COMPREHENSIVE FRAMEWORKS

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COMPREHENSIVE FRAMEWORKS METHODOLOGIES TO HUMAN
CAPITOL PLANNING

• Ideas for Today and Tomorrow
• What can you do to get a better return on your
  investment in your human capital

The ROI of Human Capital, by Dr. Jac Fitz-enz
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Brief Overview of Human Capital

• Human Capital - is a paradigm of human
  resource management that suggests a company
  should measure and manage its intangible assets
  just as it does its tangible assets. A companys
  intangible assets or intellectual capital are
  defined by three categories
• A) structural capital, B) customer capital and
  C) human capital.

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• Structural Capital - refers to intellectual
  property
• such as patents, methodologies, etc.
• Customer Capital - refers to knowledge of
  individual
• accounts, customer demands and preferences.
• Human Capital - each employees individual
  knowledge concerning the company, culture and
• getting business done.
• A company who successfully manages employee
  performance and retention will achieve a
  competitive advantage through human capital
  leverage.

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APPROACH A TRADITIONAL HC ASSESSMENT

• Measure overall employee satisfaction to provide
  a benchmark from which all other measures will be
  compared.
• Assess current state of new employee acquisition
  efforts
• Measure impact of current employee promotions,
  career development programs and procedures
• Determine overall satisfaction in areas of
  leadership and communication styles

• Determine overall satisfaction regarding general
  business procedures.
• Drill down into specific department to determine
  leadership, communication procedures within a
  particular mission critical function.
• Apply industry standard formulas HCIROI analysis
  to set goals.
• Provide a HR Scorecard that establishes the
  foundation for ongoing tracking.

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APPROACH B Employee Retention/Tracking Focused

• Assess Employee perspective on key attributes of
  performance retention.
• Determine areas of most importance to current
  employees to help prioritize corrective action.
• Determine what problems exist among key areas of
  importance.
• Measure employee loyalty to company.

• Determine how current employees view the overall
  market of available employment identify
  potential competitive employment disadvantages.
• Apply industry standard formulas to assess HR
  investments through ROI analysis which can be
  tracked over time.
• Provide HR Scorecard that assist with the use and
  dissemination of human capital data.

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DEFINITION OF WORKFORCE PLANNING

• Workforce Planning (WFP) ensures that
• "the right people with the right skills are in
  the right place at the right time.
• This definition covers a methodical process
  that provides managers with a framework for
  making human resource decisions based on the
  organizations mission, strategic plan, budgetary
  resources, and a set of desired workforce
  competencies.

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The Importance of Workforce Planning

• Human Capital practices accounted
• for as much as 43 of the difference
• between a companys market-to-book
• value and its competitors
• Human Capital ROI Study
• Deloitte Touche
• 2002

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Todays Situation

• Aging of the Workforce
• Increasing Benefits/Retirement Costs
• Aging Impact on Workforce Productivity
• Tight Labor Market
• Global Competitiveness
• Fast Paced Constant Changes in Economy

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WORKFORCE PLANNING - BENEFITS

• Benefits
• Drives shareholder value
• Increases competitiveness by hiring the right
  people for the job
• Bridge knowledge gaps that may result from
  employee turnover/new economy
• Achieve maximum organizational effectiveness
• Provides an opportunity to integrate separate
  initiatives into an overall plan

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DETERMINE THE MAKE-UP OF YOUR ORGANIZATION

• Go beyond the demographic information i.e.
  occupations, grade levels, skills, age
  retirement, diversity, turnover, etc., this info
  is valid and necessary but it is not the whole
  snapshot.
• Important - Trend data is extremely important to
  workforce analysis
• Is the turnover rate changing over time?
• Are there identifiable factors influencing
  turnover?

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DETERMINE THE MAKE-UP OF YOUR ORGANIZATION
(contd.)

• What types of positions have been filled
  recently?
• Include the "contingent" workforce, students,
  temporary, interns
• Succession Planning, employee development, career
  development, organizational development

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DETERMINE THE MAKE-UP OF YOUR ORGANIZATION
(contd.)

• External Influences
• Customer Expectations - ability to respond
  quickly
• Worldwide availability and supply of labor
• Competition of Labor
• Quality of Workforce
• Quality of Life
• Technology
• New Competencies

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CAPITAL PLANNING FRAMEWORK
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The Framework in Action

• Positively viewed factors
• The capital planning process is aligned to
  strategic intents and is linked to the firms
  budgeting and other performance management
  processes
• Focus is on building longer-term capabilities for
  sustainable performance improvement, rather than
  always on short-term returns and
• Financial discounted cash flow techniques (like
  NPV, IRR, etc.) are used to appraise and evaluate
  capital investment project proposals.

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Finding the Best HCM Strategy

• ONE SIZE DOES NOT FIT ALL!
• Tailor your HC strategy to your unique business
  strategy and market orientation
• Develop HC practices that align with this
  strategy and orientation
• Evaluate your current HC practices to ensure
  alignment

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Finding the Best Strategy (contd.)

• Focus on the basics
• Understand which jobs are critical to company
  success
• Identify and nurture top performers
• Provide multiple career paths for employees
• Design incentive plans that hold individuals
  accountable
• Effectively communicate key strategic
  information to employees
• Ensure that employees understand what is
  expected of them

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Finding the Best Strategy (contd.)

• Turnover ratios may not be a good predictor of
  financial performance
• Examine the metrics you are using to assess human
  capital management
• Research shows that companies who tailor their
  human capital practices to their market
  orientation, reap financial rewards . . . . .

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Focus on Value

• Focus on how HCM drives important business
  outcomes
• Revenues, profits
• Customer retention
• Quality performance

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Secret to Success

• Early identification, measuring and fine tuning
  human capital approach
• Keeping necessary data
• Questioning workforce tactics, for example
• Does the proposed action fit our business
  context?
• What is the return on investment?
• How long until we get results?

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The Merits of Reorganization using HCM

• Case Study 1
• CNA Financial Corporation

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CNA Financial Corporation

• Problem
• matching the internal auditing staff capabilities
  with stakeholders expectations
• Approach
• Strategic assessment of the department in
  question
• Develop a tailored Human Capital Management
  process using five key steps

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Five Key Steps
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The Conclusion

• The final results
• Internal auditing is recognized as a valuable
  business unit
• Other departments seek to partner with auditing
• Employees from this unit have become key leaders
• The department is recognized as providing top
  financial talent

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Analytical Systems

• Case Study 2
• SASs Approach to HCM and a
• Government Agency Success Story

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Moving from HR Management to HCM

• Just as financial management, supplier
  management and customer management are critical
  to the well-being of an organization, human
  capital management is no longer a tactical
  process rather, it needs data-driven expertise.
• SAS
• Best Practices A Blueprint for Human Capital
  Management Strategy

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The Changing Model of Human Resources Management

• Human capital management requires HR
  professionals to apply new practices, including
• Measuring intangibles
• Identifying patterns in data by using
  analytical-based technology
• Anticipating future needs by understanding
  correlations between measures and take action

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SAS Human Capital Management in Practice

• We are constantly inundated with requests for
  personnel information and reports from a variety
  of internal and external sources. We needed a
  fast, efficient way to get our HR data to our
  managers and reduce the burden on the HR staff.
• Tom Gramlich
• Assistant Personnel Officer
  US Census Bureau

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Why Adopt a New HR System?

• Aid in developing effective workforce plans
• Help retain employees and/or recruit new ones
• Anticipate the loss of employees to retirement
  and attrition

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Todays HCM should include

• Organizational goals supported by manpower-driven
  data
• Align people, processes and technology around a
  common goal
• Anticipate, forecast and predict future HC needs
  and changes
• Leverage benchmark data to identify best practices

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HCM Drivers
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After Implementation

• Once a HCM driven analytical system is
  implemented, HR practitioners can
• Deliver valuable HR information to decision
  makers
• Easily accommodate changes in organizational
  structure
• Validate HR activities by providing the tools to
  build business cases supported by quantifiable
  data
• Anticipate changes and build models

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Public Service Workforce Planning

• Case Study 3
• Australian Capital Territory
• Approach to Workforce Planning and Management in
  the Public Service

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ACT Framework
HRMIS environment
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ACTs Workforce Planning and Management Framework

• Desired outcome of this program
• That each agency adopts this framework
• Workforce planning and management activities
  increase within an agency
• Review and report effectiveness of workforce
  planning and management programs

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Success

• The Roads Department has made workforce planning
  a number one priority in their 2003-2004 HR plan
• ACT Fire Brigade Certified Agreement 2003-2004
  contains many aspects of the framework
• The Treasury department listed workforce planning
  in the top five requirements in the 2003-2005
  Strategic Directions document