He Wrote the Book (Literally) on Organizational People Metrics

Can a call center increase profitability simply by changing the way employees spend their breaks?

Can certain creative-minded employees promote innovation more broadly throughout an organization?

The answer to both questions is yes, and the blueprint lies in an international bestseller, People Analytics, written by my guest on today’s episode of Unusual Attitudes. Dr. Ben Waber is a visiting scientist at the Massachusetts Institute of Technology and one of the foremost authorities on corporate management, data, workplace, and people.

He has appeared in numerous media outlets and has spoken before the UN and World Economic Forum. 

As a data guy myself who helps organizations understand how AI creates value by streamlining the hiring and retention process, I always enjoy a conversation with anyone who lets the data guide smarter business decisions. Watch the full podcast, listen on Spotify, or keep reading for the big takeaways from the conversation.

People systems modeled after product systems

Companies are struggling to grasp what makes their people successful or unsuccessful, and if I had to venture a guess as to why I’d point to this line of thinking.

The systems by which organizations use to manage people are the wrong systems. That isn’t to point a scolding finger at the Applicant Tracking Systems and the Human Capital Management systems out there, but they’re built on legacy architectures. So basically they were people systems modeled from product systems.

Though well-intentioned, the problem is the system doesn’t collect the right data nor does it know how to present it. Over the last decade or so there has been a concerted effort to understand how organizations measure people and make that data available to leadership.

That has given rise to prominent data analytics experts such as Dr. Waber. As much progress as he’s seen in this area, the industry is still very limited by more systemic and structural problems when it comes to management that still has to be dealt with.

“That technology, by itself, is a necessary precondition but it will not solve the problem, which has been my focus for the last couple of years,” Waber said.

Interactions between people is where the magic happens

An organization could hire the smartest people, but if they stuck them in a broom closet, their work would likely be subpar. It’s the interactions between workers and the combination of people and systems that lead to higher organizational performance, Waber explained.

He is so fond of metrics that he co-founded a company, Humanyze, to help companies find connections and insights in data about what its most effective employees do differently. Humanyze is a spinoff of the research-focused MIT Media Lab.

“Moneyball”

The inspiration behind Humanyze was “Moneyball,” the book and movie that told the tale of how Oakland A’s manager Billy Beane successfully used computer analysis and stats instead of massive salaries. Beane unearthed value in players’ stats that had not been considered all that important previously.

Companies are in a similar position where baseball was years ago, Waber once said in an interview with MIT Sloan Management Review. Now we have the ability to collect data on what we actually do when we’re at work because of phones, email, social media and other inputs that show how people collaborate. Those data points paint a picture of how people in companies talk to their customers and how those behaviors relate to outputs.

“Tissue in the middle”

Companies can learn from baseball because they have not gone through the exercise of connecting key performance indicators (i.e. revenue, profitability) at the top of the organization to metrics down at the frontline. “The problem, of course, is understanding that whole tissue in the middle,” Waber said on the podcast.

People metrics have a big role to play in that they enable that visibility — they connect the dots in between — and leadership to be evaluated on the actual changes they make, rather than fudging the numbers just to look more profitable. “The really big problem in the people space is that we conflate financial performance with managerial competence,” Waber said. 

“You could make me the CEO of Amazon tomorrow and I would probably make a bunch of dumb decisions, but I’m not going to affect their profitability this quarter,” he added. 

The big takeaway

Business leaders would be wise to watch this podcast in its entirety, because while they may have a great product to sell, they could eventually find themselves building horse carriages while Henry Ford is about to unveil the innovative assembly line. Suddenly that great product gets out of date real fast.