WHAT CANNOT BE MEASURED CANNOT BE MANAGED

The saying “what cannot be measured cannot be managed” has been a widely accepted truth for many years.

The idea behind this statement is simple – if you cannot quantify something, you cannot determine its success or failure.

The basic idea behind this principle is that in order to effectively manage a company, you need to have accurate data and measurements to make informed decisions. This requires the ability to quantify and analyze key aspects of a business, such as revenue, expenses, productivity, and customer satisfaction.

This principle applies to all aspects of business, from operations to finances, and is crucial for companies to understand if they want to improve their performance and remain competitive.

One classic example of a company that has embraced this principle is Amazon. Amazon has built an empire by carefully measuring and managing every aspect of its business, from inventory and shipping times to customer feedback and satisfaction. This data-driven approach has allowed Amazon to grow and evolve, constantly improving its operations and expanding its offerings. The company’s ability to collect, analyze, and act on vast amounts of data has been a key driver of its success.

Another company that has demonstrated the importance of measuring and managing is Toyota. Toyota is famous for its rigorous approach to quality control and efficiency, and its production system is built around the idea of continuous improvement. The company uses a wide range of metrics to track everything from production times to defect rates, and these measurements are used to identify areas for improvement and drive changes to its processes. This relentless focus on data and measurement has helped Toyota become one of the most successful and respected companies in the world.

In contrast, companies that fail to measure and manage key aspects of their business often struggle to grow and thrive. A good example of this is Blockbuster, the once-dominant video rental chain that was eventually defeated by companies like Netflix and Redbox. Blockbuster was slow to embrace the digital age, and its lack of data-driven decision making ultimately proved to be its downfall. In contrast, Netflix was able to use data to create a personalized, on-demand video experience that customers loved, and its ability to quickly adapt and evolve as the market changed was a key driver of its success.

Another example is Kodak, a company that was once the leader in the film photography industry. Kodak’s inability to embrace digital photography and measure the changing needs of its customers ultimately led to its downfall. In contrast, companies like Canon and Nikon were able to pivot quickly to the digital age and maintain their dominance in the photography market by using data and measurements to drive their decisions.

Measurement is also important in human resource management. Companies need to know the skills and abilities of their employees in order to allocate resources effectively and make informed decisions about promotions, pay increases, and training programs. For example, companies like Microsoft use performance metrics to determine the effectiveness of their employees and to determine areas where they need additional training or support.

Companies need to have accurate and comprehensive data to make informed decisions and drive success. From financial management to sustainability, measurement is essential for companies to remain competitive and achieve their goals. Companies that ignore this principle risk falling behind their competitors and losing market share.

Is HR Measureable : What Value does it add to Business

In the dynamic and rapidly evolving world of business, the role of Human Resources (HR) has undergone a paradigm shift. Once considered a primarily administrative function, HR now stands as a strategic partner in organizational growth, employee engagement, and culture shaping. However, despite this transformation, the credibility of HR departments across various industries is facing scrutiny and skepticism. From the C-suite to the entry-level employee, there’s a prevailing sentiment that HR’s credibility is at stake. What factors have contributed to this perception, and how can HR professionals address these challenges?

The measurement of HR’s value and impact in organizations has been a topic of ongoing debate and evolution. While there has been progress in developing methodologies and metrics to assess HR’s contribution, it’s important to recognize that measuring HR’s value is not always straightforward due to the complex and multifaceted nature of human capital and organizational dynamics. Here are some key points to consider:

Challenges in Measuring HR’s Value:

1. Intangible Nature of Human Capital: Unlike tangible assets, such as machinery or equipment, human capital—comprising skills, knowledge, and motivation—is intangible and complex. Its value is often difficult to quantify directly.
2. Long-Term Impact: HR initiatives, such as training, development, and culture-building, may have long-term effects that are challenging to attribute directly to HR efforts, making it difficult to isolate the cause-and-effect relationship.
3. Multi-Dimensional Impact: HR’s influence spans across various aspects like employee engagement, performance, retention, and organizational culture. Attempting to measure all these dimensions comprehensively can be complex.
4. Interconnected Factors: HR’s impact is intertwined with other organizational factors, such as market conditions, leadership strategies, and external forces, making it difficult to isolate HR’s contribution.
5. Subjective Metrics: Many HR metrics, such as employee satisfaction or engagement, are subjective and can be influenced by individual perceptions, biases, and external factors.
6. Time Lag: The impact of HR initiatives may not be immediate, and there could be a time lag between implementation and observable results, making measurement challenging in the short term.

To gain credibility and trust, HR will need to

• Bring first-rate analytic minds into the HR function to help companies make sense of all the employee data and get the most from their human capital.
• Start quantifying the impact of HR initiatives into financial benefits, the language that the leadership well understands

While measuring HR’s value may not be straightforward due to the complex and intangible nature of human capital, advancements in data analytics, strategic alignment, and a comprehensive approach to measurement can contribute to a more accurate assessment of HR’s contributions to organizational success.