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Future of HR Metrics A Brave New World

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Presentation on theme: "Future of HR Metrics A Brave New World"— Presentation transcript:

1 Future of HR Metrics A Brave New World
Jay J. Jamrog Executive Director, HRI

2 HR Continues to Evolve & 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 EEO/AA Impact/Contribution to the Business Employee Relations Training & Development Performance Management Labor/Union Relations Compensation HR Information Systems (HRIS) Benefits Safety & Workers’ Compensation Limit Liability & Protect Downside Compliance Labor Employee Personnel Human Organizational Relations Relations Resources Effectiveness Source: Rich Vosburgh A Century of Evolution in the Function

3 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

4 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


6 Efficiency and Effectiveness

7 Three Levels of Metrics
Efficiency 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? Impact Effectiveness 17 Upgrade this one if you have any good ideas (maybe carry over any visual elements from previous slide). Make next two slides match format that you decide for this slide. Efficiency Source: Boudreau and Ramstead 62

8 Three Levels of Metrics
Effectiveness 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? Impact Effectiveness 17 Upgrade this one if you have any good ideas (maybe carry over any visual elements from previous slide). Make next two slides match format that you decide for this slide. Efficiency Source: Boudreau and Ramstead 62

9 Internal and External Historical Benchmarks

10 The Role of HR Change Agent Strategic Partner Administrative Expert
Future / Strategic Focus Change Agent Staffing Organizational design Survey action planning Performance measurement Training and development Strategic Partner Strategic HR Planning HR as Business Partner Culture and Image People Processes Administrative Expert Compensation Benefits HR information systems Compliance Employee Relations Expert Employee relations Labor relations Safety & workers’ compensation Diversity and EEO Day to Day Operational Focus

11 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.

12 Employee Relations Expert
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.

13 Change Agent Staffing Organizational Design Survey Action Planning
$ 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.

14 HR as Business Partner Culture and Image 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 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.

15 Starting with the Business Strategy

16 Basic Process for HR Strategy
Scan the External Environment Identify Strategic Business Issues Identify People Issues Develop HR Strategy Communicate the HR Strategy

17 The Inside-Out Approach
The Common HR Approach The Inside-Out Approach HR practices, processes, and systems Articulate how what we do adds value to The business Communicate to the business what a good job we are doing Source: Patrick Wright

18 The Better HR Planning Approach
The Outside-In Approach Identify the business model components and areas to drive value 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 Source: Patrick Wright

19 Metrics Model HR People Organization Efficiency Effectiveness
Time to Hire Cost per Hire Headcount Ratio Effectiveness Customer Survey “At the Table” Practice/Process Impact Efficiency Direct Labor Costs Indirect Labor Costs Positions Unfilled Effectiveness Employee Satisfaction Leadership Capability Talent Retention % Black Belt Leaders Employer Brand Efficiency Cost per Unit Shrinkage Defects/Scrap Effectiveness Customer Satisfaction Revenue Growth Market Share Source: Patrick Wright

20 Do We Really Measure how HR is Driving Business Performance?
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


22 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

23 Impact

24 Three Levels of Metrics
Impact 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? Impact Effectiveness 17 Upgrade this one if you have any good ideas (maybe carry over any visual elements from previous slide). Make next two slides match format that you decide for this slide. Efficiency Source: Boudreau and Ramstead 62

25 Business Environment Company HR Department Outputs Inputs
Internal Feedback: Efficiency Effectiveness External Feedback: Impact

26 Scorecards and Drill Downs Data Systems and Portals
Scope of HR Measurement Approaches Value Scorecards and Drill Downs Strategic Impact Organizational Effectiveness Validity and Rigor Causation Leading Indicators Data Systems and Portals Benchmarks Ad hoc HR Measures Time Source: Center for Effective Organizations, USC

27 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


29 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

30 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

31 Execution Alignment = Successful Execution
Strategy Alignment = Successful Execution People Processes To execute strategy you need to align your strategy, process and people!

32 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?

33 The Alignment Challenge
Fast - Logical ! Strategy Alignment = Successful Execution Slow . . . And follows a different logic . . . Fast - Logical ! People Processes Success and speed of execution depend on people alignment, Yet this is the hardest element to align!


35 What is the Alignment of People?

36 Research Team Dr. Albert A. Vicere Pennsylvania State University
Dr. Elena Granell Instituto De Empressa, Madrid Dr. Miles H. Overholt Human Resource Institute & Riverton Management Consulting Group Jay J. Jamrog Human Resource Institute The University of Tampa

37 Research Questions Can we identify disconnects between people and strategy? Can we identify disconnects between people and process? Can we identify strategy and operational blockages? Can we identify tensions that create disconnects and blockages Strategy Alignment = Successful Execution People Processes

38 Grounded in Management Theories from key disciplines
Strategic Thinking Marketing Operations Human Resources Organizational Culture

39 Included an analysis of four large data bases
Organizational DNA Customer Focused Cultures Employee Behavior Organizational Culture

40 The Alignment of People
Five Key Elements Strategy Marketplace Approach Alignment = Successful Execution Customer Focus Leadership Behavior Performance People Processes Processes Culture

41 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”

42 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


44 Conclusion

45 21st Century HR Professional
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 How good: - Do I HAVE to be? - CAN I be? So much to learn So little time I wonder what will happen today Source: Steve Miranda

46 Faster up the Learning Curve

47 Pushing The HR Curve Success = Intelligence + Access # People Who
Know the Solution Problem Complexity Success = Intelligence + Access Source: Steve Miranda

48 The “Evolving” HR Professional
Never Forgets… It’s Not HR’s Productivity We Should Be Concerned About 3

49 The “Evolving” HR Professional
Never Forgets… Getting Computers To Do the Work Is A Waste of Time 1

50 The “Evolving” HR Professional
Never Forgets… Because You Can Do It Doesn’t Mean You Should Do It 5

51 “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 Charles Darwin, “On the Origin of the Species by Natural Selection”, 1859 2


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