (16-28)
o The Development of the Human Capital Analytics Model (28-31)
o Benefits of Human Capital Analytics (31-33)
o Source of Problem or Opportunity (36-44)
o Define the Specific Business Measures (44-50)
o Table 2-5: Stakeholders for Typical Projects and Programs (52-53)
o Table 3-2: Typical Impact Measures for Projects and Programs (59-62)
o Searching/Locating Databases (66-67)
o Importance of Business Alignment (76-85)
o Figure 5-1: Objectives of Business Impact Coaching (92)
o Figure 5-2: Completed Data Collection Plan (94-96)
o Communication Plan (97-102)

In the remaining seven chapters, the Phillipses develop in much greater depth how to connect HR to business, predict the value of HR initiatives, and optimize the value of human capital. For example:

In Chapter 6, they explore “various data collection methods, including classic processes such as surveys, questionnaires, tests, interviews, focus groups, observation, and performance monitoring.”

In 7, they describe “several isolation methods, ranging from classic experimental versus control group, trend-line analysis and analytical processes, to estimates from a variety of sources.”

In 8, they explain “how to select solutions from various scenarios, modify a particular solution to deliver the value needed, and develop specific objectives for all five levels” of data. (See Figure 1-3, Pages 14-16)

In 9, they explore “the techniques, challenges, and opportunities for converting data to money.” (See Pages 192-193)

In 10, they explain how to forecast, predict, test, optimize. (See Pages 249-253)

In 11, they share their thoughts about how to report results with a seven-step process and drive improvement.

And in Chapter 12, they offer practical recommendations about how to overcome and manage barriers to the analytics practice and sustain it. Presumably the Phillipses agree with Jim O’Toole who suggests (in his classic, Leading Change) that most resistance is cultural in nature, the result of what he so aptly characterizes as “the ideology of comfort and the tyranny of custom.” My own rather extensive experience with change initiatives suggests that those who defend the current status quo were probably among those who worked so hard (and so well) to replace the previous status quo.

I commend them on their masterful use of reader-friendly devices throughout their lively and eloquent narrative. For example, they provide a brief but precise introduction to each of the 15 chapters, followed by an “Opening Story” to create a real-world context, as well as a “Final Thoughts” section at their conclusion. Also, dozens of Figures and Tables was well as checklists and bullet point clusters.

Obviously, no brief commentary such as mine can do full justice to the wealth of material that Patricia Phillips and Jack Phillips provide but I hope I have at least indicated why I think so highly of them and their book. The healthiest organizations are those in which personal growth and professional development are most likely to thrive. It is imperative, therefore, to be able to measure that growth and development. How? Almost everything business leaders need to know is provided in this volume. Bravo!

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