Here’s a question: If a project is likely to have a hugely negative ROI, should we proceed?
The answer seems to be yes, if the project is determining why there is a minor difference between finance and HR data. That negative ROI, which managers are so keen to ignore, is an ongoing barrier to efficient HR analytics.
The classic — almost universal — case of finance and HR coming up with different numbers is headcount. The issue manifests itself when finance reports there are, say, 916 employees in some region and HR says there are 922. While it makes no difference to any decisions that are going to be made, organizations routinely want HR to get an analytics pro to spend however many days it takes to get to the bottom of the difference.
What the analyst will find, and again this is almost universally true, is that both finance and HR’s numbers are correct. They are different because of how headcount is calculated, and that difference exists because of the differing needs of HR and finance. Net result: The company just invested an expensive employee’s time and got zero value back — a negative ROI.
It’s not just that the analyst’s time is wasted, this kind of pointless work is tedious and dispiriting. One people analytics pro shared, “One analytics project I worked on was making sense of a huge Excel spreadsheet on training because HR had different financial information than finance and didn’t know why. Talk about a waste of time.”
Looking for a project that will reduce engagement of top talent? Ask them to reconcile finance and HR data.
Tactics to address the problem
One short-term tactic HR can use to circumvent this problem is to present ranges or approximate numbers and hold fast to the fact that the “exact” number is just a by-product of the specifics of the calculation. In almost all cases working with, “We have just over 900 employees in this country” is sufficient to run the business. If for some reason senior management really does need a specific number then they can run with the one finance provides.
Unfortunately, the more common HR tactic is to have analysts spend hours in advance of any presentation to ensure the numbers line up exactly with what finance is reporting.
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A fantasy tactic is to insist HR is correct and ask finance to get one of their analysts to determine why the numbers don’t coincide.
A longer-term solution
The real heart of the problem is having leaders who are not data savvy. Read that sentence again because that points to where the real solution lies.
Headcount appears, to the non-data savvy person, to be a simple, easily quantifiable number. It is not. That’s deeply counter-intuitive. If understanding data was intuitive then no one would need to be trained in it. A data savvy organization will have managers who immediately recognize that the HR reported headcount will be different from the finance reported headcount because they have different methodologies.
For a different take on how managers who think they are data savvy but are not, read Mintzberg’s classic piece “The Soft Underbelly of Hard Data”.