Monday, 6 August 2007

Talking metrics and people evaluations is not enough 2

Despite the title given to my letter, my response to Human Resources was really about HR's role, not metrics, I was simply responding to their comments that better use of metrics play a major part in how we become more strategic.

A better explanation of why this thinking is erroneous (metrics play a part, but not a major part in this) is provided by my fellow research associate at Learning Light, Jay Cross, who originated the term e-learning and is the author of a recent book on informal learning, and with whom I spent some time at the CIPD's HRD exibition earlier this year (see Jay's blog on this).

This explanation comes from Jay's article in June's Chief Learning Officer and focuses on the ROI of learning, but applies to broader use of metrics, and other HR processes as well.

Jay explains:

"It’s ironic, but things you can’t see have become more valuable than things you can. Eighty percent of the value of the Fortune 500 is intangible.

Yet, business managers still act as if something invisible is worthless because it can’t be seen and sized up. Vestiges of Industrial Age thinking about value live on inside corporate walls. ROI is a useful concept, but it’s not if you leave out the intangibles.

Measuring intangibles involves making judgment calls, so managers often exclude these factors from their calculations. These people tote up the numbers for things they can see and count, and then they list intangibles on the side, as if this keeps their calculations pure. This is nonsense.

Learning in organizations is not a science experiment under controlled conditions in the lab. Cause and effect in business is never precise unless it is preceded with the phrase “other things being equal.” Trust me, in the real world, other things are never equal. Reality emerges from the interaction of complex adaptive forces. Stuff happens.

“Sure, Jay,” you say. “This is logical, but you can’t manage what you can’t measure.”

Actually, the old can’t-manage-can’t-measure meme is totally wrong. Executives manage unmeasured things all the time."

Spot on.

If you're still interested, you may also like to see my earlier post Global Leadership Forecast or my contribution as part of this thread on Training ROI on Training Zone.