Kerr - The Sudoku of HR Nine Numbers To Prove Your Value

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Kerr - The Sudoku of HR Nine Numbers To Prove Your Value

  1. 1. DEBORAH L. KERR, PH.D. PARTNER AFFINTUS [email_address] The Sudoku of HR NINE NUMBERS TO PROVE YOUR VALUE
  2. 2. “ Dirty” Harry Callahan Played by Clint Eastwood The Enforcer 1976 Personnel? That's for [idiots].
  3. 3. Overview <ul><li>Measuring HR performance </li></ul><ul><li>Acquiring skill in building HR performance measurement systems </li></ul><ul><li>Reporting HR value to management </li></ul>
  4. 4. Three measures <ul><li> 9 = 3 </li></ul><ul><li>Cost of hiring </li></ul><ul><li>Productive workforce </li></ul><ul><li>HR Staff Knowledge </li></ul>
  5. 5. Key Challenges In Managing Organizational Risk Availability of information Timeliness of information Organizational structure People Necessary level of investment Technology Over-regulation Competition Internal audit framework Discrepancy between leadership expectation/bus unit practices 71% of US CEOs consider people the biggest challenge in managing organizational risk.
  6. 6. What to measure <ul><li>Mission achievement </li></ul><ul><ul><li>Productive workforce </li></ul></ul><ul><li>Customer Satisfaction </li></ul><ul><ul><li>Management satisfaction with knowledge base </li></ul></ul><ul><ul><li>Customer (manager) rating of HR service </li></ul></ul><ul><li>Internal Processes </li></ul><ul><ul><li>Time to hire </li></ul></ul><ul><ul><li>Quality of hire </li></ul></ul><ul><ul><li>Staff knowledge </li></ul></ul><ul><li>Knowledge and Data Systems </li></ul><ul><ul><li>Turnover </li></ul></ul><ul><ul><li>HR Staff Knowledge </li></ul></ul><ul><li>Finance / Budget </li></ul><ul><ul><li>Budget status </li></ul></ul>
  7. 7. Establish Baseline Data: Cost of Hiring
  8. 8. You Make the Call!
  9. 9. WHY HR IS HARD Causal Loop Diagram of Performance Measurement and Management Based on J. Park’s unpublished paper Alternative Views on the Principles of Performance Management: Causal Loops Diagram Approach to the Practice of Performance Management, Texas A&M University, March 2009. Agreed Upon Performance Target Support for Performance Management Quality of Performance Information Accuracy of Performance Information Cultural Support Goal Ambiguity Non-Regular Use Scarce Resources Data Driven Decision Making Usefulness and Use of Performance Information Number of Participants Efficiency of Performance Indicator Competing Demands Trust in Performance Information + + - - - - - / + - - + + + + + - + - + + + + + - - - + L1 + L2 - L3 ? L4
  10. 10. You are Here <ul><li>“… talent is the most under-managed corporate asset of the past two decades.” </li></ul><ul><li>“… talent driven companies of the Fortune 500 experienced nearly 82% greater profit than their competitor[s].” </li></ul>http://www.htrends.com/researcharticle37148.html James Houran 2009 .
  11. 11. Andy Warhol 20th century painter and film maker 1928-1987 They say that time changes things, but you actually have to change them yourself.
  12. 12. How to Pick an Offensive Star, Really <ul><li>on base percentage </li></ul><ul><li>slugging percentage </li></ul><ul><li>avoiding outs </li></ul>getting hits
  13. 13. Star Performance: On Base Percentage <ul><li>Formula </li></ul><ul><li>H = Hits </li></ul><ul><li>BB = Bases on Balls (walks) </li></ul><ul><li>HBP = Times Hit By a Pitch </li></ul><ul><li>AB = At bats </li></ul><ul><li>SF = Sacrifice Flies </li></ul>OBP H + BB + HBP AB + BB + HBP + SF =
  14. 14. Ichiro Suzuki: On Base Percentage <ul><li>Formula </li></ul><ul><li>H = 262 </li></ul><ul><li>BB = 49(walks) </li></ul><ul><li>HBP = 4 </li></ul><ul><li>AB = 704 </li></ul><ul><li>SF = 3 </li></ul>Not bad… .41447 262 + 49+ 4 704+ 49+ 4+ 3 =
  15. 15. Texas Rangers– American League West July 7, 2011 http://mlb.mlb.com/mlb/standings/index.jsp?tcid=mm_mlb_standings accessed July 7, 2010 151% 92% 71% 2.13% 8.51% 17.0% Wins Losses Games Behind Payroll Texas 47 41 - $ 91,885,265 LA Angels 46 42 1.0 $ 138,999,024 Seattle Mariners 43 44 3.5 $ 84,865,600 Oakland A’s 39 49 8.0 $ 65,275,500
  16. 16. Why measure performance? <ul><li>Focus organizational attention </li></ul><ul><ul><li>Make sure the organization is making decisions and taking action to support the success of the organization. </li></ul></ul><ul><li>Support effective management decision-making </li></ul><ul><ul><li>Performance data help get people involved. </li></ul></ul><ul><li>Validate / support operational actions </li></ul><ul><ul><li>Identify practices that drive success and which don’t matter. </li></ul></ul>
  17. 17. Ed Lawler Susan Mohrman 20th century academics Creating a Strategic Human Resources Organization Stanford Business Books, 2003 … the HR strategic-partner role is too important to leave to someone with an HR background...
  18. 18. What to measure in HR <ul><li>Mission achievement </li></ul><ul><ul><li>Productive workforce </li></ul></ul><ul><li>Customer Satisfaction </li></ul><ul><ul><li>Management satisfaction with knowledge base </li></ul></ul><ul><ul><li>Customer (manager) rating of HR service </li></ul></ul><ul><li>Internal Processes </li></ul><ul><ul><li>Time to hire </li></ul></ul><ul><ul><li>Quality of hire </li></ul></ul><ul><ul><li>Staff knowledge </li></ul></ul><ul><li>Knowledge and Data Systems </li></ul><ul><ul><li>Turnover </li></ul></ul><ul><ul><li>HR Staff Knowledge </li></ul></ul><ul><li>Finance / Budget </li></ul><ul><ul><li>Budget status </li></ul></ul>
  19. 19. Three measures <ul><li> 9 = 3 </li></ul><ul><li>Cost of hiring </li></ul><ul><li>Productive workforce </li></ul><ul><li>HR Staff Knowledge </li></ul>
  20. 20. Mission: Productive Workforce <ul><li>Formula PW = HC – (%pNH) </li></ul><ul><li>PW = Productive Workforce </li></ul><ul><li>HC = Head Count </li></ul><ul><li>%pNH = New Hire Productivity Estimate </li></ul>
  21. 21. Customer: Manager Satisfaction with Knowledge Base - Attendance at Core Courses <ul><li>Formula CK = [(NC)(CC) / (N)(TC)] </li></ul><ul><li>CK = Core knowledge as % of courses completed </li></ul><ul><li>NC = Number New Employees completing courses </li></ul><ul><li>CC = Completed Core Courses for the time period </li></ul><ul><li>N = Number New Employees </li></ul><ul><li>TC = Total Core Courses </li></ul>
  22. 22. Customer: Manager Satisfaction with HR <ul><li>Sample survey items </li></ul><ul><li>HR is committed to manager success. </li></ul><ul><li>HR gets in the way of my efforts to be efficient and effective. </li></ul><ul><li>There is open and honest communication between managers and HR staff. </li></ul><ul><li>HR provides useful information and service to managers. </li></ul><ul><li>In the last month I have used knowledge, tools, or strategies that I learned through HR. </li></ul><ul><li>Overall HR adds value to my work. </li></ul>
  23. 23. Internal Process: Time to Hire <ul><li>Formulas </li></ul><ul><li>TF = RR – OD Time to acceptance </li></ul><ul><ul><li>TS = RR – SD Time to start </li></ul></ul><ul><li>TF = Time until offer acceptance </li></ul><ul><li>TS = Time until new hire starts work </li></ul><ul><li>RR = Date requisition received </li></ul><ul><li>OD = Date offer accepted </li></ul><ul><li>SD = Date new hire starts </li></ul>
  24. 24. Internal Process: Quality of Hire <ul><li>N = Number of people hired per year </li></ul><ul><li>T = Average number of years that employees work in the position(s). </li></ul><ul><li>(in decimal values) </li></ul><ul><li>rxy = Increased hiring effectiveness </li></ul><ul><li>Zx = Value of high performance </li></ul><ul><li>Cy = Assessment cost per use </li></ul><ul><li>SR = Selection ratio (default: 5) </li></ul>Formula $performance = [(N) (T) (rxy) (Zx)] – [(N)(Cy)(SR)] Charles Handler and Steven Hunt. 2004. Estimating the Financial Value of Staffing-Assessment Tools. Workforce Online, March 2004 http://www.workforce.com/archive/article/23/40/88.php .
  25. 25. Internal Process: Quality of Hire Example
  26. 26. Internal Process: Employee Knowledge
  27. 27. Knowledge and Data Systems: Turnover <ul><li>Formula T = (NSFY / AEFY) X 100 </li></ul><ul><li>T = Turnover </li></ul><ul><li>NSFY = Number of separations during the fiscal year </li></ul><ul><li>AEFY = Average number of employees during the fiscal year </li></ul>
  28. 28. Knowledge and Data Systems: HR Staff Knowledge 1 = beginner 2 = proficient (little supervision needed) 3 = skilled (no supervision needed) 4 = expert (teaches others, recognized specialist)
  29. 29. Finance / Budget: Salary Budget Projection Tool
  30. 30. “ Dirty” Harry Callahan Played by Clint Eastwood Magnum Force 1973 A man’s got to know his limitations.
  31. 31. What to measure? <ul><li>Measure </li></ul><ul><li>things people care about </li></ul><ul><li>things that tell a story… the story about how your work has influenced organizational results </li></ul>
  32. 32. What makes a good measure? <ul><li>Goal related </li></ul><ul><li>Receiver / client group needs the info </li></ul><ul><li>Sensory description </li></ul><ul><li>Success drivers / predictive </li></ul><ul><li>Barriers </li></ul><ul><li>What do you count now? </li></ul><ul><li>What could you count now? </li></ul>
  33. 33. Thinking about data <ul><li>Does it make sense? Does it look right? </li></ul><ul><li>What can I compare this to? </li></ul><ul><li>Do the data reported elsewhere differ from mine? </li></ul><ul><li>What is new or different? </li></ul><ul><li>What might be driving the change? </li></ul><ul><li>What is the result of each area measured? </li></ul><ul><ul><li>If we increase the productivity of our workforce, what will that mean for the organization? </li></ul></ul><ul><ul><li>If time to hire is reduced, what will that mean for managers? </li></ul></ul><ul><li>Do the data show differences in subsets? </li></ul><ul><ul><li>By department </li></ul></ul><ul><ul><li>By manager </li></ul></ul><ul><ul><li>By season </li></ul></ul>
  34. 34. Edgar Wilson Nye 19 th century American journalist 1850 – 1896 Describing Wagner’s music It’s not as bad as it sounds.
  35. 35. Communicating Results <ul><li>Summarize your message in one sentence. </li></ul><ul><li>Start at top (mission) or bottom (financial) </li></ul><ul><li>Discuss each measure </li></ul><ul><ul><li>Result </li></ul></ul><ul><ul><li>Cause / Driver </li></ul></ul><ul><ul><li>Action plan </li></ul></ul>
  36. 36. Sample Report: Time to Hire <ul><li>Time to hire averages 86 days – this is too expensive . A position vacant for this long costs us approximately $7600 in addition to the cost of hiring which averages about 30% of annual salary. </li></ul><ul><li>Analysis – two important factors are driving this result: (1) little time for HR and hiring managers to review large numbers of résumés and (2) finding time to conduct good interviews </li></ul><ul><li>HR proposes testing the incorporation of objective assessments to better screen candidates and provide scientific data to the decision making process. We have identified three options that we will pilot. Final decision to be made in 6 weeks. Four hiring managers from different departments are helping with the trial. </li></ul>
  37. 37. Developing a measurement system is a journey. Initial Managed Defined Predictable Optimized Inconsistent Repeatable Competency management Capability management Continuous improvement <ul><li>Inconsistency of action </li></ul><ul><li>Are people really important? </li></ul><ul><li>Higher priority of HR practice </li></ul><ul><li>Can HR manage itself? </li></ul><ul><li>Architecture of management practice </li></ul><ul><li>Do all managers have HR capability? </li></ul><ul><li>Predictive capability </li></ul><ul><li>Measure critical capabilities quantitatively </li></ul><ul><li>Managers empower teams and focus on strategic issues. </li></ul><ul><li>Team, unit, organization aligned with goals </li></ul><ul><li>Innovation: incremental and innovative </li></ul><ul><li>Workforce practices support a culture of performance excellence. </li></ul>
  38. 38. Mark Twain (Samuel Langhorne Clemens) 19th century American humorist, satirist, lecturer and writer 1835 –1910 The man who carries a cat down the street by the tail has 10 times the experience in cat-carrying than one who watches.
  39. 39. dlkerr <ul><li>Deborah L. Kerr, Ph.D., has over 24 years experience in executive management, consulting, and teaching. She is a partner at affintus llc, a performance-predicting selection service that matches job candidates with the highest likelihood of success to open positions at companies looking to build a culture of top performers. For the past 11 years she has also served on the graduate faculty at Texas A&M University in the George Bush School of Government and Public Service where she teaches policy formation, organizational performance measurement and management, and advanced management. </li></ul><ul><li>From 2005 – 2007 she served as Senior Vice President of Human and Organizational Development at the American Heart Association, Texas Affiliate (AHA). As a member of the AHA’s executive team, she led the design and implementation of human capital systems, strategy execution, and performance management. Prior to her AHA work, Deborah served for 14 years on the executive team at the Texas State Auditor’s Office (SAO) where she helped implement innovative processes that have been adopted by audit organizations across the U.S. She directed the development of the SAO’s scorecard and, in 2004, the SAO was named to the Balanced Scorecard Hall of Fame, recognizing its performance management system as one of the world’s best. </li></ul><ul><li>Deborah’s results in implementing performance management systems has been written about in Financial World magazine and featured in both Paul Niven’s 2002 book Balanced Scorecard Step by Step and Mohan Nair’s 2004 book Essentials of the Balanced Scorecard . </li></ul><ul><li>Deborah is often asked to speak at national, regional, and state conferences about managing strategy and systems, measuring results, and managing people. She served on the National Advisory Panel for Human Resource Performance Measurement at the Maxwell School of Government, Syracuse University, to develop public sector performance measures for the “Grading Government” series published in Governing magazine. Her articles about organizational management have been published in Perform magazine and the Journal of Accountancy and have been published in Italy and India as well. She co-authored a chapter on consulting to public sector organizations, which is included in the textbook In Action: Building a Successful Consulting Practice published by ASTD in 2002. </li></ul><ul><li>Deborah holds degrees from St. Mary’s College (Notre Dame), Columbia University, and The University of Texas at Austin. </li></ul>
  40. 40. Contact Deborah L. Kerr [email_address]
  41. 41. 6 9 2 1 5 7 2 6 5 1 7 3 2 6 4 2 8 6 7 3 1 2 8 9 7 6 1 4 9 2 8 5 1 3 8 9 HR Florida Sudoku

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