HR Controlling

HR Meeting 2005
HR Controlling
Dr. A. Jungmeister
1. Introduction HR Controlling
2. HR Controlling & HR Development
3. HR Key Ratio System, HR Key Ratios
4. Actual Trends
5. Best practice
Krebs & Partner AG, ajungmeister@bluewin.ch, juerg.krebs@bluewin.ch
The Changing Role of HR

Future/Strategic
Focus
Management of
Strategic Human
Resources
Management of
Transformation
and Change
Strategic Partner
Change Agent
Processes/ Strategy
People
Management of
Firm Infrastructure
Management of
Employee
Contribution
Administrative
Expert
Employee Champion
Day-to-day/
Operational Focus
Your Company Team Work
In which quadrant of this scheme do you think

your company is in?
Please give your vote.
Time Spent of an Average HR

Resource Now and in Future
NOW
FUTURE
Source: Marc Fiedrichsen IBM BCS, http://www.ehlite.ch/april03/12eprint.htm

Strategic and Operational HR Controlling

Strategic HR Controlling
Success potentials,
Strategic Recruiting
Strengths, Weaknesses,
Chances, Risks
Criteria
Targets
Dimensions
Operation Oriented HR
Controlling
Efficiency, Productivity
Cost, Expenses, Return
Extensive
External Factors
Considered
Hardly
Very Often
Proactive
Rarely
Long Term
Time Orientation
Holistic, network of causes

and effects
Low
Top Managers
Mindset
Formal (Numbers,
Reports)
Hierachy, Functions
Involved
Short to Mid Term

Analytical, simple chain
of effects
Yes
Employees, Middle
Managers
6
Strategic HR Controlling: HR Portfolio

A HR portfolio allows positioning of the Human Capital
against corporate strategy and defines priorities
Quality of personnel
within Business Units
HIGH
C
A
B
LOW
LOW
Strategic Importance of
the Business Units
HIGH
Strategic HR Portfolio Valuation

A HR portfolio evaluates the demand for action
in terms of actual alignment of the personnel
Performance
HIGH
Stars
Workhorses
Dead wood
Trainees
LOW
LOW
Potential
HIGH
8
What is Controlling?
Controlling Means
Economic Support of Top Management to
Enable Their Performance:
- Planning
- Steering
- Delivery of Information
- GAP Analysis
Tasks of HR Controlling - The Cycle

Setting
Targets
ACT
Reports &
Actions
Determine
Deviations
CHECK
PLAN
Collect
Current
Data
Determine
Gaps
Perform
Actions
Make
Actions
Operational
Define
Actions
DO
10
Methods of HR Controlling
Quantitative
Methods
Qualitative
Methods
11
Quantitative Methods
Quantitative Methods
- HR Key ratio systems, Score Cards
- HR cost reduction initiatives
Quantitative Indicators of HR Controlling

- Cost of personnel (recruiting, selection, work in, training,
fringe benefits etc. )
- Productivity measures (hours per cycle, product etc.)
- Personnel budget (Job count, head count, total HR expenses,
BU HR cost etc.)
12
Qualitative Methods
Qualitative Methods
- Qualitative methods are employee evaluation assessments, surveys,
personnel portfolios, scenarios or SWOT analyses
Qualitative Indicators of HR Controlling

Qualitative demand of personnel (number and form of skills)
Employee evaluation results
Measurements of work and employee satisfaction
13
Why ratios?
Ratio Comparison:
Time line comparison
Between companies or units - Benchmarking
Budget vs. current situation comparison
System of Ratios :
Ratios should be aggregated in a useful manner f.e. in a Balanced Scorecard
14
Benefit of ratios
- Early Warning System

- Planning/ Forecast
- Control
- Reduction of Uncertainty
- Clear Reporting
- Transparence in HR

- Leverage of HR potential
- Basis for Reorganization - Head Count Adjustments
- Activation of Unused Resources
15
Overview of Ratios in HR
Continuous
Education
&
Training
Career
Planning
Leadership
Developmen
t
HR Development
Young
Talent
Development
Strategy
Alignment
Cost/
Performance
Ratios
16
Typical Ratios for Efficiency Analysis in HR
Ratio
Steering/ Target
Actual vs. Target
Personnel cost per unit

produced
Personnel cost per unit
sold
Cost of personnel per
product developped
Turnover per employee
Turnover per employee
work hour
Contribution margin per
employee
Cash flow per employee
17
Steps to Your HR Scorecard/ Key Ratio System

Definition and Priorization of HR Goals & Targets
Definition of Ratios for HR Controlling
Definition of HR Ratio Users and Their Needs
Definition of Data Sources and Benchmarking Data
Definition of Survey Time and Areas
Selection of Operation Procedures for Ratio Production
Definition of Report Structures, Distribution Processes

and Confidentiality Schemes
18
Checklist For Key Ratio System
Is it available to the users?

Cost/benefit
Validity of data
Purpose - goals
Organization aspects (maintenance, users)
19
HR Key Ratio System - Sample

HR Key Ratio System
(excerpts)
Personal Development
Outplacement
HR Controlling
Training quota
Costs per social plan per

employee

employee
Exit compensation costs

(range, average)

hour per category
Number of
outplacements per
period,
Percentage of cost of
personnel from
contribution margin
Number of
outplacements per
Business Unit
Net demand on
personnel
Absorption quota
Structure of test results
Annual time of education
spent
Training costs per day
and employee
Return on Intellectual
Capital ROIC
Average age of
personnel
Quota of female
employees
20
HR Controlling with BSC

Total training expenses
per employee
Financial
Financial
Goal
Measure
Target Initiative
Financial
Goal
Measure
Target Initiative
Goal
Vision
and
Strategy
Customer
Customer
Goal
Measure
Target Initiative
Customer
Goal
Measure
Target Initiative
Goal
Measure Target
Measure Target
Initiative
Initiative
Internal Business Process

Internal
Business
Goal
Measure
Target Process
Initiative
Internal
Business
Goal
Measure
TargetProcess
Initiative
Goal
Learning and Growth

Growth
Goal Learning
Measure and
Target
Initiative
Learning
and
Growth
Goal
Measure Target
Initiative
Goal
Measure Target
Recruiting efforts
quota
Initiative
Measure Target
Initiative
Training
quota
21
Actual Trends, Best Practice
1. Line Managers Take Over HR

Responsibilities (Article)
2. Beyond Budgeting Model Empowerment
3. HR Becomes Performance Manager instead
of HR Administration Manager
4. HR Outsourcing
22
1. Line Managers Take Over HR
Line Managers Take Over HR

Responsibilities
(Article & Discussion)
23
2. Trend: Beyond Budgeting

Environment
of Enterprise
Success
Factors
Framework
Processes
& Measures
Investors are
demanding more
Quicker response
time
Governance
Targets
War for talent
Skilles Employees
Challenges &
Values
Compensation
Models
Globalization
Price Pressure
Continuous
Improvement
Accountability
/ Transparency
HR Strategy
Quicker
Innovation
Operational
Excellence
Empowerment
Ressources &
Coordination
Customers
choose freely
Customer Focus
Optimized
Organization
Measurements
Source: CAM-BRT Framework, SAP HR Congress 2002
24
3. HR Becomes Performance Manager
HR Unit Becomes Enabler of Strategy Execution

HR Becomes Performance Manager instead of HR
Administration Manager with formula:
CVA = (VAP ACP) x P
VAP = Average return of personnel
ACP = Average cost of personnel
P = Number of employees
CVA = positive, if VAP > cost of personnel
25
4: Outsourcing - Either Eliminate the Complexity

Yourself or Set Targets With The Outsourcer
HR Admin Outsourcing Evaluation
(Cost / Employee)
Cost-Benefit Impact
Of Various HR Admin Outsourcing Scenarios
$86
$11
$74
$12
Outsourcing
Transaction
Costs
$MM
$28
$13
$58
$25
$5
$5
Baseline Costs
(HR Admin Today)
$9
$18
$62
$4
HR Admin
Reengineered Costs
$40
Internal
Reengineering
Transition
Costs
$26
HR Admin Today
HR Admin
Reengineered
HR Admin Outsourced
HR Admin
Outsourced Costs
Lower labor costs

Lower overhead costs
Greater infrastructure scale
People Costs
Infrastructure Costs
Residual & Vendor Mngt Costs
Overhead Costs
Vendor Margin
US
PLE
A
EX M
2001
2002
2003
2004
2005
2006
Source: Booz Allen Hamilton Analysis 2004
26
4: Yet Outsourcing is Not Realizing

Always the Full Potential
Expected And Actual Benefits Of Outsourcing
Access to Vendor
Expertise And
Sophistication
Main Challenges With Outsourcing

Weak Control Of Cost / Performance
Data
68%
42%
Excessive Standardization
60%
Improved Quality
Of Delivery
32%
31%
Outsourcers Unresponsive to Changing

Business Needs
28%
Poorly Managed Migration
36%
24%
Inflexible Contracts
Increased Focus
On Core
Competencies
22%
57%
High Turnover In Account Management
Staff
39%
Cost Reduction
Expected
23%
Excessive Effort in Contract Mgmt
Actual
JV Unable To Commercialize
17%
0%
10%
20% 30% 40% 50%
14%
12%
Lingering Shadow Staff
22%
Balance Sheet
Improvement
19%
Performance And Cost Worsened
44%
Key Staff Attrition

60% 70% 80%
Percentage Of Respondents Rating The Benefits As Significant
10%
9%
7%
0% 5% 10% 15% 20% 25% 30% 35%
Percent Of Respondents
Sources: GartnerGroup; Booz Allen BPO Survey of 100 U.S. Companies 2004
27
Best Practice: Telco
Model Telco
28
Strategic
Controlling Model Business Units TELCO

Supporting Units
Unit ABSD
IV
Process and Product

Engineering
Prod.- Strategy
and Management
II
Projects
Operatiions
Management Unit TCTZ
BSC
Mandates
Tech. Contr.
III
IT& Infrastructure
Production
Plattform
Mgmt
I
Strategy Definition
Review Hypotheses
Strategic Initiatives
Scenario analysis
Challenging
Reporting
Oper. Controlling
Central
HR Controlling
Sec. & Fraud
Mgmt
Operating Units ABSD
III
Strategy Definition
Strategic
Controlling
Unit HR HDF
II
III
IV
Cost Models
Target Costing
Support,
Audits
Key Indicators
Target Parameters
and
Targets for
Processes and
Plattforms
Strategic Input
Tasks for BPR
29
Ressource Requirements ABSD

Operations 2004 - 2006
30
Ressource Requirements ABSD

Initatives 2004 - 2006
31
Balance Sheet HR Controlling Telco

Productivity KL employees (actual)
70 %
Gross capacity
(equals personnel of unit KL)
yx FTE
Net capacity
yx FTE
(equals employee productivity x gross cap.

Full cost calculation
Gross personnel ABSD
(gross capacity)
yx FTE
Overhead
Back office, Assistances
- yx FTE
Management
(Head of AB, Dep. & Head of AB-XXX = 1 FTE
-yx FTE
AB-AWN unproductive employees (incl. staff)
- yx FTE
Net capacity Full Cost
yx FTE
Full cost minus net capacity = 5.08%

32
Telco HR Action Plan & Issues

HR Reporting
Net capacity
Gross capacity out of forecast
: yx FTE
: yx FTE
Actual net capacity
: yx FTE
Delta net capacity

Delta gross capacity
: yx FTE
: yx FTE
Conclusion / actions:
To cover the actual demand, we would have to recruit additional XX
employees FTE (Full Time Equivalents).
This is possible within the existing management structure.
Actions to be taken:
provide new locations and work centers for the new crew
33
Best Practice: Model Die Post
Model: Die Post
34
operational
strategic
The HR Controlling Model of the Post

distinguishes between operational / strategic
dimensions and quantitative and qualititave data
Value Chain View
Strat. Targets/ Programmes
Cost Optimization
Quantitative HR Measures
Culture Development
Management Dev.
Knowledge Management
Personnel Key Data

Time and Expense Reporting
Salary data
Fluctuation
Absences
Operational View
quantitative
Employee Satisfaction
Exit statistics
Employee Valuation /MBO
Education & Training data
Growth perspective
qualitative
Source: Lecture Hans Gurtner, NDS HRM NDK1, 22. Oktober 2004 at BFH
35
HR Controlling Post Tasks& Challenges
Definition and Implementation of a single vision in HR strategy
HR Controlling means a holistic view on all important aspects in

planning, steering, controlling and information supply of HR
Management
HR Controlling defines, surveys and analyzes data periodically to

improve efficiency on resource management
HR Controlling defines all relevant aspects for Leadership and monitors

them tightly with a monthly reporting
HR Controlling delivers all relevant HR data for the employee MBO

process
HR Controlling empowers line managers with qualified suggestions and

consulting especially for increasing efficiency and effectivity of the
workforce
36
Best Practice: CS Real Estate
Model CS Real Estate
37
CS Real Estate: From Mission Statement

To A Balanced Scorecard (BSC)
Mission Statement
Target Categories of BSC
Performance
Value for
Our Owners
Finances
Value for
Users/ Customers
Customers
Personal Care
and Optimal
Decision Support
Documents
High Architectural
Quality
Structured Planning And

Operation Processes
w.Innovative Evaluation Processes
Criteria and Procedures
Within industry sector

employer of choice with attractive
working conditions
Employees
Cost
Growth
User / Customer
Process
Employees
38
Core Processes
The Process Map As A Basis For The BSC
PLANNING CORPORATE REAL ESTATE

OPERATIONS CORPORATE REAL ESTATE
PROPERTY MGMT / PORTFOLIO-MGMT
PROCESS CONSTRUCTION
Management &
Support Processes
PROCESS CONSULTING
FINANCE AND CONTROLLING
MANAGEMENT
FUNCTIONAL SUPPORT
39
Performance Indicators Are Measured within the Process

Targets Are Defined Via SLAs (Service Level Agreements)
Macro-Process PROPERTY MGMT / PORTFOLIO-MGMT"

Eigentmer
Micro-Process "Acquisition"
Eigentmervertreter
BU 15 / 17 18 /
37 / 67
Anlageobjekte
(Entscheidungsgremien
oder Vertreter gemss
Kompetenzregl.)
XFPI Akquisition
Unternehmen fr
Gebude Mgmt.
Finanz- und
Allokationsplan aus
Mikro-Prozess
Portfolio-Mgmt
Immobilienunterhaltsfirmen
Planer, Berater,
Immo-Fachstellen
und -Treuhnder
Externe
Hauseigentmer
**)
Anlagekriterien und
Investitionsabsichten
gezielt platzieren
Kommunikation**
Kommunikation**
Kommunikation mit
Marktpartnern
Liegenschaft-Angebot
Angebot grob
prfen / auswhlen
Genehmigung /
Entscheid
Genehmigung /
Entscheid
Grundsatzantrag mit
Rahmenbed.
Detail-Prfung***
Genehmigung /
Entscheid
Genehmigung /
Entscheid
Bauland-Angebot
***)
- Wirtschaftlichkeit
- rechtliche Kriterien
- technische / funktionale Prfung
- Bauland:Projekt entwickeln
- Projekt: ev. berarbeiten
Projekt-Angebot
externe Prfung /
Analyse - je nach
Branche/Angebot
Investitions-/
Kaufantrag
Verhandlungen****
Vertragsabschluss
und bernahme /
Beurkundung
****)
Vertragsverhandlungen
- Kaufvertrag
- GU / TU Vertrag

Prozesse
40
Alignment Of Structure to Processes

Link To Responsibility
Special
Tasks
Process
Responsibility
MANAGEMENT
Strategy
Budgeting, 3Y Planning
Head
Real Estate
H. Suter
R. Malakow
Implementation HR
Strat. Partner Management
Strategy and
Development
Support
D. Frey
Corporate Real
Estate CH
U. Konzalla
PLANNING
OPERATIONS
FACHFHRUNG /
SUPPORT
CONSULTING
MANAGEMENT
Bus. Development
Portfoliomanagement Investmts
D. Keller
PROPERTY MGMT
POERTFOLIO MGMT
Construction
Projects
J. Burkhard
CONSTRUCTION
M. Egger
Accounting /
Controlling / MIS
J. Kellerhans
FINANCE AND ACC.
41
Implementation Of Perfomance Measurement

With BSC Into Employees MBOs
n
Business Unit heads are responsible for the integration of departemental

BSCs into employees MBOs (Management By Objective) and employees
targets
Some key ratios out of the processes were directly taken form process
indicators, others had to be adapted
Departmental BSC are not the only criteria for employee evalution within
the MBO process other process related measures are included
BSC
Process Property Mgmt
BSC Process
Operations
BSC Process
Construction
Name: X
MBO Targets for

Employee X
Other Specific Objectives
42
Literature/ References
The ROI of Human Capital by Jac Fitz-Enz, Frankfurt 2003
The HR Scorecard: Linking People, Strategy, and Performance
by Brian E. Becker, Mark A. Huselid, Dave Ulrich, 2005
How to Measure Human Resource Management by
Jac Fitz-enz, 2004
HR Metrics The World Class Way, by Sullivan, John, 2005
43
Contact
Krebs & Partner AG
Organization Development -Team Development - Coaching
Erlenauweg 17
CH-3110 Mnsingen
Tel.: +41 (0)31 721 84 14
Fax : +41 (0)31 721 85 89
Member of ICF Switzerland-International Coach - Federation
www.tbka.ch
juerg.krebs@bluewin.ch, Mobile: +41 79 292 75 19
ajungmeister@bluewin.ch, Mobile +41 79 404 18 94
44

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HR Meeting 2005

2. HR Controlling & HR Development

3. HR Key Ratio System, HR Key Ratios

The Changing Role of HR

Krebs & Partner AG, ajungmeister@bluewin.ch, juerg.krebs@bluewin.ch

Your Company Team Work

In which quadrant of this scheme do you think

Krebs & Partner AG, ajungmeister@bluewin.ch, juerg.krebs@bluewin.ch

Time Spent of an Average HR

Source: Marc Fiedrichsen IBM BCS, http://www.ehlite.ch/april03/12eprint.htm

Strategic and Operational HR Controlling

Holistic, network of causes

Krebs & Partner AG, ajungmeister@bluewin.ch, juerg.krebs@bluewin.ch

Short to Mid Term

Strategic HR Controlling: HR Portfolio

Krebs & Partner AG, ajungmeister@bluewin.ch, juerg.krebs@bluewin.ch

Strategic HR Portfolio Valuation

Krebs & Partner AG, ajungmeister@bluewin.ch, juerg.krebs@bluewin.ch

Krebs & Partner AG, ajungmeister@bluewin.ch, juerg.krebs@bluewin.ch

Tasks of HR Controlling - The Cycle

Krebs & Partner AG, ajungmeister@bluewin.ch, juerg.krebs@bluewin.ch

Krebs & Partner AG, ajungmeister@bluewin.ch, juerg.krebs@bluewin.ch

Quantitative Indicators of HR Controlling

Krebs & Partner AG, ajungmeister@bluewin.ch, juerg.krebs@bluewin.ch

Qualitative Indicators of HR Controlling

Krebs & Partner AG, ajungmeister@bluewin.ch, juerg.krebs@bluewin.ch

Krebs & Partner AG, ajungmeister@bluewin.ch, juerg.krebs@bluewin.ch

- Early Warning System

Krebs & Partner AG, ajungmeister@bluewin.ch, juerg.krebs@bluewin.ch

Krebs & Partner AG, ajungmeister@bluewin.ch, juerg.krebs@bluewin.ch

Typical Ratios for Efficiency Analysis in HR

Actual vs. Target

Personnel cost per unit

Krebs & Partner AG, ajungmeister@bluewin.ch, juerg.krebs@bluewin.ch

Steps to Your HR Scorecard/ Key Ratio System

Definition of Ratios for HR Controlling

Definition of HR Ratio Users and Their Needs

Definition of Data Sources and Benchmarking Data

Definition of Survey Time and Areas

Selection of Operation Procedures for Ratio Production

Definition of Report Structures, Distribution Processes

Checklist For Key Ratio System

Is it available to the users?

Krebs & Partner AG, ajungmeister@bluewin.ch, juerg.krebs@bluewin.ch

HR Key Ratio System - Sample

Costs per social plan per

Cost of personnel per

Exit compensation costs

Cost of personnel per

Krebs & Partner AG, ajungmeister@bluewin.ch, juerg.krebs@bluewin.ch

HR Controlling with BSC

Internal Business Process

Learning and Growth

Krebs & Partner AG, ajungmeister@bluewin.ch, juerg.krebs@bluewin.ch

Actual Trends, Best Practice

1. Line Managers Take Over HR

Krebs & Partner AG, ajungmeister@bluewin.ch, juerg.krebs@bluewin.ch

1. Line Managers Take Over HR

Line Managers Take Over HR

Krebs & Partner AG, ajungmeister@bluewin.ch, juerg.krebs@bluewin.ch

2. Trend: Beyond Budgeting

War for talent

Source: CAM-BRT Framework, SAP HR Congress 2002

Krebs & Partner AG, ajungmeister@bluewin.ch, juerg.krebs@bluewin.ch