Future of HR Metrics A Brave New World

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Future of HR Metrics A Brave New World
Jay J. JamrogExecutive Director,
HRIJamrog_at_HRInstitute.org
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HR Continues to Evolve the model defines our
aspirations
continue to grow
Add Value Maximize Upside
Strategic HR Planning
Culture Image
Organizational Design
HR as Business Partner
Survey Action Planning
Staffing
EEO/AA
Impact/Contribution to the Business
Training Development
Employee Relations
Performance Management
Labor/Union Relations
Compensation
HR Information Systems (HRIS)
Benefits
Safety Workers Compensation
Compliance
Limit Liability Protect Downside
Labor Employee Personnel
Human
Organizational Relations Relations
Resources
Effectiveness
A Century of Evolution in the Function
Source Rich Vosburgh
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The Role of HR

• The 2002 Human Resource Competency Study found
  that 43 of HRs impact on business performance
  came from its strategic contribution.

Source University of Michigan Business School
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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
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Efficiency and Effectiveness
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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?

Efficiency
Source Boudreau and Ramstead
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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?

Effectiveness
Source Boudreau and Ramstead
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Internal and External Historical Benchmarks
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The Role of HR
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

• Employee Relations Expert
• Employee relations
• Labor relations
• Safety workers compensation
• Diversity and EEO

• Administrative Expert
• Compensation
• Benefits
• HR information systems
• Compliance

Day to Day Operational Focus
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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.
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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.
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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.
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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.
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Starting with the Business Strategy
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Basic Process for HR Strategy
Scan the External Environment
Identify Strategic Business Issues
Develop HR Strategy
Communicate the HR Strategy
Identify People Issues
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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
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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
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Metrics Model
Organization
HR
People

• Efficiency
• Time to Hire
• Cost per Hire
• Headcount Ratio
• Effectiveness
• Customer Survey
• At the Table
• Practice/Process Impact

• Efficiency
• Cost per Unit
• Shrinkage
• Defects/Scrap
• Effectiveness
• Customer Satisfaction
• Revenue Growth
• Market Share

• Efficiency
• Direct Labor Costs
• Indirect Labor Costs
• Positions Unfilled
• Effectiveness
• Employee Satisfaction
• Leadership Capability
• Talent Retention
• Black Belt Leaders
• Employer Brand

Source Patrick Wright
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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

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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

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Impact
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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
Source Boudreau and Ramstead
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Business Environment
Company
HR Department
Outputs
Inputs
InternalFeedbackEfficiencyEffectiveness
External FeedbackImpact
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Scope of HR Measurement Approaches
Value
Scorecards and Drill Downs
Strategic ImpactOrganizational
EffectivenessValidity and RigorCausationLeading
Indicators
Data Systems and Portals
Benchmarks
Ad hoc HR Measures
Time
Source Center for Effective Organizations, USC
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Building an Impact Model

• Do you understand your business
  partner/clients 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

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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

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Food for thought

• it is not the lack of a strategy that causes
  Senior Executives to lose sleep, but rather
  their organizations 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

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

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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!
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What is the Alignment of People?
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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
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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
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Grounded in Management Theories from key
disciplines

• Strategic Thinking
• Marketing
• Operations
• Human Resources
• Organizational Culture

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Included an analysis of four large data bases

• Organizational DNA
• Customer Focused Cultures
• Employee Behavior
• Organizational Culture

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The Alignment of People
Five Key Elements
Strategy

• Marketplace Approach

Alignment Successful Execution

• Customer Focus

• Leadership Behavior

• Performance

Processes
People
Processes

• Culture

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Impact MeasurementIts 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 dont know you they wont trust
  you
• Fear of being found out

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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 todays
  realities and deleting systems that do not add
  value

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Conclusion
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Key Attributes for the 21st Century HR
Professional

• Why vs How
• Let me show you something
• you dont 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
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Faster up the Learning Curve
HIGHER PERFORMANCE
SOONER
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Pushing The HR Curve
People Who Know the Solution
Problem Complexity
Success Intelligence Access
Source Steve Miranda
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The Evolving HR Professional Never Forgets
Its Not HRs Productivity We Should Be
Concerned About
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The Evolving HR Professional Never Forgets
Getting Computers To Do the Work Is A Waste of
Time
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The Evolving HR Professional Never Forgets
Because You Can Do It Doesnt Mean You Should Do
It
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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
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