Measuring Human Resources part1 of 3


Published on

the presentation is the first part of 3 part series, on my lecture at KIAMS

Published in: Business, Technology
1 Comment
No Downloads
Total views
On SlideShare
From Embeds
Number of Embeds
Embeds 0
No embeds

No notes for slide

Measuring Human Resources part1 of 3

  1. 1. MEASURING HR October – December 2011 Kirloskar Institute of Advanced Management Studies, HARIHAR,PUNE Archita Panda Part – 1/3.
  2. 2. COVERAGE OF THIS COURSE <ul><li>Evolution of HR as a function and Future/Present of HR </li></ul><ul><li>Integrated HR functions and HR Scorecard </li></ul><ul><li>ROI for HR Services </li></ul><ul><li>Approach to Measure HR </li></ul><ul><li>HR Metrics and Cost estimation of HR function </li></ul><ul><li>HR Cost and Budgeting </li></ul><ul><li>HR Accounting </li></ul><ul><li>HR Audit </li></ul>
  3. 3. Add Value & Maximize Upside Limit Liability & Protect Downside Impact/Contribution to the Business Strategic HR Planning Organizational Design HR as Business Partner Compensation Benefits Safety & Workers’ Compensation Compliance Labor/Union Relations Staffing Training & Development Culture & Image HR Accounting Employee Relations Performance Management Survey Action Planning HR Information Systems (HRIS) A Century of Evolution in the Function Labor Employee Personnel Human Organizational Relations Relations Resources Effectiveness continue to grow Source: Rich Vosburgh HR Metrics Project Management
  4. 4. SIX WAVES OF CHANGE FOR HR FUNCTION <ul><li>W1 : Facilitated getting people with machines to </li></ul><ul><li>produce large volumes. </li></ul><ul><li>W2: Focus on picking up right person for the right </li></ul><ul><li>Job and provide career path. </li></ul><ul><li>W3: Dramatic rise of legislation and segregation of </li></ul><ul><li>People </li></ul><ul><li>W4: The age of organization brand and diversity </li></ul><ul><li>Integration </li></ul><ul><li>W5: Organization of one to Many ( empowerment </li></ul><ul><li>and individual development ) </li></ul><ul><li>W6: Strategically integrate the pieces together in </li></ul><ul><li>global context </li></ul>
  5. 5. HR’ S PRODUCT LINE <ul><li>Basic Administrative Services ( Resource Efficiency & Service Quality ) </li></ul><ul><li>Business Partner Services ( Know your business ) </li></ul><ul><li>Strategic HR ( Formulate business strategy ) </li></ul>
  6. 6. THE FOUR C’S OF HR FUNCTION <ul><li>Competent </li></ul><ul><ul><li>Strategic Contribution </li></ul></ul><ul><ul><li>Business Knowledge </li></ul></ul><ul><ul><li>HR Delivery </li></ul></ul><ul><ul><li>Personal Credibility </li></ul></ul><ul><ul><li>HR Technology </li></ul></ul><ul><li>Curious </li></ul><ul><li>Courageous </li></ul><ul><li>Care about People </li></ul>
  7. 7. HR KNOWLEDGE TEMPLATE 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
  8. 8. <ul><li>What is the effect of HR on the bottom line of the firm?  </li></ul><ul><li>Is there a significant relationship between compensation and worker turnover in an organization?  </li></ul><ul><li>Does worker training and development enhance retention?  …customer satisfaction?  </li></ul><ul><li>What value would you attribute to each worker?  How much is each employee “worth?”  </li></ul><ul><li>Are all employees alike and thus should be managed similarly, or should each employee be developed and managed uniquely?  </li></ul><ul><li>What brings out the “best” in each worker?  What makes them maximally productive and valuable to the organization?  </li></ul><ul><li>How to quantify what HR function does ? </li></ul><ul><li>What is ROI in HR ? </li></ul><ul><li>We will try and find out answer of these questions in the following </li></ul><ul><li>sessions.   </li></ul>
  11. 11. REQUIREMENT TO ALIGN Fully understanding how value is created in your business Then designing a measurement system based on that story
  12. 13. ARTICULATE BUSINESS STRATEGY <ul><li>Organization's need for clear strategy ( clear, </li></ul><ul><li>concise and free of ambiguities ). </li></ul><ul><li>HR Architecture is key to deliver business strategy </li></ul><ul><li>Components of HR Architecture </li></ul><ul><ul><li>HR Function ( Deliver services to support business strategy) </li></ul></ul><ul><ul><li>HR Management System ( focus on </li></ul></ul><ul><ul><li>Quality of human resources e.g. building high performance culture ) </li></ul></ul><ul><ul><li>Strategic Employee Behavior ( Infuse preferred employee behavior to implement strategy ) </li></ul></ul>
  13. 14. HR VS. STRATEGY <ul><li>Control cost by driving out in efficiencies </li></ul><ul><li>Create value in all parts of strategy </li></ul><ul><li>Replace conventional metrics with new value creating </li></ul><ul><li>metrics </li></ul><ul><li>Restructure HR roles to infuse tangible achievements </li></ul><ul><li>Position HR as strategic partner with clear </li></ul><ul><li>understanding of business strategy </li></ul>
  14. 15. DEVELOP BUSINESS CASE FOR HR <ul><li>Understand business strategy and make implementation plan through </li></ul><ul><ul><li>Creating value with good HR alignment </li></ul></ul><ul><ul><li>Control cost to enhance organizational efficiency </li></ul></ul><ul><li>Establish Good performance measures for HR </li></ul>
  15. 16. BUSINESS CASE <ul><li>Include measures which has linkages to organization's performance drivers </li></ul><ul><li>Causal inferences </li></ul><ul><li>Multi level business analysis </li></ul><ul><li>A distinction between lagging variables and leading variables </li></ul><ul><li>Develop HR measures with top down approach </li></ul><ul><li>Emphasis on strategy implementation and less on strategy content </li></ul>
  16. 17. GOOD HR MEASURES - CHARACTERISTICS <ul><li>Simple with related information </li></ul><ul><li>Capture amount and cause </li></ul><ul><li>Should provide benchmark for comparison </li></ul><ul><li>Should be unambiguous </li></ul><ul><li>Contribute in meaningful ways to overall performance evaluation. </li></ul>
  17. 18. 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
  18. 19. HR STRATEGY MAP <ul><li>Strategy map defines organization process and capabilities to drive performance </li></ul><ul><ul><li>Leading indicators : Drive Performance </li></ul></ul><ul><ul><li>Lagging Indicators : Measure results </li></ul></ul><ul><li>Strategy Map include both results that are tangible and intangible. </li></ul>
  19. 20. HR STRATEGY MAP <ul><li>Strategic goals critical to achieve than simply nice to have them </li></ul><ul><li>Performance driver for each goal </li></ul><ul><li>Measure progress for each goal </li></ul><ul><li>Expected employee behavior </li></ul><ul><li>HR Architecture to provide competencies and behavior needed for the goals. </li></ul>
  20. 21. HR STRATEGY MAP <ul><li>Learning & Growth : </li></ul><ul><li>Internal Process: </li></ul><ul><li>Customer : </li></ul><ul><li>Financial: </li></ul>Employee Skills Process Quality Process Cycle Time On time delivery Customer Loyalty Return on Capital
  21. 22. HR COMPETENCY 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
  22. 23. INDENTIFY DELIVERABLES <ul><li>Deliverables are created when HR system intersects strategy map </li></ul><ul><li>Better Pay Adjustment Employee Stability </li></ul><ul><li>Promotion Improved R&D cycle time </li></ul>Strategy Map HR Deliverables
  23. 24. INDENTIFY DELIVERABLES <ul><li>Identify short and long term in pay off </li></ul><ul><li>Cost benefit analysis ( ROI ) </li></ul><ul><li>Three step process to identify ROI: </li></ul><ul><ul><li>Identify all potential cost ( Fixed , Variable and Sunk) </li></ul></ul><ul><ul><ul><li>Fixed : Does not change with production </li></ul></ul></ul><ul><ul><ul><li>Change with output </li></ul></ul></ul><ul><ul><ul><li>Total resource invested </li></ul></ul></ul><ul><ul><li>Identify the likely benefits </li></ul></ul><ul><ul><ul><li>Understand economic contribution by Employee </li></ul></ul></ul><ul><ul><ul><li>(e.g. Revenue per employee) </li></ul></ul></ul><ul><ul><ul><li>Variability of financial result on employee performance ( Profit generated per high performer associate </li></ul></ul></ul><ul><ul><li>Calculate ROI of the program </li></ul></ul><ul><ul><ul><li>As percentage, money spent and returned </li></ul></ul></ul><ul><ul><ul><li>Break even and pay back period </li></ul></ul></ul>
  24. 25. HR ARCHITECTURE VS. HR DELIVERY <ul><li>Internal alignment between three components of HR Architecture </li></ul><ul><ul><li>By measuring stakeholder feedback </li></ul></ul><ul><ul><li>Understand pain areas and take quick action </li></ul></ul><ul><li>External alignment with all other in the value chain </li></ul><ul><ul><li>Run test and audit for HR deliverable </li></ul></ul><ul><ul><li>Check correlation & consistency with the performance driver </li></ul></ul>
  25. 26. MEASUREMENT SYSTEM <ul><li>Select correct HR measures and deliverables </li></ul><ul><li>Establish high performance HR work system </li></ul><ul><li>Alignment measures to check consistency </li></ul><ul><li>HR Efficiency Measures </li></ul><ul><ul><li>Core efficiency measure : Significant expenditure items like benefit and salary cost etc. </li></ul></ul><ul><ul><li>Strategic efficiency measure : cost per new hire, HR expenses per employee </li></ul></ul>
  26. 27. EXECUTE MANAGEMENT BY MEASUREMENT <ul><li>Find Champion or key executive sponsor for HR scorecard </li></ul><ul><li>Create a need for HR scorecard </li></ul><ul><li>Shape a vision </li></ul><ul><li>Encourage commitment and involvement </li></ul><ul><li>Build the enabling system </li></ul><ul><li>Have early success and demonstrate progress </li></ul><ul><li>Sustain the effort </li></ul>
  27. 28. A GOOD HR SCORECARD <ul><li>Distinguish HR doable to deliverables </li></ul><ul><li>Empowers HR to control cost </li></ul><ul><li>Measures leading indicators </li></ul><ul><li>Clarify HR contribution to Profitability </li></ul><ul><li>Allows HR professional to manage better </li></ul><ul><li>Encourage flexibility and on going change </li></ul>
  28. 29. <ul><li>How to make a Budget ? </li></ul><ul><li>Defining Expense Areas </li></ul><ul><li>Historical Data </li></ul><ul><li>Assumptions </li></ul><ul><li>Projections ( Reference Business Strategies ) </li></ul><ul><li>Consolidate </li></ul><ul><li>0 </li></ul>HR BUDGET
  29. 30. <ul><li>Archita Panda </li></ul><ul><li>Email: [email_address] </li></ul><ul><li>Mobile: 9850094074 </li></ul><ul><li>Linkedin Profile: </li></ul><ul><li>End of Part – 1/3. </li></ul><ul><li>0 </li></ul>CONTACT ME FOR FURTHER DETAILS