Future of HR Metrics

A Brave New World

 HR Continues to Evolve
& the model defines our aspirations
Add Value
& continu
Maximize
Upside
Strategic e to
HR Planning
grow
Impact/Contribution to the Business

Culture
Organizational & Image
Design
HR as
Survey Action Business
Planning Partner

Staffing EEO/AA

Employee Training &

Relations Development Performance
Labor/Union Management
Relations
Compensation
Benefits HR Information
Systems (HRIS)
Safety &
Limit Compliance
Liability Workers’
& Compensation
Protect
Downside

Labor Employee Personnel Human Organizational

Relations Relations Resources Effectiveness

A Century of Evolution in the Function

 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
•What range of
resources
(financial and non-
Impact financial) should
be considered?

Effectiveness •What is the

appropriate level
of investments?
Efficiency •How should
investable
resources be
allocated to
Source: Boudreau and Ramstead maximize results?
 Three Levels of Metrics
Effectiveness
•What unique
combination of
policies and practices
Impact would best build the
necessary human
capital?
Effectiveness •What factors link
policies and practices
to human capital
Efficiency enhancement?
•What attributes
distinguish effective
Source: Boudreau and Ramstead from ineffective
Internal and External
Historical
Benchmarks
 The Role of HR
Future / Strategic Focus

Strategic Change Agent

• Staffing
Partner • Organizational design
• Strategic HR • Survey action planning
Planning • Performance
• HR as Business measurement
Partner • Training and People
Processes
• Culture and Image development
Administrative Employee Relations
Expert Expert
• Compensation • Employee relations
• Benefits • Labor relations
• HR information systems • Safety & workers’
• Compliance compensation
• Diversity and EEO
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

Identify
Scan the Identify Develop Communicate
Strategic
External People HR the
Business
Environment Issues Strategy HR Strategy
Issues
 The Common HR Approach

The Inside-Out Approach

Communicate
HR practices, Articulate how
to the business
processes, what we do
what a good
and adds value to
job we are
systems The business
doing

Source: Patrick Wright

 The Better HR Planning
Approach
The Outside-In Approach

Develop an Use the metrics

Identify the
HR strategy to demonstrate
business model
to execute the or prove how
components
business model we are driving
and areas to
with relevant business
drive value
metrics performance

Source: Patrick Wright

 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 • Talent Retention • Market Share
Impact
• % Black Belt Leaders
• Employer Brand
Source: Patrick Wright
Do We Really Measure how HR is
Driving Business Performance?

Business Actual HR
Objectives Measures
 Driven to Win  Headcount
 Flexible  Turnover Rates
 Embracing Risk  Succession Candidates
 Creative  Time to-fill, train, on-board
 Global  Cost Reduction
 Fast  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
•What is the link
between
sustainable
strategic success
Impact and human
resource
management?
Effectiveness
•Which talent pools
are most critical for
Efficiency competitive
advantage?
•How could
Source: Boudreau and Ramstead improving human
 Business Environment

Company

HR Department

Inputs Outputs

Internal
Feedback:
Efficiency
Effectiveness
External
Feedback:
Impact
 Scope of HR Measurement
Approaches
Value

Scorecards Strategic Impact

and Organizational Effectiveness
Drill Downs Validity and Rigor
Causation
Data Systems Leading Indicators
and Portals

Benchmarks

Ad hoc HR
Measures

Time

Source: Center for Effective Organizations, USC

 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 People Processes
Fast -
different logic . . . 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 Dr. Miles H. Overholt
Pennsylvania State Human Resource Institute &
University Riverton Management
Consulting Group

Dr. Elena Granell Jay J. Jamrog

Instituto De Empressa, Human Resource Institute
Madrid The University of Tampa
 Research Questions
 Can we identify disconnects Strategy
between people and strategy?

 Can we identify disconnects Alignment

between people and process? =
Successful Execution
 Can we identify strategy and
operational blockages?
People Processes

 Can we identify tensions that

create disconnects and blockages
 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
Alignment
 Customer Focus
=
Successful Execution
 Leadership
Behavior
 Performance Processes
People Processes

 Culture
 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 CURIOSITY

• Hit it to me / My team • So much to learn

• How good: So little time
- Do I HAVE to be? • I wonder what will
- CAN I be? happen today

Source: Steve Miranda

Faster up the Learning Curve
HIGHER PERFORMANCE SOONER

WHAT YOU
NEED TO KNOW

PROCESS
 Pushing The HR Curve
# People Who
Know the Solution

Problem Complexity

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