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Evaluating Human Capital: Harnessing Efficiency and Productivity
Evaluating Human Capital: Harnessing Efficiency and Productivity
Evaluating Human Capital: Harnessing Efficiency and Productivity
Evaluating Human Capital: Harnessing Efficiency and Productivity
Evaluating Human Capital: Harnessing Efficiency and Productivity
Evaluating Human Capital: Harnessing Efficiency and Productivity
Evaluating Human Capital: Harnessing Efficiency and Productivity
Evaluating Human Capital: Harnessing Efficiency and Productivity
Evaluating Human Capital: Harnessing Efficiency and Productivity
Evaluating Human Capital: Harnessing Efficiency and Productivity
Evaluating Human Capital: Harnessing Efficiency and Productivity
Evaluating Human Capital: Harnessing Efficiency and Productivity
Evaluating Human Capital: Harnessing Efficiency and Productivity
Evaluating Human Capital: Harnessing Efficiency and Productivity
Evaluating Human Capital: Harnessing Efficiency and Productivity
Evaluating Human Capital: Harnessing Efficiency and Productivity
Evaluating Human Capital: Harnessing Efficiency and Productivity
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Evaluating Human Capital: Harnessing Efficiency and Productivity

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Evaluating Human Capital: Harnessing Efficiency and Productivity

Evaluating Human Capital: Harnessing Efficiency and Productivity

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  1. Confidential Evaluating Human Capital: Harnessing Efficiency and Productivity NHRDN YMC 9th May, 2009
  2. About Helion Advisors <ul><ul><li>Venture Fund launched in August 2006 </li></ul></ul><ul><ul><li>Managing $350 million in funds </li></ul></ul><ul><ul><li>Provide “growth capital” to innovative business models </li></ul></ul><ul><ul><ul><li>Special focus on business models based on value creation by people </li></ul></ul></ul><ul><ul><li>23 investments till date </li></ul></ul><ul><ul><li>Advisory Team experienced in Investing, Starting, Scaling, Managing, Exiting Businesses </li></ul></ul><ul><ul><li>Strong ‘On Ground’ support – “Active Capital” </li></ul></ul><ul><ul><ul><li>Real-time management advice to portfolio companies </li></ul></ul></ul><ul><ul><ul><ul><li>HR, Finance, M&A, Operations, Strategy, Globalization </li></ul></ul></ul></ul><ul><ul><ul><li>Significant time/resource commitment per advisor </li></ul></ul></ul><ul><ul><ul><li>Hands-on involvement with entrepreneurs </li></ul></ul></ul>
  3. HR Path To Progress Value Past Present Future Supporting the Business Being a Business Partner Being a Business Driver Value is derived from owning and being accountable for processes that deliver business results We need to rethink the work of HR
  4. Management Expects People Management Practices to Lock in Higher Business Performance <ul><ul><li>“ Are we focused on the right drivers of value creation in our business…are we setting the right goals…” </li></ul></ul><ul><ul><li>“ What low cost opportunities exist to drive revenue higher through a realignment of key employee performance drivers …” </li></ul></ul><ul><ul><li>“ Where in our business are we destroying bottom line value through poorly aligned people management practices…” </li></ul></ul><ul><ul><li>“ How can we be better leverage our talented people to drive increased sales, productivity and a superior customer experience… </li></ul></ul>A business case for changing the way we manage and invest in our people !
  5. How Value is Delivered to Investors Keeps Promises Compelling Strategy Core Competencies Organizational Capabilities INTANGIBLE VALUE Make and meet commitments to employees, customers, suppliers, investors… Convincing approach for continuing to create value and extending that ability into the future Clear ability to realize value creation potential and to continue track record of keeping promises Internal ability to make things happen efficiently and effectively now and in the future
  6. Measuring Human Capital Impact <ul><li>Qualified Applicant Rate </li></ul><ul><li>Offer Acceptance Rate </li></ul><ul><li>Percent Diverse Hires </li></ul><ul><li>New Hire Performance Rate </li></ul><ul><li>Bench Strength % of “A” Players in “A” Positions </li></ul><ul><li>Leadership Engagement </li></ul><ul><li>High-Reach Goal Performance </li></ul><ul><li>Reward Differentiation </li></ul><ul><li>Critical Skill Readiness </li></ul><ul><li>Top Performer Retention </li></ul><ul><li>Voluntary Turnover </li></ul><ul><li>Absence Rate </li></ul><ul><li>Total Rewards Competitiveness </li></ul><ul><li>Engagement Score </li></ul><ul><li>Human Capital Performance </li></ul><ul><li>Human Capital ROI </li></ul>Talent Supply Leadership & Key Talent Capabilities High Performance Employment Relationship Investor Outcome Process Investor Outcome Process <ul><li>TSR </li></ul><ul><li>CFROI </li></ul><ul><li>Revenue Growth </li></ul><ul><li>Revenue </li></ul><ul><li>Net Income </li></ul><ul><li>CFROI </li></ul>
  7. How Employees Create Value Identify Value Drivers Review Business Performance Analyse Performance Issues <ul><li>Establish How Value is Created in the business : </li></ul><ul><li>Shareholder value & competitive analysis </li></ul><ul><li>Strategy Mapping (high level definitions): </li></ul><ul><li>- Financials </li></ul><ul><li>- Operations </li></ul><ul><li>- Customer </li></ul><ul><li>- Employees </li></ul><ul><li>Employee Value Chain </li></ul><ul><li>Establish Key Metrics & Benchmarks </li></ul><ul><li>Understand How The Business Is Performing </li></ul><ul><li>Baseline performance across key drivers </li></ul><ul><li>Establish internal/ external benchmarks </li></ul><ul><li>Identify Individual, Team, BU and Org Variation </li></ul><ul><li>Talent Index/ HCF Diagnostics </li></ul><ul><li>Identify Strong and Soft Spots </li></ul><ul><li>Explore Issues Impacting Employee Performance </li></ul><ul><li>Issue Tree Analysis </li></ul><ul><li>High Performance Workforce Audit </li></ul><ul><li>Process, System, Behaviour </li></ul><ul><li>Factors Diluting Performance </li></ul>1 2 3
  8. “ Adapted from Kaplan, Robert S. and David P. Norton; The Balanced Scorecard: Translating Strategy Into Action. Boston: Harvard Business School Press, 1996” Financial How do we create value? Customer What do our customers expect and value? Process To satisfy our customers, at what processes must we excel? Learning & Growth To achieve our vision, how must we learn, innovate, and improve? Business Results Growth Strategy Productivity Strategy Value Proposition Cost Quality Time Function Relationship Value Chain: Path to Performance Develop New Services Business Performance Levers + + + Enabling Capabilities Build the Brand Make the “ Sale” Deliver the Service Assess Effectiveness in Meeting Need Balanced Scorecard Strategy Map P erspectives Skills and competencies Technology and databases Knowledge assets, best practices Context, Climate, Culture
  9. How HR Practices Create Value HR Practices Performance Work People Communication Buy Build Borrow Bind Set standards Ensure consequences financial non financial Do feedback Build communication top down/ bottom up inside out/ outside in side to side Restructure organization Reengineer work process Manage teams Architect physical setting
  10. Linking Shareholder Value and People 19 Commitment Competencies Capabilities Implementation Through People Fundamental Value Drivers <ul><li>Price Appreciation </li></ul><ul><li>Dividends </li></ul>Total Shareholder Returns Key Strategic Factors <ul><li>Pricing </li></ul><ul><li>Fixed Cost Contracts </li></ul><ul><li>Cost Plus Contracts </li></ul><ul><li>Currency Exposure </li></ul><ul><li>Market Position </li></ul><ul><li>Differentiation </li></ul><ul><li>Customer Relationships </li></ul><ul><li>Sales Force Effectiveness </li></ul><ul><li>Project Load </li></ul><ul><li>Industry Sector </li></ul><ul><li>Bidding Success Rates </li></ul><ul><li>New Orders and Order Backlog </li></ul><ul><li>Profit Margin </li></ul><ul><li>EBITDA/ Revenues </li></ul><ul><li>Net Income/ Revenues </li></ul><ul><li>Overhead/Expense Marketing/Administrativ </li></ul><ul><li>Accounts Receivable </li></ul><ul><li>Current Liabilities </li></ul><ul><li>Use of Debt Leverage </li></ul><ul><li>Investor Relations </li></ul><ul><li>Analyst Coverage </li></ul><ul><li>Growth </li></ul><ul><li>Revenues </li></ul><ul><li>Cost of Capital </li></ul><ul><li>Capital Accessibility </li></ul><ul><li>Market Alternative Returns </li></ul>Structures, processes, and experiences that enable your organization to secure competitive advantage Capabilities Performance behaviors critical to successful performance Competencies Factors that facilitate employee commitment to the organization Commitment <ul><li>Market Focus </li></ul><ul><li>Investment Capital </li></ul><ul><ul><li>Branch Office </li></ul></ul><ul><ul><li>Project Working Capital </li></ul></ul><ul><ul><li>Business Dev. Costs </li></ul></ul>Service Delivery <ul><li>Project Execution </li></ul><ul><li>Overall Contract Management </li></ul><ul><li>Technology </li></ul><ul><li>. Operating Leverage </li></ul><ul><li>Labor Productivity </li></ul><ul><li>Return on l Capital (ROC) </li></ul><ul><li>Return on Gross Investment (ROGI) </li></ul>Return on Investment
  11. Economic Value Generate Growth Potential Increased Return Lower Cost of Capital Business Expansion Improved Competitiveness Operational Efficiency Organizational Effectiveness Optimal Capital Structure Increased Market Share Revenue Growth Improved Profit Margin Improved Asset Turnover Debt Equity Ratio Risk Profile New Products Market Awareness Customer Service New Distribution Channels New Markets Cycle Time Cost Management (e.g., overhead costs, operating costs) Metrics Market Segmentation Rationalize Business Processes/Units Resource Utilization Key Outcomes Percent of New Product Revenue /Total Revenue Regional Breakdown of Sales New Market/Total Sales Percent Promotional Expense /Total Revenue Brand Equity Scores Customer Satisfaction Operating Costs/COGS Overhead Costs/Total Accounts Receivable Turnover Plant Assets Turnover Inventory Process Costs/Time ABC Costing Engagement Level Performance Measures Process Costs/Time and Key Processes Hierarchy Levels Brand Value Creation Business Processes Fundamental Corporate Results Entrepreneurship Innovation Accountability Speed and Sense of Urgency Measured Risk Customer Focus Teamwork and Collaboration Behaviors Executing strategy - From intangible sources Linking Shareholder Value and People
  12. From HR Cost to Cost Driven by People <ul><li>Hidden costs lurk in the system </li></ul><ul><ul><li>In the duplication of activities among departments; </li></ul></ul><ul><ul><li>In highly paid staff performing lower order tasks </li></ul></ul><ul><ul><li>In too many people involved in a particular process. </li></ul></ul><ul><li>View HR Costs on Activity Basis </li></ul><ul><ul><li>Total cost and cost per head are not nearly as meaningful as cost by activity </li></ul></ul><ul><ul><li>See each HR activity as a percentage of its total cost, the number of full-time equivalents dedicated to it, </li></ul></ul><ul><ul><li>Costing by activity enables you to target process changes that lead to long-term cost reductions </li></ul></ul>
  13. Thank you
  14. 22 Linking Shareholder Value and Employee Commitment Business Results/ Value Drivers Key Strategic Factors Current Objectives Engagement/ Commitment HR Tools/Levers <ul><li>Growth </li></ul><ul><ul><li>Pricing </li></ul></ul><ul><ul><li>Project Load </li></ul></ul><ul><li>Return on Investment </li></ul><ul><ul><li>Profit Margin </li></ul></ul><ul><ul><li>Turnover </li></ul></ul><ul><li>Market Position </li></ul><ul><li>Project Execution </li></ul><ul><li>Service Delivery </li></ul><ul><li>Overhead/Expense Management </li></ul>Total Shareholder Return <ul><li>Excellence in Project Execution </li></ul><ul><li>Cost-Effectiveness/ Reduction </li></ul><ul><li>Maximize Project Profits </li></ul><ul><li>Measurement and Accountability </li></ul><ul><li>Growth in Earnings </li></ul><ul><li>Culture/Purpose </li></ul><ul><li>Quality of Life </li></ul><ul><li>Job Tasks </li></ul><ul><li>Relationships </li></ul><ul><li>Total Compensation </li></ul><ul><li>Opportunity </li></ul><ul><li>Leadership </li></ul><ul><li>Benefits </li></ul><ul><li>Training and Development </li></ul><ul><li>Organization/ Workflow </li></ul><ul><li>Pay/Benefits/ Nonfinancial Rewards </li></ul><ul><li>Career Development </li></ul><ul><li>Performance Management </li></ul><ul><li>Recruiting/Staffing </li></ul><ul><li>Communication </li></ul>
  15. Linkage and Accountability 24 Commitment Competencies Capabilities Implementation Through People Fundamental Value Drivers Key Strategic Factors Balanced Measures Example <ul><li>Financial </li></ul><ul><li>Margins </li></ul><ul><li>Cost Reduction </li></ul><ul><li>Project Profitability </li></ul><ul><li>Client </li></ul><ul><li>Client Satisfaction </li></ul><ul><li>Perceived Value of Service </li></ul><ul><li>Operational </li></ul><ul><li>On-time Completion Rates </li></ul><ul><li>Bidding Success Rates </li></ul><ul><li>Employee </li></ul><ul><li>Employee Survey Results </li></ul><ul><li>Turnover Rates </li></ul><ul><li>Price Appreciation </li></ul><ul><li>Dividends </li></ul>Total Shareholder Returns <ul><li>Pricing </li></ul><ul><li>Fixed Cost Contracts </li></ul><ul><li>Cost Plus Contracts </li></ul><ul><li>Currency Exposure </li></ul><ul><li>Market Position </li></ul><ul><li>Competitive Differentiation </li></ul><ul><li>Perceived Value of Service </li></ul><ul><li>Customer Relationships </li></ul><ul><li>Sales Force Effectiveness </li></ul><ul><li>Project Load </li></ul><ul><li>Industry Sector </li></ul><ul><li>Geographic Penetration </li></ul><ul><li>Bidding Success Rates </li></ul><ul><li>New Orders and Order Backlog </li></ul><ul><ul><li>Funded </li></ul></ul><ul><ul><li>Nonfunded </li></ul></ul><ul><li>Profit Margin </li></ul><ul><li>EBITDA/ Revenues </li></ul><ul><li>Net Income/ Revenues </li></ul><ul><li>Turnover </li></ul><ul><li>Revenues/ Investments </li></ul><ul><li>Overhead/Expense Mgmt. </li></ul><ul><li>Marketing/Administrative </li></ul><ul><li>Accounts Receivable </li></ul><ul><li>Current Liabilities </li></ul><ul><li>Fixed Capital Investment </li></ul><ul><li>Use of Debt Leverage </li></ul><ul><li>Investor Relations </li></ul><ul><li>Analyst Coverage </li></ul><ul><li>Growth </li></ul><ul><li>Revenues </li></ul><ul><li>Cost of Capital </li></ul><ul><li>Financial Liquidity </li></ul><ul><li>Capital Accessibility </li></ul><ul><li>Market Alternative Returns </li></ul><ul><li>Strategic Alliance/Joint Ventures </li></ul><ul><li>Market Focus </li></ul><ul><li>Investment Capital </li></ul><ul><ul><li>Branch Office </li></ul></ul><ul><ul><li>Project Working Capital </li></ul></ul><ul><ul><li>Business Dev. Costs </li></ul></ul>Service Delivery <ul><li>Project Execution </li></ul><ul><li>Overall Contract Management </li></ul><ul><li>Technological Capabilities </li></ul><ul><li>Subcontractor Mgmt. Operating Leverage </li></ul><ul><li>Labor Productivity </li></ul>Structures, processes, and experiences that enable your organization to secure competitive advantage Capabilities Performance behaviors that are observable, measurable, and critical to successful performance Competencies Factors that facilitate employee commitment to the organization Commitment <ul><li>Return on Total Capital (ROTC) </li></ul><ul><li>Return on Gross Investment (ROGI) </li></ul>Return on Investment
  16. HR of the Future–Four Bold Bets on Where HR Is Headed Organizational Steward HR of the Future is assuming a renewed role in building a sense of community, trust and integrity, and even spiritual meaning for the organization. High Performance HR of the Future is taking accountability for driving performance at the organization, team, and individual levels. Talent Engine HR of the Future is redefining and expanding its focus in the area of talent by managing a seamless “human capital supply chain” to ensure the organization has a ready supply of top talent. Human Capital R&D HR of the Future is taking the lead in advanced data mining and predictive modeling of human capital processes to identify new business insights. HR of the Future
  17. Next Generation HR Cost Talent Supply People Process People Outcomes Business Performance Leadership & Key Talent Capabilities High Performance Employment Relationship People Administration Value Growth Profitability Return Innovation Continuous Supply of Qualified Talent Building High Performance Workforce Operational Efficiency & Effectiveness Growth in Key Capabilities Compelling Employment Bond

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