Human Capital Analytics: How to Harness the Potential of Your Organization's Greatest Asset

CHAPTER 6

Causation: What Really Drives Performance

“Shallow men believe in luck or in circumstance. . . . Strong men believe in cause and effect.”

—Ralph Waldo Emerson1

Curiously, there is a clear-cut correlation between ice cream consumption and murder rates. Yet is it fair to say that one causes the other? When more data are considered, both ice cream and murder also correlate with drowning, shark attacks, and boating accidents. Does ice cream indeed cause murderous behavior? And is it consumed by sharks? Hardly . . . Unpleasantly hot weather often causes people to be frustrated and irritable. Plus, more people are congregating together outdoors. Thus, conflicts leading to murders become more likely. Hot weather, in rather obvious ways, leads people to indulge in ice cream and water sports to cool off. In turn, water sports leads to more boating accidents and shark attacks. For those who are fond of ice cream, it is equally accurate and fair to say that ice cream prevents snow avalanches and reduces colds and flu. These links are all correlations and thus do not say much about actual causes.

What is a proof of causation, really? How can we establish the connection between an investment and a business effect or say which metric drives another? What we would like to know is which investments change our business for the better. Experimenters and philosophers debate endlessly over what constitutes “proof.” Our intuition about what someone will take as “proof” is a bit like game ...