In HR Analytics, beware of the ‘Mental-Model-Accounting’
Many people at the HR Tech World Congress here in Paris are saying HR should start collaborating with Finance more closely to get better analyses. Here’s my experience: Finance definitely out-analyses HR and a good collaboration with them is certainly desirable at the reporting level. But at the same time, such collaboration entails a risk: Finance looks at all analyses through the eyes of an accountant, while predictive HR analytics primarily aims for organisational optimisation by analysing human behaviours in function of achieving organisational objectives.
Accountants think in linear terms
That’s true. In my experience HR is still not analytical enough. But to suggest a close and intimate tango with Finance in one single sweep, that’s a dance step too far for me. Why? Well, the Finance guys work along the ‘mental model’ of accounting: their decisions are plated with the ‘people as a cost’ aspect. They strike red lines through staff numbers and investments, sometimes unbearably carefree. They think in a linear fashion where 10% less revenue should mean 10% cost reduction minimum.
Let Finance do HR Analytics?
Someone here at the congress even told me that practice has shown HR and analytical capacity will just never be great dance partners. The traditional HR professional, so claimed my interlocutor, generally is an all-rounder when it comes to the people aspect in organisations. The current makeup of the HR spectrum, he continued, is not enough to take on the role of HR analytics effectively and excel in it. That’s why he suggested it would be better to leave it to Finance instead.
Move to a research mental model!
All this means it’s extremely important for HR to have an iron focus on developing its own competencies. Only this will enable it to counterbalance the mental model of accounting in a major way. Good analytical competencies are essential after all in quantifying and optimising the impact investment in human capital has on the business/organisation. This is a different mental model which I call the ‘research mental model’. So do you need Finance to analyse the impact of recruitment quality on young graduate retention? Do you need Finance to analyse the impact of training on customer satisfaction? No you don’t!
Predictive analytics, the competitive advantage of the future!
I can’t disagree more with the vision of my good-natured interlocutor. During all my encounters here in Paris, I try to make HR aware of their crushing responsibility in thinking about the new makeup of their teams. Not of leaving analytical expertise to Finance. Hell you! In the words of Google: analytical and business expertise have become the competitive advantages of the future. This will be the most successful (the fastest) if existing HR teams adjust their makeup! But the good news is that an important number of large and progressive organisations are occupying themselves with this intensively at the moment. Mental model what?