Use Data-Driven Techniques to Improve HR Processes

There’s no shortage of processes for guiding decisions in business today. But does using them take the “human” out of “human resources”?

By Mark Feffer Oct 1, 2015
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HR Magazine October 2015When Motorola engineers devised Six Sigma in the 1980s to detect manufacturing defects, they started a revolution of sorts. The data-driven process-improvement method moved from the factory floor to the executive suites, where it was used to refine business models and improve commercial products. In the decades since, companies in many industries have implemented Six Sigma or their own systematic approaches to improving products and operations, ranging from the Lean process, which seeks to eliminate waste, to Total Quality Management, a technique for ensuring an organizational commitment to quality.

These methods have become foundational to many businesses, from health care to transportation. With so much data and technology at its fingertips, HR has the opportunity to do much the same thing. But do data-driven processes risk removing the “human” from “human resources”?

Top Process Management Approaches

Six Sigma uses statistical analysis to improve the quality of products and services by removing defects and errors. The methodology follows five steps known collectively as DMAIC: define, measure, analyze, improve and control. It was developed at Motorola in the 1980s and has since been adopted by many companies and industries.

Lean focuses on eliminating “waste” from business processes in order to improve performance. Waste might include redundant procedures, such as requiring a manager to sign off multiple times on the same requisition, or misused time and energy, such as when employees must visit a separate floor several times a day to retrieve documents.

Total Quality Management is designed to improve an organization’s quality and productivity. According to the American Society for Quality, it requires that everyone in the organization work to improve processes, products, services and the workplace. Through the use of strategy, data and communication, it aims to infuse a commitment to quality into the organization’s culture.

Business Process Management is defined by information technology research and consulting company Gartner as “the discipline of managing processes (rather than tasks) as the means for improving business performance outcomes and operational agility.” The needs of customers come first and foremost, as opposed to focusing on organizational hierarchy.

At first glance, HR doesn’t seem like the best fit to adopt such strategies. Human resources, after all, isn’t about turning out products from an assembly line or developing engineering techniques. But given the pressure on HR to adopt more data-driven approaches to decision-making, it’s a logical question to ask.

And the answer is a qualified yes. Any process, data-driven or not, that is applied without critical thought or judgment will by definition take out the human touch. The good news is that there’s plenty of room for both people and processes in HR; you just have to find the right combination.

The Processes of HR

There’s a big difference between tracking the defect rate of, say, machine parts and keeping tabs on the effectiveness of a workforce strategy. To be sure, some aspects of HR’s activities can be easily measured—how many people responded to the enrollment drive for the new wellness plan, for example. But others, like employee engagement and performance, are trickier, and HR has been slow to wade into the intricacies of data use. Although technology offers numerous ways to help HR overcome the innate biases of human decision-makers—by having advanced systems review and score resumes, for instance—many aspects of HR require a touch that is, well, human.

But let’s not forget that HR already relies on many processes, including onboarding, performance management, benefits enrollment and others. “It’s amazing how much HR is like other business functions,” says Josh Bersin, principal and founder of Bersin by Deloitte, a research and consulting company in Oakland, Calif. “Even though HR is concerned with people, HR departments are giant processing machines.”

Seen in that context, practices such as Six Sigma—which focuses on setting objectives, collecting data and analyzing results to reduce product or service defects—could play a role in an organization’s people operations. However, total reliance on such data-driven and systematic approaches likely would reduce employees to numbers, alienate the workforce and fail to identify opportunities to engage people whose skills may be high-value even though they’re not neatly catalogued.

Fortunately, HR isn’t faced with an either/or choice. Process, data and human judgment all come into play when making decisions as granular as an individual hire or as broad as a company-wide approach to performance management. The key is to find the optimal mix of those elements.

“It’s about finding the right balance,” says Scott Olsen, leader of the human resource services practice at PricewaterhouseCoopers in New York City. “You don’t want a cookbook, but you want a well-defined framework that ensures people are considering the issues and have a uniform process.”

So the value of adopting Six Sigma or Total Quality Management might not be so much about the information it makes available for users to study but the consistency it brings to decision-making. And if applied properly, good business management methodologies can give HR clearer, deeper insights.

Evidence-Based Decisions

Of course, that prompts the questions: What’s a sound process? A consistent one? An efficient one?

Those questions aren’t easy to answer. “The importance of structured business methodologies is that they help focus us on the things that have value,” says Kristie Evans, owner of HR Logistics, a Raleigh, N.C., consulting company. “It’s all about that analysis process where you build the understanding you need to make a better decision.”

Six Sigma and similar strategies are designed to bring discipline to decision-making and lead to measurably better outcomes. “When you apply Six Sigma to a process, you get real data on how the process operates,” says Daniel Bloom, author of Achieving HR Excellence Through Six Sigma (CRC Press, 2013). “You’re looking at being able to identify where the problems are.” For example, you might find that most managers are completing hires in 30 days, but one is taking 60.

Only when you understand a problem can you begin to solve it—and gathering hard facts is how to begin. “This is about having evidence-based decision-making based on techniques and processes,” says Paul L. Belliveau, SHRM-SCP, managing director of Avancé Human Capital Management Advisors, a consulting company in Bedford, N.H.

But evidence-based doesn’t mean there’s no role for people. “There is sometimes this tension between ‘do we make this data-driven or human-judgment-driven?’ ” says John Beshears, an assistant professor of business administration at Harvard Business School and an expert in behavioral economics, which explores individual decision-making and market outcomes. “You don’t want to divorce the two; they’re linked. The human decides how to weight different aspects of the problem, for example.” In other words, it’s up to HR professionals to determine whether they have the right data and are applying it appropriately.

That, however, can make things complicated. Often, when numbers are applied to personal issues, decisions can seem arbitrary and impersonal. “We forget it’s a person we’re dealing with,” says Bradley Staats, associate professor of operations at the University of North Carolina’s Kenan-Flagler Business School. “On the other hand, when humans engage their ‘human’ side, [which] involves things like biases and emotions, [it] can get in the way of the right decision.”

Still, combining data and processes with your own judgment doesn’t necessarily present a conflict. Conversations with employees are by nature personal, but they should happen at a specific point—one that is perhaps prompted by data, Bersin says.

Data, Processes and Judgment

But how does this all work? How can HR combine good data, disciplined processes and human judgment in a way that fulfills its missions to both the organization and the workforce?

Part of the answer lies in understanding the strengths and weaknesses of each element’s components. Data offers insights but can also be misinterpreted or misused. A process can enforce consistency and efficiency but may be too rigid to accommodate unforeseen circumstances. And humans can appreciate nuance but are prone to bias and acting on emotion.

That’s not to diminish the role of the human touch. “There are a lot of tasks we still think are appropriate to leave to human judgment,” Beshears says. “There are a lot of complex situations where analytics may not work.”

Although it’s best to use good data whenever possible, sometimes the right information isn’t available or practical to obtain. In that case, find ways to incorporate some discipline into the decision-making method. This could be as simple as stepping back and reflecting on a choice and how it was made rather than just forging ahead. “That’s not about analytics, it’s about allowing yourself space to verify and validate the decision,” Beshears says.

It’s also about making changes when necessary. “You can’t program a company. You need a certain ability to pivot, to be nimble,” Olsen notes. “Any process is going to need some exceptions. You need off-ramps, escalations and the like. You need judgment when you look at analytics and data.”

That means best practices should be seen more as guidelines than as hard-and-fast rules. “In HR, you see plenty of standardization,” Staats adds. “The challenge is giving people the flexibility to change the process when they need to.”

As an example, Staats cites a health care provider that requires physicians to follow clear procedures as they diagnose and treat a variety of illnesses. However, the doctors have the freedom to deviate from standard treatments based on their medical judgment. When that happens, the health care company reviews the practitioner’s reasoning to determine whether the company’s established treatments can be improved. In effect, it’s the procedure—not the physician—that must prove its worth.

The Right Approach

If processes are implemented incorrectly, they won’t be worth the time it took to put them in place. “Data helps us focus our attention on the really important stuff,” Staats says. But then it’s up to people to use the information appropriately. “You need accountability,” he says. “Data can be used to put numbers behind the story somebody wants to tell [as opposed to what’s best for the company]. That’s an example of bad management, not bad analytics.”

Also keep in mind that a process is only as good as the information that’s fed into it. Often, HR professionals rely on metrics that don’t reflect the whole story, says Kevin Carlson, professor and head of the department of management at Virginia Tech’s Pamplin College of Business.

For example, when HR measures turnover, it’s more important to assess which employees are leaving the company than the total number of departures. “The turnover rate is easy to capture, but it’s not the right number,” Carlson says. “You want turnover that’s positive—the right people are leaving and the right people are staying. If you measure just rates, you can create initiatives that end up emphasizing marginal employees and getting them to stay.”

The key to making the most of analytics is to actually use them as a basis for action. “Reporting metrics isn’t enough,” Carlson says. Reporting can be well-intentioned but not designed to solve organizational issues, he says.

The Coca-Cola Co. has demonstrated how to move beyond metrics. It instituted Six Sigma to improve its HR call center’s responsiveness by analyzing the types of questions associates typically couldn’t answer, according to Ted Revilock, director of operational excellence at the Atlanta-based corporation. By identifying those inquiries and training associates on the correct responses, the company reduced the number of calls that require extensive follow-up and now provides a more efficient customer service experience.

Revilock sees Six Sigma as having a positive influence on employees as well. A survey of Coca-Cola’s HR associates found that 90 percent believe that learning more about the Six Sigma program was good for their careers.

Turning analytics into action often may be difficult, but it’s not impossible. “There’s a whole range of tasks that HR fulfills that are hard to quantify,” Beshears says, such as responsibilities related to employee morale or the quality of performance reviews. But the fact that something isn’t measured today “doesn’t mean you shouldn’t be trying to develop those metrics,” he says.

Even without hard facts, you can move forward. “When there’s no evidence, you have to create what-if scenarios,” Carlson says. “Set it up, walk it through, see where it leads and gives you a basis for the decision. That’s a process.”

Rather than minimize the human voice in HR problem-solving, a strong process can strengthen it by helping ensure that you are coming to the best possible conclusions. Many people rely on their gut feel when they’re trying to solve a problem. “It’s an important part of decision-making,” says Belliveau, but not a fail-safe one. While it can combine experience, knowledge, sense and memory, instinct doesn’t necessarily lead to the best decisions. In the end, “You don’t want to strip it out, but you have to contain it,” he says.

No matter what HR does, any process or problem touched by people won’t be perfect. “You’re not going to remove the human from being human,” Evans says. But “let’s hold ourselves accountable. Let’s look at how we add value.”

When decisions are approached in the right way, data and human judgment aren’t such strange bedfellows after all. “There needs to be a meeting of the two sides of the equation,” Evans says.

Mark Feffer is a freelance business writer based in Philadelphia.

Web Extras

Article: Leaders as Decision Architects (Harvard Business Review)
Article: Focus HR on Process Improvement (Harvard Business Review)
Article: Six Sigma Projects in the Human Resources Department (iSixSigma)
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