The revolution in quality control and manufacturing techniques that has taken place in the last 15 years was data-driven and systems-driven and statistical-process-control-driven. The US economy has benefited incredibly over the last 15 years … by seriously embracing the science of manufacturing and quality control. Figuring out what to do is important. But doing it and doing it well is equally important. And in the second category, the scientific, data-driven approach is absolutely well-placed.”
When Andy Grove, Chairman and founder of Intel said these words in a Harvard Business School Press interview in 2003, he was talking about general business strategy and execution. Jeffrey Pfeffer, a professor of organisational behaviour at Stanford University, calls the data-driven approach “evidence-based management”. He strongly advocates for its application in the field of human capital management.
In his book, Dangerous Half-Truths & Total Nonsense, Pfeffer writes: “There is compelling evidence that when companies use HR best practices based on the best research, they trump the competition. These findings are replicable in industry after industry, from automobiles to textiles, to computer software to baseball. Yet many companies still use inferior people management practices. The problem isn’t just that HR managers know what to do but can’t get their companies to do it. Like other leaders, many HR executives hold flawed and incomplete beliefs. They fall prey to second-rate evidence, logic and advice, which produce suspect practices, and in the end damages performance and people.”
Despite the admonitions of Pfeffer and other luminaries, HR professionals have for years argued that their discipline is an art rather a science and that there is no way of precisely measuring the ROI in talent management initiatives. While it will always be more difficult to quantify the returns on an investment in a middle manager’s leadership skills than in a machine that spits out a widget, for example, there are more and increasingly credible indicators available today that clearly demonstrate the link between human capital investment and profit.
Source(s): The Human Capital Insitute