1. Chapter 12 Evaluating and improving human resource management

2. Learning objectives Understand approaches to evaluating human resource management activities Describe how effective evaluation contributes to the strategic achievement of organisational goals Outline the steps and phases involved in benchmarking Outline the key components of a ROI evaluation

3. HRM measurement and evaluation provides a basis for determining how HR adds value to the organisation and improves its capacity to deliver its mission identifies areas that have met or exceeded targets and highlight poorer performing dimensions for attention common evaluation measures include: performance on strategic goals; job satisfaction ratings; the level of participation in training and development activities; % of employee/volunteer retention; and customer satisfaction surveys

4. HR Audit Includes: productivity per dollar of people costs e.g. salary,training etc extent to which recruitment, selection, and retention processes meet the organisation’s targets success rate of talent identification and succession management programs aimed to develop current employees for promotion number and nature and resolution of employee grievances degree to which training has closed the gap between current competencies and needed future competencies % of ‘poor’ performers’ improved performance as a result of HR initiatives Employee satisfaction and engagement levels

5. Benchmarking a systematic process of measuring an organisation’s products, services and practices against those of similar organisations, particularly those organisations that are deemed superior performers Basic elements typically covered include: Employment and Deployment Salaries and Remuneration Staff Training and Development Equal Employment Opportunity Occupational Health Safety and Welfare Employee Relations

6. Step 1 Identify the essential functions, products or outputs to benchmark Phase 1 : Planning Step 2 Identify external organisations or functions within the organisation with superior work practices for comparison Phase 2: Analysis Step 3 Determine what data sources are to be used e.g. HR systems, personnel records, surveys, interviews Step 4 Determine the current level of performance. The baseline measurement will enable the gap in performance to be identified Step 5 Develop a vision for improving future practice based on the benchmarking findings Phase 3: Integration Step 6 Report progress to all stakeholders on an ongoing basis. Communication and feedback are crucial components of benchmarking Step 7. Establish functional goals linked to the overall vision for the organisation Phase 4: Action Step 8 & 9 Develop action plans and implement the best practice findings. Step 10 Update knowledge on current work practice to facilitate continuous quality improvement Benchmarking steps

7. Example of data from the Racial and Gender Report Card College Professional Administration by Position Division I WhiteBlackAsianHispanicNative American Other Minority 2005-06MenWomenMenWomenMenWomenMenWomenMenWomenMenWomen Academic Advisor/Counselor 24.5%49.1%13.5%10.0%0.0%0.1%1.2%1.0%0.0% 0.3% Business Mgr. 42.8%48.3%1.0%2.1%0.3%0.7%1.0%2.8%0.0%0.3%0.0%0.7% Compliance Coordinator/Officer 43.5%42.3%7.9%4.4%0.3% 0.9%0.3%0.0% Equipment Mgr. 75.4%9.9%7.0%1.6%1.9%0.0%2.4%1.1%0.5%0.0% 0.3% Fundraiser/Development Mgr. 64.6%26.5%4.5%1.1%0.7% 0.9%0.2% 0.0%0.2%0.4% Facility Mgr. 79.2%11.6%4.1%1.6%1.9%0.3%0.8%0.0% 0.5%0.0% Life Skills Coordinator 17.8%57.2%10.6%9.6%0.5%0.0%1.4%1.9%0.5%0.0% 0.5% Promotions/Marketing Mgr. 59.5%32.3%2.9%2.4%0.5%0.0%1.6%0.5%0.0% 0.3%0.0% Sports Information director 88.4%9.5%0.4% 0.0%0.4%0.9%0.0% Asst. or Assoc. SID 69.7%24.4%1.5%1.1%0.6%0.8%0.6% 0.2%0.0%0.4%0.0% Strength Coaches 75.2%9.9%10.3%1.2%0.8%0.2%0.8%0.4%0.6%0.2%0.0%0.2% Ticket Manager 52.4%38.8%3.3%1.6%1.0% 1.3%0.3%0.0% 0.3% Note: Data provided by the NCAA. Historically Black Institutions excluded x= Data not recorded Source: (Lapchick et al 2006).

8. Balanced scorecard approach The balanced scorecard is a management and measurement system that provides a framework for translating an organisation’s vision and strategy into action (Kaplan, 1996; Kaplan & Norton, 1996) used to translate strategy into operational terms by measuring a full range of perspectives: financial, customer, internal business process, and learning and growth

9. The HR Scorecard* Focuses on measures of five key human resource related elements: 1. Workforce Success. The degree to which the workforce has accomplished the key strategic objectives for the business. 2. Right HR Costs. Is the total investment in the workforce appropriate? 3. Right Types of HR Alignment. The extent to which there is alignment of HR practices with the business strategy and differentiated across positions, where appropriate. 4. Right HR Practices. The degree to which the design and implementation of best HR management policies and practices is used throughout the organisation. 5. Right HR Professionals. The skills in HR needed to design and implement a world-class HR management system are present. *See: http://www.markhuselid.com/hr.html

10. Kirkpatrick’s 4-level model of evaluation Level 1: Measures reaction and the action planned following training or learning initiatives. Level 2: Measures learning and knowledge changes as it relates to successful program implementation Level 3: Measures the extent to which trainees apply learned skill and knowledge to the job. Level 4: Measures changes in business results related directly to the HR initiative

11. Return On Investment a traditional financial measure based on historic data and thus is a relatively static measure The formula for ROI is: (total benefit - total costs)=____X 100 = ROI total costs

12. Calculating ROI Example: Training program Participant Annual improvementBasis of estimateIsolationConfidence Adjusted 1value (A)factor (B)level (C) value (D) $36,000 Improvement in 50%85%$15,300 project efficiency. Time saved problem solving ($3k mth X 12) In this case the participant allocates 50% of the improvement to training but is only 85% confident about this estimate. The confidence % is then multiplied by the estimate to develop a cost benefit value, as follows: Improvement value (A) = $36,000 X % of improvement isolated to training = 50% X Confidence level (C) = Cost benefit improvement value (D) $15,300 ROI = (Total benefits - Program costs) X 100

13. Example of Impact Study Report Program Title: Continuous Improvement Program in Customer Relationship Management Target Audience: Pilot groups of cross- functional team members Duration: 6 weeks (36 hours) Technique to Isolate Effects: Participant estimation, trend analysis Technique to Convert Data to Monetary Value: Historical costs, internal experts, labour cost per unit, units per person per hour (formula) Fully Loaded Program Costs: $53 000

14. Reaction Results Learning Results Application Results Business Impact Results Return on Investment Intangible Benefits 4.8 out of 5 achieved on Overall Satisfaction 4.8 out of 5 achieved on recommending program to others Rating of 4.5 on relevance of program to daily job 94% reported intention to apply learnings to Team Project Plan within 30 days of the workshop Participants demonstrated ability with select continuous improvement skills during action learning scenarios (i.e. root cause analysis exercises ;values added flow analysis demonstration) Participants completed Qualification assessment with 100% accuracy 94% applied Continuous Improvement skills to a defined project within 30 days of workshop 86% report significant productivity increase in daily work as a result of applied Continuous Improvement skills Monetary benefits from increased units per person per hour $79,550 Value (based upon average CRM life cycle of 21.5 weeks) Monetary benefits from increased labour efficiencies: $70,058 ROI (%) = Net Program Benefits Cost $149,608- 53,000 53,000 = 1.82 x 100 = 182% Increased systems view Increased problem solving skills Improved cross functional collaboration Improved decision making Improved process understanding Better picture of the cost associated with CRM

15. Summary evaluation assists the organisation to assess financial costs and benefits of HR plans and polices evaluation can be internally or externally focussed and may be carried out by organisational staff, external agencies contracted to undertake evaluations or by independent bodies each form of evaluation provides the organisation feedback on which to assess how its HR contributes strategically to organisational effectiveness