Future of HR Metrics

A Brave New World

Jay J. Jamrog
Executive Director, HRI
Jamrog@HRInstitute.org

HR Continues to Evolve

Impact/Contribution to the Business

& the model defines our aspirations

Add Value
&
Maximize
Upside

Strategic
HR Planning

Culture
& Image

Organizational
Design

HR as
Business
Partner

Survey Action
Planning
Staffing
Employee
Relations
Labor/Union
Relations

Training &
Development

EEO/AA
Performance
Management

Compensation
Benefits

Limit
Liability
&
Protect
Downside

Safety &
Workers
Compensation

Labor
Relations

Source: Rich Vosburgh

continu
e to
grow

HR Information
Systems (HRIS)

Compliance

Employee
Relations

Personnel

Human
Resources

A Century of Evolution in the Function

Organizational
Effectiveness

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

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

Efficiency and
Effectiveness

Three Levels of Metrics

Efficiency

Impact

What range of
resources
(financial and nonfinancial) should
be considered?

Effectiveness

What is the
appropriate level
of investments?

Efficiency

How should
investable
resources be
allocated to
maximize results?

Source: Boudreau and Ramstead

Three Levels of Metrics

Effectiveness

Impact

Effectiveness

Efficiency

Source: Boudreau and Ramstead

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

Internal and External

Historical
Benchmarks

The Role of HR
Future / Strategic Focus

Strategic
Partner

Strategic HR
Planning
HR as Business
Partner
Processes
Culture and Image

Administrative
Expert

Compensation
Benefits
HR information systems
Compliance

Change Agent

Staffing
Organizational design
Survey action planning
Performance
measurement
Training and
development

People

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

Day to Day Operational Focus

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.

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.

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.

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.

Starting with the

Business Strategy

Basic Process for HR

Strategy
Scan the
External
Environment

Identify
Strategic
Business
Issues

Identify
People
Issues

Develop
HR
Strategy

Communicate
the
HR Strategy

The Common HR Approach

The Inside-Out Approach

HR practices,
processes,
and
systems

Source: Patrick Wright

Articulate how
what we do
adds value to
The business

Communicate
to the business
what a good
job we are
doing

The Better HR Planning

Approach
The Outside-In Approach

Identify the
business model
components
and areas to
drive value

Source: Patrick Wright

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

Metrics Model
HR

People

Organization

Efficiency

Efficiency

Efficiency

Time to Hire

Direct Labor Costs

Cost per Unit

Cost per Hire

Indirect Labor Costs

Shrinkage

Headcount Ratio

Positions Unfilled

Defects/Scrap

Effectiveness

Effectiveness

Effectiveness

Customer Survey

Employee Satisfaction

Customer Satisfaction

At the Table

Leadership Capability

Revenue Growth

Practice/Process
Impact

Talent Retention

Market Share

Source: Patrick Wright

% Black Belt Leaders

Employer Brand

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

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

Impact

Three Levels of Metrics

Impact

Impact
Effectiveness
Efficiency

Source: Boudreau and Ramstead

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

Business Environment
Company

HR Department
Outputs

Inputs

Internal
Feedback:
Efficiency
Effectiveness

External
Feedback:
Impact

Scope of HR Measurement
Approaches

Value

Scorecards
and
Drill Downs
Data Systems
and Portals

Strategic Impact
Organizational Effectiveness
Validity and Rigor
Causation
Leading Indicators

Benchmarks
Ad hoc HR
Measures

Time
Source: Center for Effective Organizations, USC

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

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

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

Execution
Strategy

Alignment
=
Successful Execution

People

Processes

To execute strategy you need to align your strategy, process and people!

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?

The Alignment Challenge

Fast Logical !
Strategy

Alignment
=
Successful Execution

Slow . . .
And follows a
different logic . . .

People

Processes

Fast Logical !

Success and speed of execution depend on people alignment,

Yet this is the hardest element to align!

What is the
Alignment of
People?

Research Team
Dr. Albert A. Vicere
Pennsylvania State
University

Dr. Miles H. Overholt

Human Resource Institute &
Riverton Management
Consulting Group

Dr. Elena Granell

Instituto De Empressa,
Madrid

Jay J. Jamrog
Human Resource Institute
The University of Tampa

Research Questions
Can we identify disconnects between people and strategy?

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

Alignment
=
Successful Execution

People

Processes

Grounded in Management
Theories from key disciplines
Strategic Thinking
Marketing
Operations
Human Resources
Organizational Culture

Included an analysis of four

large data bases
Organizational DNA

Customer Focused Cultures

Employee Behavior
Organizational Culture

The Alignment of People

Five Key Elements
Marketplace
Approach
Customer Focus
Leadership
Behavior
Performance
Culture

Strategy

Alignment
=
Successful Execution

People

Processes
Processes

Impact Measurement
Its 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

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

Conclusion

Key Attributes for the

21st Century HR Professional
Why vs How
Let me show you something
you dont already know

INTELLIGENCE
ACCOUNTABILITY

Hit it to me / My team
How good:
- Do I HAVE to be?
- CAN I be?

Source: Steve Miranda

CURIOSITY

So much to learn
So little time
I wonder what will
happen today

Faster up the Learning Curve

HIGHER PERFORMANCE SOONER
WHAT YOU
NEED TO KNOW

PROCESS

Pushing The HR Curve

# People Who
Know the Solution

Problem Complexity

Success = Intelligence + Access

Source: Steve Miranda

The Evolving HR Professional

Never Forgets

Its Not HRs

Productivity
We Should
Be Concerned
About

The Evolving HR Professional

Never Forgets

Getting Computers
To Do the Work
Is A
Waste of Time

The Evolving HR Professional

Never Forgets

Because You
Can Do It
Doesnt Mean
You Should
Do It

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

Species by Natural Selection, 185