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Leading Edge

Published February 2010

Data Dilemma and Solution

 

  Dr. Jac Fitz-enz

Last October, I was at a dinner meeting of senior HR executives discussing human capital data management. Although they represented industries from retail to high technology, they all had the same problem. Their companies had spent and continue to spend massive amounts of money on information systems without solving managers' needs for decision-making intelligence. This extends from the executive suite down to the first level of management. There is no paucity of data, but there is a shortage of intelligence, and the data is not configured or configurable to tell a story.

One attendee announced that in her company they could punch a button and see a trail of effects from human capital to financial outcomes. There was almost an audible gasp in the group. She went on to explain that it had taken them about a year and a ton of money, but now managers at all levels could track the effects of human capital costs and productivity on business goals.

Emerging Cry

Throughout 2009, I heard more cries for that type of capability. The irony is that while many organizations want it, most are not in a position to attain it. When we start delving into corporate databases, we run into several inhibitors. Questions abound, such as where is the data, who owns it, and will they share any, some or all of it? Also, what is the data quality, is it communicable across functions, and is it readily accessible? This is enough to kill most initiatives. Still, even before software development, the more essential question is what data is useful, and what is the logic of connectivity?

The balanced scorecard model has been in the market now for more than 10 years. I think of it as a building plan. It lays out four floors, starting at ground level with the human side: learning. On the second floor are processes. Above that is the customer floor, and finally the penthouse of financials. The model suggests there is a staircase from one floor to the next.

While a stairway takes us up from one level to the next, we have to decide what the specific drivers are between the level below and the current or next level above. This is the most difficult challenge.

Wiring Diagram

The essential connection is what you might envision as a wiring diagram. In an electrical plan, the lines are specific. They show associations throughout the building. If you throw a switch in one place, you know where the lights will go on in another. The power can be distributed to one other point, across an entire floor, or it might illuminate an entire building.

I see the possibilities of laying out connections throughout an organization. Essentially, we should be able to make or observe a change in one part of the organization and be able to trace its effects to other parts, including possible extraneous forces. Specifically, if there is change in human capital cost or processing time, we would like to know what effect it will have on a given process. Thereafter, what is predictable about customer response if the process takes somewhat longer or costs more or less? Finally, if the customers' behavior changes, what effect will that have on our financials?