MEASURING HROctober – December 2011Kirloskar Institute of Advanced Management Studies, HARIHAR,PUNEArchita Panda Part – 1/3.

COVERAGE OF THIS COURSE

Evolution of HR as a function and Future/Present of HR

Integrated HR functions and HR Scorecard ROI for HR Services Approach to Measure HR HR Metrics and Cost estimation of HR

function HR Cost and Budgeting HR Accounting HR Audit

Add Value&

Maximize Upside

Limit Liability

&Protect

DownsideImp

act/

Con

trib

uti

on

to t

he B

usin

ess Strategic

HR Planning

OrganizationalDesign

HR as BusinessPartner

CompensationBenefits

Safety &Workers’

Compensation

Compliance

Labor/Union Relations

Staffing

Training &Development

Culture& Image

HR Accounting

EmployeeRelations

PerformanceManagement

Survey ActionPlanning

HR InformationSystems (HRIS)

A Century of Evolution in the Function

Labor Employee Personnel Human OrganizationalRelations Relations Resources Effectiveness

continue to grow

Source: Rich Vosburgh

HR Metrics

Project Management

SIX WAVES OF CHANGE FOR HR FUNCTION

W1 : Facilitated getting people with machines to produce large volumes.W2: Focus on picking up right person for the right Job and provide career path.W3: Dramatic rise of legislation and segregation of PeopleW4: The age of organization brand and diversity IntegrationW5: Organization of one to Many ( empowerment and individual development )W6: Strategically integrate the pieces together in global context

HR’ S PRODUCT LINE

1. Basic Administrative Services ( Resource Efficiency & Service Quality )

2. Business Partner Services ( Know your business )3. Strategic HR ( Formulate business strategy )

THE FOUR C’S OF HR FUNCTION

Competent Strategic Contribution Business Knowledge HR Delivery Personal Credibility HR Technology

Curious Courageous Care about People

HR Knowledge Delivery

HR Technology

Personal Credibility

Business Knowledge

Strategic Contribution

Entry Recruitment Internet Recruiting

Personal Communication

Labour Knowledge

Organization Knowledge

Mid- Career Staffing Metrics

E – HR Effective Relationship

Value chain knowledge

Change Management

Senior Professional

Strategic Staffing

HR Tracking and Measurement

Establish Trust and Credibility

Organization Structure

Culture Management

Executive Bottom Line Orientation

Overall Organization IT Strategy

High Integrity Value Proposition Knowledge

Strategic Decision Making

HR KNOWLEDGE TEMPLATE

What is the effect of HR on the bottom line of the firm?  Is there a significant relationship between compensation and

worker turnover in an organization?  Does worker training and development enhance retention?  …

customer satisfaction?  What value would you attribute to each worker?  How much is each

employee “worth?”  Are all employees alike and thus should be managed similarly, or

should each employee be developed and managed uniquely?  What brings out the “best” in each worker?  What makes them

maximally productive and valuable to the organization?  How to quantify what HR function does ? What is ROI in HR ?

We will try and find out answer of these questions in the following

sessions. 

HR SCORECARD

ALIGNMENT HR FUNCTION

REQUIREMENT TO ALIGN

Fully understanding how value is

created in your business

Then designing a measurement

system based on that story

ARTICULATE BUSINESS STRATEGY

Organization's need for clear strategy ( clear,concise and free of ambiguities ). HR Architecture is key to deliver business strategy Components of HR Architecture

HR Function ( Deliver services to support business strategy)

HR Management System ( focus on Quality of human resources e.g. building high

performance culture ) Strategic Employee Behavior ( Infuse preferred employee

behavior to implement strategy )

HR VS. STRATEGY

Control cost by driving out in efficiencies Create value in all parts of strategy Replace conventional metrics with new value

creating metrics Restructure HR roles to infuse tangible

achievements Position HR as strategic partner with clear understanding of business strategy

DEVELOP BUSINESS CASE FOR HR

Understand business strategy and make implementation plan through Creating value with good HR alignment Control cost to enhance organizational efficiency

Establish Good performance measures for HR

BUSINESS CASE

Include measures which has linkages to organization's performance drivers

Causal inferences Multi level business analysis A distinction between lagging variables and

leading variables Develop HR measures with top down

approach Emphasis on strategy implementation and

less on strategy content

GOOD HR MEASURES - CHARACTERISTICS

Simple with related information Capture amount and cause Should provide benchmark for comparison Should be unambiguous Contribute in meaningful ways to overall

performance evaluation.

HR STRATEGY IMPLEMENTATION

Knowledge Management

System

HR Strategic Alignment

Performance Management

System

Employees who are strategically focused

The firm’s capacity to implement strategy

The overall performance of the firm

A high Performance work system

HR STRATEGY MAP

Strategy map defines organization process and capabilities to drive performance Leading indicators : Drive Performance Lagging Indicators : Measure results

Strategy Map include both results that are tangible and intangible.

HR STRATEGY MAP

Strategic goals critical to achieve than simply nice to have them

Performance driver for each goal Measure progress for each goal Expected employee behavior HR Architecture to provide competencies and

behavior needed for the goals.

HR STRATEGY MAP

Learning & Growth :

Internal Process:

Customer :

Financial:

Employee Skills

Process Quality

Process Cycle Time

On time delivery

Customer Loyalty

Return on Capital

HR Competencies Application in Dynamic Market Environment

Knowledge of Business Focus on financials and understand customer needs .

Delivery of HR Practices Flexibility and adaptability to meet business requirement

Management of change Increase velocity of implementation of large scale changes

Management of culture Preserving core values while adopting new market place

Personal Credibility Ability to win while maintaining integrity, credibility and courage

Strategic HR Performance Management Metrics to quantify the impact of HR Initiatives and People Strategy

HR COMPETENCY

INDENTIFY DELIVERABLES

Deliverables are created when HR system intersects strategy map

Better Pay Adjustment Employee Stability

Promotion Improved R&D cycle time

HR Deliverables Strategy MapStrategy Map

INDENTIFY DELIVERABLES Identify short and long term in pay off Cost benefit analysis ( ROI ) Three step process to identify ROI:

1. Identify all potential cost ( Fixed , Variable and Sunk) Fixed : Does not change with production Change with output Total resource invested

2. Identify the likely benefits Understand economic contribution by Employee (e.g. Revenue per employee) Variability of financial result on employee performance ( Profit generated per

high performer associate3. Calculate ROI of the program

As percentage, money spent and returned Break even and pay back period

HR ARCHITECTURE VS. HR DELIVERY

Internal alignment between three components of HR Architecture By measuring stakeholder feedback Understand pain areas and take quick action

External alignment with all other in the value chain Run test and audit for HR deliverable Check correlation & consistency with the

performance driver

MEASUREMENT SYSTEM

Select correct HR measures and deliverables Establish high performance HR work system Alignment measures to check consistency HR Efficiency Measures

Core efficiency measure : Significant expenditure items like benefit and salary cost etc.

Strategic efficiency measure : cost per new hire, HR expenses per employee

EXECUTE MANAGEMENT BY MEASUREMENT

Find Champion or key executive sponsor for HR scorecard

Create a need for HR scorecard Shape a vision Encourage commitment and involvement Build the enabling system Have early success and demonstrate

progress Sustain the effort

A GOOD HR SCORECARD

Distinguish HR doable to deliverables Empowers HR to control cost Measures leading indicators Clarify HR contribution to Profitability Allows HR professional to manage better Encourage flexibility and on going change

How to make a Budget ?

1. Defining Expense Areas

2. Historical Data

3. Assumptions

4. Projections ( Reference Business Strategies )

5. Consolidate

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HR BUDGET

Archita Panda

Email: architapanda@gmail.com

Mobile: 9850094074

Linkedin Profile: http://in.linkedin.com/pub/archita-panda/6/177/823

End of Part – 1/3.

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