Sunday, November 28, 2010

Statistics for HR...Correlation, Regression, OH MY!






In most of my teaching and consulting in the area of Strategic HR, I discuss the importance of HR having or obtaining analytical skills as I truly believe we are moving to an HR model that will look much different in the next few years. (HR 2.0)

I always get the question, "What skills do I need and where do I get those?"

First, I will talk about "what skills." I think basic statistics is necessary in HR to analyze all the diverse data sets in organizations as the data relates to human capital. Here are the must haves:

1) Correlations-are used to understand how data sets are related. In other words, if variable A changes does variable Y change? There are about a million ways this can be used in HR alone. If engagement goes up, does turnover go down? (negative correlation). But in a broader sense, you can analyze the relationship between employee behaviors and customer behaviors. If employees are knowledgeable regarding our products, do sales go up? Correlations can be calculated very simply in Excel or SPSS.

2) Regressions-Regression analysis is widely used for prediction and forecasting. Regression is also used to understand which among the independent variables are related to the dependent variable, and to explore the forms of these relationships. In restricted circumstances, regression analysis can be used to infer causal relationships between the independent and dependent variables. So, correlation tells you if a relationship exists, regression tells you which variables have the most impact on the dependent variable. So, in an example from our work, we look at engagement data to find out what variables have the MOST impact on employee engagement for a particular company. As these variables can be different from company to company it is important to know what drives engagement so you can keep doing the right things. Regressions can also be calculated in Excel and SPSS.

Where can you get these skills?

I am living proof, it can be done. My analytical journey started in 1995 when I reported to the CFO. My days were over when I could embark on the HR program of the week without a business case for why I wanted to create this program and WHAT the expected impact would be.

Fast forward, to stating our own business and working with our client's multiple data sets. We had some very interesting questions that needed statistics to answer properly. So, I enrolled in statistics classes at Georgia State University, where I made the highest grade in a class comprised of math majors. (my business partner was 2nd!) I don't tell you this to brag (well maybe) but to say, we had a distinct advantage over the math majors. We knew how to talk the language of the business and how to tell a story with data...they did not.

Now, back to HR 2.0 that will require analytical skills. It can be TAUGHT IF YOU WANT TO LEARN. But, they can be BOUGHT if you don't want to learn as well.

Bottom line....learn them or buy them....you needed these skills yesterday.
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