DDBA 8580 Week 5 HR Metrics Brief Example

Which People Numbers Count as Evidence? A Metrics Brief Separating Efficiency, Effectiveness and Impact Measures for a Workforce Claim and Proposing an Attribution Rule an Executive Could Apply Without HR in the Room

Student Name

Walden University

DDBA 8580: The New HR: The Savvy Strategic Partner

Instructor Name

Month Day, Year

Which People Numbers Count as Evidence? A Metrics Brief Separating Efficiency, Effectiveness and Impact Measures for a Workforce Claim and Proposing an Attribution Rule an Executive Could Apply Without HR in the Room

The Claim

HR efficiency ratios persuade almost no one outside the function, while operating measures persuade everyone and prove little about HR. A workforce claim needs a measure that is both persuasive and attributable, and that requires a rule for when operating results can be credited to an HR practice.

Three Classes of Measure

Boudreau and Ramstad (2007) distinguished three questions HR measurement can answer: efficiency, how much HR activity is produced for the resources spent; effectiveness, whether HR practices achieve their intended effects on people; and impact, whether those effects matter for the organization's strategic success.

[after]

The table uses a composite manufacturer's claim that a supervisor training program improved productivity. Cost per training hour is entirely HR's but says nothing about results, which is why Ulrich (1997) urged HR to measure what it delivers rather than what it does. Team ratings of coaching show the program changed behavior but are one step removed from output. Output per labor hour is what the plant manager watches, but it moves for many reasons: product mix, equipment, staffing levels and season.

Table 1

Three Classes of Measure for a Supervisor Training Claim

Why Impact Needs a Rule

Marler and Boudreau (2017) reviewed research on HR analytics and found that much practice reports descriptive measures, with relatively little evidence linking HR interventions to organizational outcomes through designs that support causal claims. An executive reading a people report cannot run a study, but can apply a rule.

The proposed attribution rule has three parts. First, a comparison: credit an operating change to an HR practice only if units that received the practice improved more than comparable units that did not yet receive it. Second, a lag: measure the operating result at a stated interval after the practice, here two full quarters, chosen before results are seen. Third, a threshold: the difference between treated and comparison units must exceed the largest quarter-to-quarter swing those units showed in the prior two years. If all three hold, the executive can credit the practice; if any fails, the claim stays at effectiveness.

Applying the Rule

At the composite manufacturer, four of eight lines had trained supervisors by January. Two quarters later, output per labor hour rose 6 percent on trained lines and 2 percent on untrained lines. The prior largest quarterly swing was 3 percent. The 4-point gap exceeds it, so under the rule the executive could credit training with part of the improvement.

What the Executive Should Ask

Before accepting an impact claim, the executive should ask which units served as the comparison and when the lag was set.

Limits

The rule assumes comparison units are similar. If the first lines trained were chosen because their supervisors were strongest, the comparison overstates the effect.

References

Boudreau, J. W., & Ramstad, P. M. (2007). Beyond HR: The new science of human capital. Harvard Business School Press.

Marler, J. H., & Boudreau, J. W. (2017). An evidence-based review of HR analytics. International Journal of Human Resource Management, 28(1), 3-26. https://doi.org/10.1080/09585192.2016.1244699

Ulrich, D. (1997). Human resource champions: The next agenda for adding value and delivering results. Harvard Business School Press.