Ever get a feeling something isn’t what it should be? Do you “know” that that a process related to HR or people is broken or inefficient?

Rarely do we get “go with our gut” in business. We need to start by having data, aka baselines. We need to know by the numbers where we are today before we can drive into the future.

Most people’s first reaction to gathering baselines is to “prove” that there is a problem and to justify an initiative. There is a place for that, but baselines need to be so much more. Imagine you create a baseline that shows a $1 spend every time a person performs an action. Then what? What does that data really tell you? In and of itself, you don’t know if spending a dollar is good or bad for that action.

Typically companies just add up those dollars until they add up to bigger dollars. Then they determine that they can spend a smaller number of dollars, and set off on improvement initiatives. Sometimes our operations are so broken that we get lucky and actually find ways to fix them. The danger as we mature is to keep applying that logic. But eventually we have fixed the process problems, and we find out $1 is just what it costs.

The problem with this approach of the use of baseline is that the need to improve is subjective. There is just a “feeling” that $1 is too much and there must be a cheaper way. Instead of looking at the baseline as an aggregate, you need to determine what makes up that $1, and what other data can tell you what part of that $1 you can change and ultimately if it’s worth it.

This is all a cost-centric approach. In the end, a good baseline tells us if we have moved the bar, and the bar should be measured in profit. Cost is only one factor. The control and service centered HR organization is measured in what it costs the enterprise. The strategic, enabled, predictive, data driven HR organization is measured by the value it helps the enterprise generate. In either case, you can’t quantify your contribution, or better yet, its effect on the business without a baseline.