Sharing Information





You too can help the organization

to drive the business.





1. Analyze the organization’s vision

– Evaluate, articulate and clarify the organization’s

strategic plan for accomplishing its vision. Every firm should have a unique vision

and a specific plan to achieve it. Consider all the ways that the HR department

currently helps or hinders the company’s mission. How could changes in HR policies,

procedures and practices positive affect the strategy? What can HR do to make

it more likely that employees will achieve the company’s vision according to its

strategic plan?

2. Create a business case

– Clearly show upper management how and why HR is a

strategic asset and how it can increase profi ts. Explain how HR will provide the

organization with its most critical resource: qualifi ed, valuable employees capable of

implementing and achieving the strategic plan. Show how HR can build employees’

knowledge, skills, abilities and attitudes to help the company achieve its mission. It

used to be that typical companies regarded the HR function in terms of "how can we

cut costs." But, today’s most profi table, forward-looking organizations view HR in

terms of "how can an HR strategy result in increased profi tability?" The answer to

this question will help upper management see the value of strategic HR.

3. Determine how the company creates value

– How does the organization serve its

customers or clients? Draw a strategy map that illustrates the steps toward meeting

strategic goals. Identify the behaviors that achieve those objectives.

4. Identify HR enablers and performance drivers

– Use the strategy map to diagnose where

HR can make positive changes to elicit behaviors that mark good performance.

5. Evaluate the current HR system

– Look at your organization, policies, procedures,

compensation and reward programs. Does the system augment the company’s key

performance drivers? Do your policies attract, develop and retain staffers who

produce the results the company wants? If not, the policies are misaligned.

6. Define what you need to measure

– What factors can you measure to show if HR

is helping or hindering strategic performance? Create a system to collect data and

measure those factors. This will be your company’s "HR Scorecard." Its numbers are

only as valuable as the relevant information they provide about specific situations.

Much of this data may not be readily available because it wasn’t previously measured.

Since irrelevant data is of no benefi t, you may need to collect new types of data, more

frequent data or data from new sources.

7. Implement the HR Scorecard

– Gather data, measure performance outcomes and

analyze the results. This information lets you tweak HR’s activities and approach to

support the company’s strategic objectives more powerfully.

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An effective HR Scorecard serves two purposes as an management tool:

• It gives you the information you need to adjust HR’s actions and behaviors to achieve

better results.

• It validates HR’s contribution to the company’s success in financial terms.



WHAT YOU CAN DO WITH YOUR SCORECARD

• Focus the Scorecard on the most important goals in terms of the firm’s strategy.

• Determine how the elements of HR’s own system reinforce (or contradict) one

another. For instance, if you are always at full staffi ng levels, but the quality of the

staff is inadequate, then HR is not meeting the fi rm’s needs or supporting a strategy

that requires a high quality staff.

• The things you decide to measure on the HR Scorecard will attract attention, thus

they are the elements that will get managed. Select them carefully.

• Showcase the relationship between the cost and benefi ts of HR deliverables. For

example, it may cost more per hire to attract, recruit and retain high-quality staff,

but the benefi ts may outweigh the additional cost.

• Help upper management understand how HR can create value, so executives see that

it may be fi nancially wiser to invest in HR than to cut its expenses.

• Differentiate between HR doables (what HR does) and HR deliverables (something

that creates desired employee behaviors that drive the company’s overall strategy).

• When evaluating measurements and results, recognize the difference between

leading indicators and lagging indicators.

• If the company’s strategy changes or the performance drivers affecting that strategy

change, HR’s strategy must also change and you must update the Scorecard.

• Conduct a Return on Investment (ROI) analysis to determine the best way for HR to

produce results that abet the company’s strategic plan.

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FINALLY WHAT HRM SHOULD DO

1. HRM VISIBILITY --Make regular presentations about your successes/

contributions/ upcoming programs.

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2. HRM credibility – Sustain credibility by "living" the values you espouse, working

with others, establishing win-win relationships, being honest and taking initiative.

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3. HRM Ability – Show you are able to organize, orchestrate, manage and deliver change initiatives.

which should aim at the HR objectives aligned with corporate objectives

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4. Cultivate the company’s culture – Deliberately weave the company’s values, mission,

vision and strategy into the HRM way into the business operation on day-to-day basis.

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5. Proficiency – Become capable in HR practices, theories and procedures. Commit to

learning and to delivering results based on what you learn from the company business.

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6. Business knowledge – Understand how your company operates. Know its

technological, strategic, fi nancial, sales and marketing functions. Understand how

they interact with each other and with HR, so you can identify ways HR can help.

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7. Strategic performance management -Identify and link the strategic ways

that HR can contribute to the company’s

overall strategy and success.

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8. HR SCORECARD - Identify and implement appropriate, accurate ways to measure the infl uence of

HR activities on performance drivers and corporate strategy.

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9. HRM IMPACT - Estimate the potential implications of a change in HR to identify patterns and

connections in seemingly unrelated data, and to determine the impact that this

change will have on the company’s profits.

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10.THE MOST IMPORTANT OF ALL - HR COMMUNICATION -

Communicate how HR affects overall strategy and profits, so senior management

can understand that the change in HR represents a positive return on investment.

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If You Don’t Measure it, You Won’t Improve it

There are two ways, the HRM can contribute to the

GROSS PROFIT CONTRIBUTION.



1.GROWTH ORIENTED INITATIVES.

2.COST EFFICIENT INITATIVES.

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1. THE GROWTH ORIENTED INITIATIVES.

Your impact on corporate performance is indeed measurable.

A statistical technique called regression analysis is one excellent way to measure your impact. The guiding principle of an effective regression analysis is to isolate certain variables (i.e., more effective talent management practices) in order to better measure their impact.

An example of this is focusing on a specific group of employees who can be tied to revenue, and implement initiatives or programs targeted toward these individuals.

Microsoft is even beginning to experiment with this technique in its workforce-planning efforts.

These are just a few of the ways you can demonstrate your impact on revenue and profits:

Improving the selection process for revenue-generating employees by implementing online assessments. This works particularly well for salespeople.

Increasing the return from your employee referral program; referred employees stay longer, produce faster, and perform better.

Ramping up proactive sourcing efforts to identify game-changing, high-impact employees who drive higher returns for the company.

Implementing an idea or innovation recruiting initiative that yields products or services that your company sells.

Targeting internal mobility/continuous recruiting initiatives to top performers and subsequently reducing the turnover rate of these individuals, who drive significantly more revenue and profits than their peers.

Implementing "source optimization programs" to ensure that the top-performing sources of hire as measured in revenue generated are optimized and used more often.

You can, of course, continue to operate as a service provider that handle TRAINIING AND DEVELOPMENT

PROGRAMS TO IMPROVE THE SKILLS AND KNOWLEDGE LEVEL TO IMPROVE

THE PERFORMANCE / PRODUCTIVITY/ HENCE THE RESULTS.

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Align tactics with strategy and monitor performance with scorecarding.

Greater efficiency—align tactics with strategy to use resources effectively.

Increased accountability—assign owners for each metric and responsibility for performance.

Increased focus—concentrate on priorities and eliminate distractions.

Improved communication—communicate results and actions taken to manage performance.

Improved collaboration—use metrics to link together people, departments, and processes.

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2.THE COST EFFICIENT INITATIVES.

-these initatives can help to enrich the bottomline.

HERE WE MOSTLY USE METRICS AS STANDARDS.



1. Strategic Perspective — the results of strategic initiatives managed by the HR group. The strategic perspective focuses on the measurement of the effectiveness of major strategy-linked people goals.



EXAMPLES

-change management capability of the organization

-organization compensation and benefit package with respect market rate.

-HR BUDGET / ACTUAL

-HR COSTS BENCHMARK EXTERNALLY

-HR annual resource plan.

-skills/ competency level

etc



2.Operational Perspective — the operational tasks at which HR must excel. This piece of the Balanced Scorecard provides answers to queries about the effectiveness and efficiency in running HR processes that are vital to the organization.





EXAMPLES

-time taken to fill vacancies

-cost per recruitment promotions

-absenteeism by job category

-accident costs

-accident safety ratings

-training cost per employee

-training hours per employee

-average employee tenure in the company

-lost time due to injuries

-no. of recruiting advertising programs

-no. of employees put through training.

-turnover rate

-attrition rate

etc







3.Financial Perspective — this perspective tries to answer questions relating to the financial measures that demonstrate how people and the HR function add value to the organization.



EXAMPLES

-compensation and benefits per employee

-sales per employee

-profit per employee

-cost of injuries

-HR expenses per employee

-turnove cost

-employee '' workers compensation costs''

etc



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HERE ARE SOME COMMON EXAMPLES.

FOR EACH ELEMENT, YOU CAN SET YOUR OWN

THRESHHOLD, BASED ON YOUR COMPANY

STRATEGY/ HR STRATEGY.

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1.ABSENTEEISM PER EMPLOYEE [DAYS]

2.AVERAGE RECRUITMENT TIME [DAYS]

3.EMPLOYEE TURNOVER [ % ]

4.EMPLOYEE SATISFACTION [ LEVELS ]

5.AVERAGE EMPLOYEE TENURE [ YEARS]

6.INDUCTION TRAINING [ % OF NEW EMPLOYEES]

7. TRAINING WORKSHOP [ % ] CONDUCTED/PLANNED

8. TRAINING AT EXTERNAL COURSES [ %] ACTUAL / PLANNED

9.PERFORMANCE APPRAISALS [ NOS.] AGAINST TOTAL EMPLOYEES.

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HERE ARE SOME

PROBABLE HR METRICS IN COMPENSATION ONLY



1.ANNUAL TOTAL COMPENSATION INCREASE RATE [%] [this year vs last year]

2.ANNUAL TURNOVER RATE.[this year v s last year]

3.COMPENSATION &BENEFITS AS A % OF SALES.

4.COMPENSATION & BENEFITS AS A % OF OPERATING EXPENSES.

5.COMPENSATION & BENEFITS PER EMPLOYEE [ this year vs last year]

6.COMPENSATION & BENEFITS COMPETITIVENESS INDEX.

7.INCENTIVE PAYMENT AS A % OF TOTAL COMPENSATION & BENEFITS.

8.BENEFITS SPEND AS A % OF TOTAL COMPENSATION & BENEFITS

9.COMPENSATION & BENEFITS BY LEVELS OF STAFF

-senior mgnt/ executives/middle mgnt/ junior mgnt/supervisors/staff etc.

10.NEW COMERS COMPENSATION & BENEFITS AGAINST TOTAL FOR THE YEAR.

11.% OF EMPLOYEES SATISFIED WITH CURRENT SYSTEM [ SURVEY ]

12.MEDICAL BENEFITS EXPENSES TOTAL [ THIS YEAR VS LAST YEAR]

13.MEDICAL BENEFITS EXPENSES PER EMPLOYEE.

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HERE ARE SOME STANDARDS METRICS

1

HR UTILIZATION

%

TOTAL PAYROLL $ / TOTAL SALES $









2.

HR PRODUCTIVITY

%

TOTAL EMPLOYMENT COST $/TOTAL







PRODUCTION VOLUME IN $ X 100









3.

HR BUDGET

%

ACTUAL $ / BUDGET $ X 100









4'.

ACCIDENT COSTS

%

CURRENT ACTUAL $ / LAST YEAR $ X 100









5'.

ACCIDENT SAFETY

%

CURRENT ACTUAL $ / LAST YEAR $ X 100



RATINGS













6'.

EMPLOYEE

%

EMPLOYEE BENEFITS $ / TOTAL PAYROLL $ X100



BENEFITS



















EMPLOYEE BENEFITS $ /TOTAL SALES $ X 100

















7'.

HR BUDGET

%

ACTUAL HR EXPENSES $ / TOTAL SALES $ X 100



sales effectiveness













8'.

HR EXPENSES

$

TOTAL HR EXPENSES $ / TOTAL NO. OF EMPLOYEES



per head













9'.

HR EXPENSES

%

HR EXPENSES $ / TOTAL EXPENSES $ X 100



cost effectivenss













10'.

NO.OF COURSES

%

ACTUAL CONDUCTED / PLANNED X 100



CONDUCTED













11.

NO. OF SAFETY

%

ACTUAL CONDUCTED / PLANNED X 100



training programs













12.

TRAINING DAYS

%

ACTUAL TRAINING DAYS / PLANNED X 100



EFFECTIVENESS













13.

EMPLOYEES

%

ACTUAL TAKING PART / PLANNED X 100



involvement in train













14.

SICK DAYS

nos.

TOTAL SICKDAYS TAKEN/ TOTAL EMPLOYEES



managemeent effectiveness













15.

STAFF orientation

%

NO. OF NEW STAFF LEAVING IN THREE MONTHS/



EFFECTIVENESS



TOTAL NO. OF NEW STAFF ORIENTED







X 100

















16.

TIME TO FILL AN

NO.DAYS

TOTAL NO OF DAYS / TOTAL NO positions filled



OPEN POSITION





















17.

TURNOVER BY

%

TURNOVER / TOTAL RECRUITMENTS X100



RECRUITING source











BY EACH SOURCE

















18.

TURNOVER BY

%

TURNOVER / TOTAL EMPLOYEES BY EACH



EACH JOB



CATEGORY



CATEGORY



X 100

















19.

WORKERS

%

ACTUAL $ / PLANNED BUDGET $ X 100



çompensation costs





















20.

HR STAFFING

NO.

TOTAL HR STAFF / TOTAL EMPLOYEES



EFFICIENCY















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Pulling it All Together-----Building a Scorecard

Zeroing in on Metrics that Matter

Begin your program with a solid foundation of basic metrics: cost-per-hire, turnover, etc.

Ask managers what issues concern them – what impacts productivity, makes their lives easier?

Based on the responses, determine which metrics affect the areas identified, and then determine which measures provide results that clarify the values identified.

Benchmark what others are doing in terms of the specific metrics you choose. Don’t spend valuable time on benchmarking until you know which metrics are important to your organization.



Zeroing in on Metrics that Matter

Take a numerical snapshot of your present situation.

Analyze the outcomes of the proposed action.

Decide what tools are needed in terms of technology and outside assistance.

Make a business case for the action and outcome you decide to pursue.

Show managers updated report (via metrics) on how HR has contributed to their success.



Strategic Relationships

Process must be owned by Executives, Managers, HR, Finance, and IT

Takes time and will power

May require an investment in information technology support services to support human capital measurement and reporting opportunities

Requires the fostering of key strategic relationships to ensure favorable outcomes

Wrap-Up



Take "baby steps" by starting with a few key metrics.

You don’t have to change the whole organization at once.

Measurement and management go hand in hand.

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Regards

Madhuri. Mutyam