'Good human resources will boost you company profits, research proves' ran the headline yesterday on the IES/Work Foundation report just released. Er, it ranks up there with 'Elvis found on the moon' and 'Freddie Starr ate my pet hamster', i.e. not quite.......
This report weighs in with 222 pages and that's just the list of sponsors............and it is not in the slightest a politically motivated marketing publication........! The two year study is the time it reportedly took to do it not that the research itself covered several time periods of study.....
Actually the report proves very little other than some correlation effects but hey........
I have always respected IES research though I was a little concerned at the last effort for CIPD (see blog entry 24th September 'Despair at yet more flawed research.......'). IES has always prided itself as an independent organisation but this effort seriously raises that question along with its 'research cred' in this particular field.
There are a number of worrying things with the report but it's also concerning as to what isn't contained within it. The page after page of 'robust' methodology may be a little off-putting for some but to the trained eye there are questions. One can't fault the objective just the execution.
Here's your starter for ten:
1 The interpretation of results is flawed. There’s a misunderstanding between correlation and causation particularly in econometric/longitudinal terms (problem with time periods as well).
2 There is no sector by sector breakdown to show the correlation aspects within (i.e. do they support the aggregate data?). Why not? Is it because there's no conclusive relationship at this level? A strange omission given the weighting to sector coverage in the report rationale.
3 Use of metrics like gross profit per FTE are very problematic when used, especially x-sectorally (see our report ‘Cracking the Human Capital Code’ for insight and more suitable alternatives). Even allowing for this, as there is a relationship between gross profit per FTE and operating profit per FTE (and to some extent sales per FTE) it's a bit of a three card trick to present them separately as correlative output. So it’s not as impressive as it looks (also see 7 below more worryingly). Also how do these profit metrics square up with public sector organisations representative in the sample (about 15%)? I presume they're excluded?
4 By my reckoning there about 450 charts (sectors x metrics x model components) that are relevant of which only 10 are shown. Bearing in mind that there are a number of pages devoted to irrelevant information it does beg the question as to what happened to the others? or at least a selection of?
5 The 4A model as a representation is an extra arbitrary layer and the model components (questions) represent a fraction of the HCM landscape (for example only 20% our HCM Evaluator scope is covered); i.e. factors that are not covered in the question set used (which the report does hint at). There are issues regarding the findings of the factor analysis and Cronbach alpha scores which suggest questions over 4A model reliability
6 Certain aspects of the qualitative process need to carry extreme caution as qualitative data derived from telephone opinion used as proxy (i.e. substitute) for quantitative data has the potential for misrepresentation (also increases incidence of ‘don’t know’ responses - see report), I.E. IT'S NOT EVIDENCE BASED
7 Factor analysis is an acknowledged method but it has flaws where applied in a ‘blind fashion’ (correlations uncovered which may prove nothing without underlying rationale or limited interpretation). If the data is skewed or is partial, factor analysis can just report random correlation.
8 The use of graphical output showing correlations that look good but uses data that is not explained or defined in the analysis (i.e. the econometric ‘fitted value’ in all of the metric diagrams but has little definitional or explanatory reference in the report is a serious omission).
9 Only partial sector coverage representing a broader market-place requires caution at aggregated data level (this is acknowledged somewhere in the report but then missing from conclusions. There are a number of core sectors not represented (well about 20 anyway!).Over 60% of private sector sample was just in three sectors manufacturing, wholesale and retail and real estate (question over sector definiton here).
10 The public sector representation contained two segments - primary schools and criminal justice. This is an extremely narrow slice of that sector and I would think would raise more than a few eyebrows with the public sector we know.....
There are more things but this whole report leaves me with a so what? since in the applied space things have moved on...
However, in a word it is very questionable.
Also ask yourself..........
Why does the independent IES research wander off and cover IiP – which really should be in a separate research report (notwithstanding the bizarre conclusions)? Why does an ‘independent’ organisation like the IES incorporate a view of IiP in a broader research report? Is it to do with the sponsorship?
YES – BIG ONE THAT – STARTING TO SEE THE PICTURE........carry on......
Just what is it with this cosy world-thing between Institute of Employment studies/Work Foundation/Investors in People and CIPD? Safety in numbers? Or closing of ranks? Either way there is a whiff of a complex monopoly (in market terms)..................
Both IES and Work Foundation (and CIPD) are charities that also offer commercial consulting. The question begs either you’re a charity or you’re not, doesn’t it?
Because if you are – does that mean people are buying you because (a) you can afford to offer services at less than the market rate, i.e. cheaply through funding or (b) as a subscribing member I receive something for my membership? i.e. a private network? (Which then begs the question why make the report public if it’s privately funded and offers results that provide a material advantage?)
At least the CIPD is a little more transparent with its subsidiary 'for profit' company (if morally questionable). And we already know about IiP and Best Companies receiving Government funding/grants (or didn’t you?) see respective ISHCM reports.
Is the market-place that problematic that everybody requires special funding rather than allowing the market mechanism to decide? Is there a link as to why the people management market is/has been badly served..........???????
I think that it’s about time that the market became a little more discerning and transparent........
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