Jac Fitz-enz, Metrics Maverick

In 1978, Jac Fitz-enz published an article in Personnel Journal (the predecessor to Workforce Management) titled “The Measurement Imperative.” In it, he proposed a radical, anti-establishment idea: that human resources activities and their impact on the bottom line could be measured. The reaction? Apathy. Disagreement. Disbelief.

    During a recent speech in Phoenix, the tireless 71-year-old corporate agitator zeroed in on what he has learned from all the fuss. “The secret to success, I’ve found, is to outlive the bastards who oppose you.”

    A quarter of a century ago, conventional wisdom held that human resources couldn’t and shouldn’t be measured, Fitz-enz says. “They told me HR was about truth and goodness and making life better for people.” What they told him, in effect, was to go away, and let the under-the-radar practice of human resources remain as it was. Fitz-enz did not fade away. Instead, he became a renegade pioneer who consistently championed the economic value of human resources despite the fact that initially, no one seemed to care. Over the last 25 years, he has nudged, prodded, poked, argued and written more words about the business effects of human resources than just about anyone else on the planet. Along the way, he has amassed an impressive résumé.

    Fitz-enz was the first to argue that human resources decisions affect real dollars and, consequently, have a real impact on the bottom line. He was the first to develop a set of useful and systematic measurements for practitioners to utilize in their companies. He established the Saratoga Institute, the first organization to gather and distribute solid benchmark data about compensation, staffing, hiring and retention. Today, the institute is world renowned for its work in providing executives with comprehensive human resources measurement and analysis tools. Fitz-enz is also the author of seven books and more than 160 articles and book chapters about measurement.

    His steadfast crusade has inspired the work of countless other human resources visionaries, including John Sullivan, head of the Human Resource Program at San Francisco State University. “Jac has been a pioneer,” he says. “I’ve been developing HR metrics for 20 years, and I learned the basics from Jac.”

    Thanks largely to Fitz-enz, a majority of companies are now at least talking about the importance of measurement. “Jac started this conversation,” says John Boudreau, research director for the Center for Effective Organizations at the Marshall School of Business, University of Southern California. “He established very clearly the reality that you could measure a soft thing called HR. We couldn’t have gotten here without him.”

    Today, the unknown author who so annoyed readers back in 1978 is the undisputed father of human capital metrics, and his fans are legion. In February, Fitz-enz delivered a keynote talk to 200 at the Human Capital Metrics Summit in Phoenix. After his speech, several members of the audience stood in line like groupies waiting for Dr. Jac, as he likes to be called, to personally autograph his books.

    Although there’s little doubt that Fitz-enz will go down in history as a business visionary, his career began rather inauspiciously. Born and raised in Aurora, Illinois, he graduated from the University of Notre Dame with a bachelor’s degree in political science. He then spent three years working as a naval intelligence officer in Hawaii. Upon discharge, he moved to California and worked in a variety of line jobs, including sales positions for several companies.

    In 1969, after returning to college and acquiring a master’s degree in organizational communication from San Francisco State, Fitz-enz accepted his first human resources position, a job in the training department of Wells Fargo Bank. At the time, he says, the personnel department was populated by bankers who had failed at banking. Because the company didn’t know what else to do with these employees, they were shoved into the department that was regarded as a repository for second-class employees. “Personnel was housed in an annex to the main corporate office,” he says. “We were put there, I was told, so that we couldn’t hurt anybody. I’d come out of sales positions where I was considered hot stuff. To be thrown into the annex with failed people…that was tough to take.”

   Feeling angry, unappreciated and defensive, Fitz-enz began to gather data about the bank’s personnel department so he could demonstrate to line managers that the function did indeed have value. This was the first tentative step on a path that would eventually become a lifelong journey to prove the value of human resources. Fitz-enz started his research in the bank’s staffing department. He reviewed the time to fill job requisitions, the cost to hire new employees and the number of requisitions filled by given staff members. “It was all very basic: cost, time and quantity,” he says. “We were simply trying to justify ourselves.”

    The bank’s reaction to his reports was, in a word, underwhelming. Line managers, who believed it was impossible to measure a soft, feel-good function like human resources, reacted to his data with disbelief and derision. “It was a long fight,” he says, but after a few years the bank’s “brighter people,” as he calls them, began to see the wisdom of his work. In 1974, Fitz-enz left Wells Fargo and took a position with Imperial Bank in Southern California, where he’d moved to complete a doctorate in organizational communication at the University of Southern California. The bank had been founded by two former construction professionals who innately understood the importance of quantifying business activities. “They weren’t afraid to innovate,” Fitz-enz says. It was here that the young rebel began to shift from a defensive posture concerned with justifying the existence of human resources to an offensive position designed to prove the value of human resources.

    Upon receiving his doctorate, Fitz-enz moved back to the San Francisco Bay Area and accepted a position with a computer company in the Silicon Valley. Only he didn’t call the department human resources. “The HR manager before me had destroyed the department’s credibility, and it was my job to rebuild it,” Fitz-enz says. “I changed the name to industrial relations to take away the stigma.” The move reflected his characteristic reluctance to accept the status quo. This is, after all, a man who dropped the k from his first name because he’d never liked writing the letter, and added a hyphen to his last name because he got tired of people mispronouncing it.

    While at the computer company, Fitz-enz grew more confident than ever that he could address bottom-line business problems through human resources activities. He started by implementing a supervisory training program. Survey results from before the training and six months afterward revealed significant improvements in product quality. “The improvements were so significant, I started looking around and wondering, ‘What else can I do?’” He then attacked hiring concerns and retention issues, and was soon being invited to the Monday morning executive meeting held by the CFO. Like other department heads, Fitz-enz, the company’s first human resources professional to attend these meetings, always had data to share about his department’s progress.

    Despite his reputation as a numbers guy, Fitz-enz insists that he didn’t start out intending to focus on metrics. “My goal was to find a way that HR activities could help improve decision-making in companies,” he says. “I was never that into numbers. I actually flunked math twice in high school.” And yet he intuitively knew that the only way he and others in the field could make a difference in their companies was by understanding metrics and being able to talk quantitatively with other executives. Since no other human resources executive was talking this way, Fitz-enz decided to start the conversation with his 1978 article in Personnel Journal.

    Looking back, it’s perhaps no surprise that the article was met with such contempt. In the 1970s, America was still very much a manufacturing-based economy, and most companies were involved in producing a product. Because of this, organizations were especially concerned about tangible assets such as plants, equipment and inventory. The idea that human resources and the department that manages them could affect the bottom line had not gotten much attention. “Jac was talking about the value of people years before anyone could hear the message,” says Nick Burkholder, president of Staffing.org in Willow Grove, Pennsylvania.

    Fitz-enz didn’t care. What he was concerned about was improving the ability of managers to make decisions. To make better decisions, they needed data, and Fitz-enz wanted to bring it to them. In 1980, the former math failure left the corporate world to start his own consulting company, the Saratoga Institute. He hung out a shingle and the response was, once again, underwhelming. Although he was spending all his time speaking and writing about metrics, his message did not find a ready audience, and for the first six years of the institute’s existence, Fitz-enz lived off credit cards. “Fortunately,” he says, “the interest was then tax-deductible.” In those early days, he admits, he was often frustrated by the inability of people in human resources to understand his message. “I got tired of talking to people who were unwilling to open their minds to new ideas,” he says. “I think I pushed too hard in the beginning. I got caustic. I kept asking myself, ‘When are people going to get this?’” Faced with a lack of money and a lot of resistance, he found other things to keep him going. “Stubbornness, for one thing,” he says. “But I was also in my 50s by that point. I had to make the company work because if I didn’t, I would probably never be hired for another human resources job.”

    Fitz-enz is a man who is highly articulate when speaking about subjects such as metrics. Measurement is his mantra. But when asked about his personal life, he is not forthcoming. In short, he raised four children, has five grandchildren, has been married and then divorced, and remarried two years ago.

    Although it was rough going in the early years, eventually the business landscape began to change and opposition to his message receded. The quality movement, the shift to a service economy, and the introduction of technology that made data gathering and analysis easier all helped executives accept the fact that human resources practices could be measured, should be measured and do have a demonstrable effect on the bottom line. Fitz-enz gleefully cites surveys revealing that 92 percent of CFOs now believe that human capital affects customer service, 82 percent believe it affects profitability and 72 percent believe it affects innovation. The idea that employees can have such a measurable business impact was unheard of when Fitz-enz began.

    In the last 10 years, the practice of measuring workforce activities has become widely accepted, and some companies rely so heavily on metrics that they might not even be around if it weren’t for Fitz-enz’s early work. Outsource providers like Exult, for example, rely on data to prove to their customers that outsourced human resources services have value. “Jac was the first person to get people focused on metrics,” says Bruce Ferguson, Exult’s vice president of talent acquisition. “Without him, we would clearly not be as far along today.”

    Betty Silver, director of SAS’s corporate university in Cary, North Carolina, agrees. Her company develops business-intelligence software. She says Fitz-enz’s work has been instrumental in helping SAS determine what human resources analytics are necessary for companies to make good business decisions. “Jac partnered with us on the development of our human capital software,” she says. “This is a man who understands that HR is not a cost center but a revenue-generating facility.”

    In 1998, at perhaps the height of his popularity, Fitz-enz sold the Saratoga Institute to Spherion, but stayed on in a management capacity. In 2003, the company was sold to PricewaterhouseCoopers, and Fitz-enz officially retired from the institute. “It’s a testament to Jac’s work that Saratoga has been acquired by an accounting firm,” says Yves Lermusiaux, president of iLogos Research, a division of RecruitSoft based in San Francisco. “This shows you that people are now taking HR measurement seriously and looking at the financial consequences.”

    Fitz-enz’ reason for selling are simple. “I had to get my equity out,” he says. “I was 65 years old.” Freed from the day-to-day management of a consulting firm, he is still speaking, writing and consulting. But he is also looking forward to his retirement in about three years. His goal then? To golf. “I’m a seven handicap now. My goal is to reduce that to a four by the time I retire.”

    Three years from now, when Fitz-enz has little more to worry about than which club to select for a 95-yard shot from the rough, he’ll be secure in the knowledge that he has made a difference in the business world. Nick Burkholder likens him to John Harrison, the self-taught English clockmaker who in the 1700s invented the device that measures longitude, which made seafaring navigation much safer. “The implications of Jac’s work are just as great,” Burkholder says. “In fact, I would have left human resources if it weren’t for Jac’s work. He was a rock. He made me see what I could do with the function.”

Workforce Management, April 2004, pp. 49-52 — Subscribe Now!