Transcript Future of HR Metrics A Brave New World

Future of HR Metrics
A Brave New World
Jay J. Jamrog
Executive Director, HRI
[email protected]
HR Continues to Evolve
Impact/Contribution to the Business
& the model defines our aspirations
Add Value
&
Maximize
Upside
continue
to grow
Strategic
HR Planning
Culture
& Image
Organizational
Design
HR as
Business
Partner
Survey Action
Planning
Staffing
Employee
Relations
Labor/Union
Relations
Training &
Development
EEO/AA
Performance
Management
Compensation
Benefits
Limit
Liability
&
Protect
Downside
Safety &
Workers’
Compensation
Labor
Relations
Source: Rich Vosburgh
HR Information
Systems (HRIS)
Compliance
Employee
Relations
Personnel
Human
Resources
A Century of Evolution in the Function
Organizational
Effectiveness
The Role of HR
The 2002 Human Resource
Competency Study found that
43% of HR’s impact on business
performance came from its
strategic contribution.
Source: University of Michigan Business School
The Role of HR
In 2001, greater proportion of
respondents (41.1%) said they were
full partners in the development and
implementation of business strategy
than in 1998 (29.4%).
However, the expected increase in
time devoted to this role is not
reflected in the data.
Source: HRPS/Center for Effective Organizations
Efficiency and
Effectiveness
Three Levels of Metrics
Efficiency
Impact
Effectiveness
Efficiency
Source: Boudreau and Ramstead
• What range of
resources (financial
and non-financial)
should be
considered?
• What is the
appropriate level of
investments?
• How should
investable resources
be allocated to
maximize results?
Three Levels of Metrics
Effectiveness
Impact
Effectiveness
Efficiency
Source: Boudreau and Ramstead
• What unique combination
of policies and practices
would best build the
necessary human
capital?
• What factors link policies
and practices to human
capital enhancement?
• What attributes
distinguish effective from
ineffective policies and
practices?
Internal and External
Historical
Benchmarks
The Role of HR
Future / Strategic Focus
Strategic Partner
• Strategic HR Planning
• HR as Business Partner
• Culture and Image
Change Agent
• Staffing
• Organizational design
• Survey action planning
• Performance measurement
• Training and development
People
Processes
Administrative
Expert
Employee Relations
Expert
• Compensation
• Benefits
• HR information systems
• Employee relations
• Labor relations
• Safety & workers’ compensation
• Diversity and EEO
• Compliance
Day to Day Operational Focus
Administrative Expert
Compensation
Payroll as %--total operating costs (benchmarked); compensation targets
benchmarked against peer companies; turnover rates; quality of
management review and Board material.
Benefits
Medical cost per participant; dental cost per participant; 401K employee
participation rate; $ saved in union negotiations.
HRIS Systems Support
HRIS implementation on time and within budget; customer satisfaction.
Compliance
# New EEO Charges; # Old EEO Charges Closed; Progress on AA Goals;
Outcomes of Inspections and Audits.
Employee Relations Expert
Employee Relations
Turnover rates, “Best Place to Work” rankings, legal compliance,
efficiency, union activity (or lack thereof).
Labor Relations
Absence of the extreme negative (strikes, slowdowns, sit-downs, boycotts); $
outcome of new contracts, both immediate & longer term; timeliness & quality
of new contracts; productivity per employee; safety & quality measures.
Safety and Workers’ Compensation
# Incidents & $ value of accidents; # employees trained; % required
training & certifications completed; audit results.
Diversity & EEO
Attitude survey measures of perceived fairness; # people trained in Diversity
Awareness and Diversity Leadership programs; perceived tolerance.
Change Agent
Staffing
$ to Fill; Days to Fill; # Filled; Quality of Hires; Retention of Hires.
Organizational Design
Benchmarking headcount; effectiveness of communications & key
processes (no bottlenecks); spans and layers; management ratios.
Survey Action Planning
Employee satisfaction results at the work group level; rolled up to Business
Unit level; norms available for Business Unit analysis.
Performance Management
Performance Reviews: Timeliness and Quality; #/% Positions with written
accountabilities and measures; other measures vary with the position.
Training & Development
# Programs; #Days/Person Training; Impact of Training; effectiveness
measures within new groups.
Strategic Partner
Strategic HR Planning
Quality of succession management program assessment. Quality of Bench
Strength. Quality of Succession Plan Follow-up (% Actions Completed).
HR as Business Partner
Any business measure of effectiveness. 360-Degree Feedback on the
extent to which HR is considered a partner by those they support.
Culture and Image
Employee Satisfaction data; quality of the description and utilization of
culture & image understanding; standing on the Fortune 100 Greatest Places
to Work.
Starting with the
Business Strategy
Basic Process for HR
Strategy
Scan the
External
Environment
Identify
Strategic
Business
Issues
Identify
People
Issues
Develop
HR
Strategy
Communicate
the
HR Strategy
The Common HR Approach
The Inside-Out Approach
HR practices,
processes,
and
systems
Source: Patrick Wright
Articulate how
what we do
adds value to
The business
Communicate
to the business
what a good
job we are
doing
The Better HR Planning
Approach
The Outside-In Approach
Identify the
business model
components
and areas to
drive value
Source: Patrick Wright
Develop an
HR strategy
to execute the
business model
with relevant
metrics
Use the metrics
to demonstrate
or prove how
we are driving
business
performance
Metrics Model
HR
People
Organization
Efficiency
Efficiency
Efficiency
• Time to Hire
• Direct Labor Costs
• Cost per Unit
• Cost per Hire
• Indirect Labor Costs
• Shrinkage
• Headcount Ratio
• Positions Unfilled
• Defects/Scrap
Effectiveness
Effectiveness
Effectiveness
• Customer Survey
• Employee Satisfaction
• Customer Satisfaction
• “At the Table”
• Leadership Capability
• Revenue Growth
• Practice/Process
Impact
• Talent Retention
• Market Share
Source: Patrick Wright
• % Black Belt Leaders
• Employer Brand
Do We Really Measure how HR is
Driving Business Performance?
Business
Objectives






Driven to Win
Flexible
Embracing Risk
Creative
Global
Fast
Actual HR
Measures









Headcount
Turnover Rates
Succession Candidates
Time to-fill, train, on-board
Cost Reduction
Training Completed
Grievances
Client Satisfaction Surveys
Performance/Potential
Ratings
 Sales per employee
 Best practices recognized
The Role of HR
When executives were asked to select
which descriptor best described the view
of HR held their organizations, only 34%
indicated that HR was viewed as a
“strategic partner.”
SHRM/Balanced Scorecard Collaborative
A major shortcoming in many companies
is “a lack of measurement on the impact
of HR.”
Accenture High Performance Workforce Study
Impact
Three Levels of Metrics
Impact
Impact
Effectiveness
Efficiency
Source: Boudreau and Ramstead
• What is the link
between sustainable
strategic success and
human resource
management?
• Which talent pools
are most critical for
competitive
advantage?
• How could improving
human capital
increase value?
Business Environment
Company
HR Department
Outputs
Inputs
Internal
Feedback:
Efficiency
Effectiveness
External
Feedback:
Impact
Scope of HR Measurement
Approaches
Scorecards
and
Drill Downs
Data Systems
and Portals
Benchmarks
Ad hoc HR
Measures
Source: Center for Effective Organizations, USC
Strategic Impact
Organizational Effectiveness
Validity and Rigor
Causation
Leading Indicators
Building an Impact
Model
 Do you understand your business
partner/client’s pain?
• are they interested in relieving that pain?
• do they see it as value added work?
 Can you specify the business
requirements?
• lengthy boring process
• critical to your success
Tough Times for Top Executives
“Over the past three years, nearly
40 percent of the top 2500 CEOs
have been removed from their
posts. Nearly all of them, due to
a failure to execute the strategy.”
Bossidy and Charan
Food for thought
 “… it is not the lack of a strategy that causes
[Senior Executives] to lose sleep, but rather their
organization’s inability to execute against a
strategy… ” Booz-Allen & Hamilton
 “Having a great strategy is no longer enough –
lots of companies can develop great strategies.
To win, companies must be able to turn great
strategy into great performance. In short, they
must be able to execute.” Marion Associates
 “Execution is a disciplined process or logical set
of connected activities that enables an
organization to make its strategy work. Execution
can itself be a source of competitive advantage.”
Hrebiniak, Making Strategy Work, Wharton
Execution
Strategy
Alignment
=
Successful Execution
People
Processes
To execute strategy you need to align your strategy, process and people!
The biggest questions facing
CEOs today
 How do I know if my company is aligned?
 How do I create the alignment I want?
 How do I maintain the alignment I want?
The Alignment Challenge
Fast Logical !
Strategy
Alignment
=
Successful Execution
Slow . . .
And follows a
different logic . . .
People
Processes
Fast Logical !
Success and speed of execution depend on people alignment,
Yet this is the hardest element to align!
What is the
Alignment of
People?
Research Team
Dr. Albert A. Vicere
Pennsylvania State
University
Dr. Miles H. Overholt
Human Resource Institute &
Riverton Management
Consulting Group
Dr. Elena Granell
Instituto De Empressa,
Madrid
Jay J. Jamrog
Human Resource Institute
The University of Tampa
Research Questions
 Can we identify disconnects
between people and strategy?
 Can we identify disconnects
between people and process?
Strategy
Alignment
=
Successful Execution
 Can we identify strategy and
operational blockages?
People
 Can we identify tensions that
create disconnects and blockages
Processes
Grounded in Management
Theories from key disciplines
 Strategic Thinking
 Marketing
 Operations
 Human Resources
 Organizational Culture
Included an analysis of four
large data bases
 Organizational DNA
 Customer Focused Cultures
 Employee Behavior
 Organizational Culture
The Alignment of People
Five Key Elements
Strategy
 Marketplace Approach
 Customer Focus
 Leadership Behavior
 Performance
 Culture
Alignment
=
Successful Execution
People
Processes
Processes
Impact Measurement
It’s all about Change
Impact measurement is not about numbers
… its about change
Numbers only provide you with a common
and specific language
If your clients don’t know you they won’t
trust you
Fear of being “found out”
Higher Values for HR
Success for those who:
 Provide new thinking on old topics
 Balance increased strategic role with employee
champion role
 Closely align HR strategies to business needs
 Navigate hard economic times without damaging
higher order or systems mechanisms
 Use systems thinking and measurement (efficiency,
effectiveness and impact)
 Help create systems and process for today’s
realities and deleting systems that do not add
value
Conclusion
Key Attributes for the
21st Century HR Professional
• Why vs How
• Let me show you something
you don’t already know
INTELLIGENCE
ACCOUNTABILITY
• Hit it to me / My team
• How good:
- Do I HAVE to be?
- CAN I be?
Source: Steve Miranda
CURIOSITY
• So much to learn
So little time
• I wonder what will
happen today
Faster up the Learning Curve
HIGHER PERFORMANCE SOONER
WHAT YOU
NEED TO KNOW
PROCESS
Pushing The HR Curve
Success = Intelligence + Access
Source: Steve Miranda
The “Evolving” HR Professional
Never Forgets…
It’s Not HR’s
Productivity
We Should
Be Concerned
About
The “Evolving” HR Professional
Never Forgets…
Getting Computers
To Do the Work
Is A
Waste of Time
The “Evolving” HR Professional
Never Forgets…
Because You
Can Do It
Doesn’t Mean
You Should
Do It
“It is not the strongest of
the species that survive,
nor the most intelligent,
but rather the one most
responsive to change.”
Charles Darwin, “On the Origin of the
Species by Natural Selection”, 1859