A recent interview with the father of HR Analytics, Jac Fitz-enz.

Mihaly Nagy:  You have recently published a book entitled ‘The New HR Analytics: Predicting the Economic Value of Your Company’s Human Capital Investments’. Correct me if I’m wrong but haven’t organizations been trying to quantify ROI on various HR programmes for a very long time? Why do you feel this is now such a relevant issue?

Dr. Jac: Let me give you a very quick history. As you mentioned we introduced metrics in 1978 and it slowly evolved through benchmarking and simple analytics in the 1900’s and now we are in to predictability because the market is so unstable at this point that we have to be able to look into the future.

We cannot just look at past data and try to extrapolate that into the future because the future is clearly nothing like the past. I recall when I was with you in Vienna in 2008 (Stamford Global's Human Asset Summit) when everything came down. Certainly we couldn’t look at the market today as it was in 2007. So predictability is absolutely critical today. Beyond that the reason why it’s such a relevant issue is there’s tremendous pressure to compete. It’s like a tsunami that’s emerging around the world. We have more and more developing countries not only China and India but also now Vietnam, Indonesia and some African countries. So more and more countries are coming into the market, this in turn leads to greater competition.

If you add to that the consistent introduction of new technology, everyday there seems to be something new that gives somebody an edge and this requires someone else to compete. You also have the labor market that is very erratic these days.If we go back just a couple of years here in America we were concerned about where we were going to get people to fill jobs once the baby boomers had retired. However since 2008, the baby boomers are not retiring and now the question is what are we going to do with the young people coming into the market when the old people haven’t left? So the labor market is upside down. Also in various countries like Russia for example you have the labor demographic moving in a different direction.

Finally the whole credit problem is still there. I don’t think we are going to see a major increase in credit availability for sometime. I was talking to another board member in a company that I am involved with and he said “The banks at least in the States still have a lot of problems on their balance sheets, so they’re not going to be lending money easily.” When you put all those together, basically you have a market that is unprecedented and you have to look into the future to be able to determine how you’re going to act, how you’re going to allocate resources and how you’re going to make investments. So predictability now is really the most relevant issue we have.

Download the interview