One of my favorite books from the past ten years is Moneyball by John Lewis.
Lewis chronicles the remarkable success of a baseball team (The Oakland Athletics) on a shoestring budget under General Manager Billy Beane. Under Beane’s watch the Athletics have consistently out-performed teams that with double or triple the payroll of the Athletics. Despite only having a conventional general manager’s background (former player), Beane decided to take a radical approach to player selection and development, informed by a new breed of baseball statistical analysis called sabremetrics. Instead of following the established dogma of relying on film assessments and scout intuition to determine the makeup of his team, he instead turned his organization upside-down by hiring a few bright Ivy League graduates. These “kids” performed detailed regression statistical analysis of player performance, both within the organization and without. Together they asked and answered a few simple questions:
- What statistics are the key indicators of success for a baseball team?
- Comparing those statistics to the relative market values of the players who possess them, what does the market overpay for? What traits are undervalued?
Answering step 1 above required true intellectual horsepower. They drew upon the work of a new breed of statisticians who were analyzing new and innovative data points. In the final analysis they came up with a simple hypothesis: baseball teams were grossly underpaying for players who knew how to get on base through the decidedly unsexy method of taking a walk. Beane took this discrepancy and began amassing less expensive players who were good at taking walks. The result was amazing: the A’s won several division titles with hitting lineups that were so devoid of marquee names that their levels of performance seemed like an anomaly to the rest of baseball–except that they kept performing year after year.
It’s my belief that HR suffers from a greater level of undiscovered insights than baseball. As mentioned previously, employees are the most expensive and most pivotal resources for any organization. Yet true analysis of how their performance impacts the organization is seldom undertaken in a serious, analytical manner the way that Beane did with his baseball team. Companies who undertake this analysis can take actions such as investing in recruiting sources that yield the best, most tenurable employees.
these insights and take action on them will have an edge on their peers. \
It is at this point I should bring up the biggest argument I hear against focus on measurement in HR:
“But Brandon, so much of what we do in HR is not quantifiable. ”
Maybe true. A little. But also completely a cop-out.
We have a great number of data points at our disposal: employee tenure, performance ratings, potential ratings, turnover values, capability assessments, demographic data, application sources–to name a few. With the advent of social networking, we have even more elements to add to the discussion: number of links with top performers, number of networked friends, etc. Many companies also now have integrated talent management platforms with normalized data that make the analysis possible.
Let’s face it. People who make the argument above aren’t saying:
“But Brandon, so much of what we do in HR is not quantifiable. We been poring over reams of data for years and that is the conclusion we have reached.”
They are saying:
“But Brandon, so much of what we do in HR is not quantifiable. I take this as a foregone conclusion so I’m not even going to try.”
“But Brandon, so much of what we do in HR is not quantifiable. Even if it was, I was not good with numbers in school, which is why I am in HR in the first place.”
Whatever the reason, the personnel insights continue to remain locked away, waiting for the right analysis to come along and set them free. Fortunately, the new generation of thinkers are beginning to point the way forward. The unquestioned pioneer in this field is Jac Fitz-Enz. He has been working for years in developing predictive metrics such as time to full capability and cost of turnover. Once the value in the data is laid bare, more boards will begin ensuring collection and analysis will take place. HR leaders will be expected to report on the ROI of the human capital–and those incapable of doing so will find other employment.
HR’s “Moneyball” moment will come, hopefully soon.