Story mode: – A relatively new HR consulting firm run by experienced people with 12 -15 years of hands-on experience with the Big Corporations of the world (read- GE , IBM etc.). One client, a small enterprise, wanted the firm to undertake a project to improve its sales performance.
The consultant pronounced, “Collaboration and Resourcefulness are the two defining characteristics of a great sales person. We will conduct a training programme to influence these two attributes and then your sales will improve”.
The company said, “OK . But you will need to prove that what you claim applies to us”.
The project started in Quarter ending Dec 2012 . A small test was conducted and each salesman was scored on Collaboration and Resourcefulness. The sales volume for the quarter was tracked.
January 2013 (first week) training was conducted and again the measurements were done for Collaboration Score, Resourcefulness score and Sales volume achieved in Quarter ended March 2013.
The good news was that
From the view of the HR analyst , the project began with identification of the ‘business Y’. Here it was the improvement in revenue . But what was a good measure of ‘improvement’? Should the absolute improvement in revenue be the Y ? Or should the percentage improvement in revenue be the Y?
A closer look at the data showed that :-
Category of change in revenue is a variable used to standardize the large range of % change in revenue (14% to 335%)
Thus, both the parameters mentioned above would have to be considered !
A simple co-relation of the variables proved that
On running a linear regression model we can see that the variable Change in revenue is explained to the tune of 21% by Change in collaboration score and change in Resourcefulness score.
The variable category of change in Revenue is explained to the tune of 19% by % change in collaboration score and % change in resourcefulness score
This was compulsive evidence on the impact of collaboration and resourcefulness on revenue. And the impact of an increase in collaboration and resourcefulness scores because of the training!! The results were there for all to see .
Needless to say, the consulting firm has taken the Competency and Resourcefulness training to other prospective clients and is doing roaring business.
This is just one of the many ways HR analytics can be used to measure the ROI or the impact of HR initiatives on an organizations profit.