Measuring Human Resource Performance

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Measuring the performance on HR operations can be used to improve performance and align the operation with the business. This presentation provides a summary of several measurement methods, as well as some principles for good practice.

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Measuring Human Resource Performance

  1. 1. People & Change AdvisoryMeasuring HumanResource PerformanceA presentation for ASHRMNovember 30, 2010Advisory
  2. 2. Agenda 1. Basic Concepts and Principles 2. Measurement Trends and Uses 3. A Case Study This document is CONFIDENTIAL and its circulation and use are RESTRICTED. © 2010 KPMG, the Indian member firm of KPMG International, a Swiss cooperative. All rights reserved. The KPMG logo and name are trademarks of KPMG International. 2
  3. 3. About KPMGThis document is CONFIDENTIAL and its circulation and use are RESTRICTED.© 2010 KPMG, the Indian member firm of KPMG International, a Swiss cooperative. All rights reserved. The KPMG logo and name are trademarks of KPMG International. 3
  4. 4. KPMG’s Regional and International Credentials A Truly Global Firm Selection of KPMG’s international and regional clientsKPMG is the global network of International Regionalprofessional services firmswhose aim is to turn Adobe Intel Corporation Al Ahlia Investment Companyunderstanding of information, Pepsi Leisure Initiatives Al Ahlia Chemicalsindustries and business trends Armstrong World Industries Arab Building Industrial Lucent Technologies Armco Resourcesinto value. With more than McGraw Hill Bank of Kuwait and the Middle AT & T BIS (TCI) Mellon140,000 people worldwide, Bank Boston East* MotorolaKPMG member firms provide Boeing Pacific Gas & Electric Burgan Bankassurance, tax and legal, financial BP Amoco PeopleSoft, Inc. Commercial Bank of Kuwaitadvisory and consulting services Bryant Technology EQUATE Petrochemical Port Authority of NY & NJ California State Univ. Companyfrom more than 750 cities in 152 SBC Gulf Bank Computer Associates Searscountries. Computron Global Investment House Society General California State Univ. Gulfinvest InternationalKPMG International is managed The MITRE Corporation Gulf Investment House Deutche Bank Visa Internationalglobally by an executive team of Fed. Home Loan Bank – NY Kuwait Institute for Scientific Wachovia Bankseven partners through three First Security Corp. York International Researchoperating regions; the Americas, First Union Mobile TelecommunicationsEurope (including Middle East Fleet Financial Company Gap Inc. Oman International Bankand Africa) and Asia Pacific. Saudi Arabian Airlines General Electric Gillette Saudi Arabian Basic Industries Global Resorts Corporation Saudi Aramco United Nations Development Fund This document is CONFIDENTIAL and its circulation and use are RESTRICTED. © 2010 KPMG, the Indian member firm of KPMG International, a Swiss cooperative. All rights reserved. The KPMG logo and name are trademarks of KPMG International. 4
  5. 5. KPMG Advisory Services Our nine global Advisory service lines Process & Technology Services Business Process Sourcing Business Process Improvement People & Change Management Accounting Advisory Services Financial Management Financial Risk Management Global Conversion Services Credit/Operational/Market/Liquidity Risk Quality Close (Rapid Close) 2 Assessment, Model Build/Validation, Accounting Support 1 Management AAS PTS Economic Capital Measurement, Business Performance Management, Planning Accounting Services Advisory Services Capital Adequacy & Regulatory Reporting Corporate Finance Insurance Risk/Actuarial Services M%A Services Financial Instruments Accounting Valuations 3 4 5 Finance & Treasury Management Infrastructure and Projects Debt and Equity Financing CF FRM For Asset Management Financial Risk Real Estate Advisory Corporate Finance Management Forensic Forensic Fraud and Financial Investigation 6 Fraud Risk Management 7 8 Dispute Resolution Services Internal Audit Services IAS ITA R Regulatory Compliance Internal Audit IT Advisory Restructuring Forensic Technology Internal Audit Sourcing Services Corporate Intelligence Enterprise Risk Management Corporate Governance Restructuring Regulatory Compliance Operational Restructuring Sustainability Services 9 Cash Management Contract Compliance Services IT Advisory ERP Controls Integration/ TS Financial Restructuring Crisis Management Transaction Service Business Systems Controls Turnaround Executive Management Security Services/ Exit Planning and Implementation Security Privacy and Continuity Insolvency IT Attestation IT Project Advisory Transaction Services IRM in External Audit Buy and Sell Side Advice IRM in internal Audit (Pre and Post Deal) /IT Audit Co/Outsourcing Capital Markets Service IPO IT Strategy & Governance Debt and Equity Assistance IT Sourcing This document is CONFIDENTIAL and its circulation and use are RESTRICTED. © 2010 KPMG, the Indian member firm of KPMG International, a Swiss cooperative. All rights reserved. The KPMG logo and name are trademarks of KPMG International. 5 5
  6. 6. KPMG Industry Groups Industry Groups Information, Infrastructure, Financial Consumer Industrial Communication & Government & Private Equity Services Markets Markets Entertainment HealthcareInvestment Banking Retail Automotive Communications Building FundraisingRetail Banking Food, Beverages & Chemicals Media Construction Investments andInsurance Tobacco Pharmaceuticals Electronics Transportation / Logistics DealsLeasing Consumer Products Forestry Software and business Healthcare / Life sciences PortfolioInvestment Management Apparel / Textiles Mining services/ Managementand Funds Paper / Packaging Oil and Gas Hotels & Leisure Realising ValueReal Estate Power and Utilities Printing / Publishing Aerospace / Defence Diversified Industrials Steel and other metals This document is CONFIDENTIAL and its circulation and use are RESTRICTED. © 2010 KPMG, the Indian member firm of KPMG International, a Swiss cooperative. All rights reserved. The KPMG logo and name are trademarks of KPMG International. 6
  7. 7. Basic Concepts and Principles Topic 1 This document is CONFIDENTIAL and its circulation and use are RESTRICTED. © 2010 KPMG, the Indian member firm of KPMG International, a Swiss cooperative. All rights reserved. The KPMG logo and name are trademarks of KPMG International. 7
  8. 8. The HR Value Proposition People Management Solutions Tailored to Fit The Needs of Your Organization © 2010 KPMG Al Fozan & Al Sadhan, the Kingdom of Saudi Arabia member firm of KPMG International, a Swiss cooperative. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative.
  9. 9. What do we mean by Measurement? Definition: Performance Measurement The ongoing monitoring and reporting of program accomplishments, particularly progress toward pre- established goals. This document is CONFIDENTIAL and its circulation and use are RESTRICTED. © 2010 KPMG, the Indian member firm of KPMG International, a Swiss cooperative. All rights reserved. The KPMG logo and name are trademarks of KPMG International. 9
  10. 10. Types of Measurement 1. Predictive 2. Baseline 3. In-Process (Formative) 4. Retrospective (Summative) This document is CONFIDENTIAL and its circulation and use are RESTRICTED. © 2010 KPMG, the Indian member firm of KPMG International, a Swiss cooperative. All rights reserved. The KPMG logo and name are trademarks of KPMG International. 10
  11. 11. Principles for Good Measurement 1. Avoid measurement dysfunction. “…performance measurement systems can deliver a [sand storm] of meaningless data.” - Mike Hammer This document is CONFIDENTIAL and its circulation and use are RESTRICTED. © 2010 KPMG, the Indian member firm of KPMG International, a Swiss cooperative. All rights reserved. The KPMG logo and name are trademarks of KPMG International. 11
  12. 12. Principles for Good Measurement 1. Avoid measurement dysfunction. 2. Measure what matters most. 3. Select the right measures. 4. Communicate. 5. Add value – make a difference. This document is CONFIDENTIAL and its circulation and use are RESTRICTED. © 2010 KPMG, the Indian member firm of KPMG International, a Swiss cooperative. All rights reserved. The KPMG logo and name are trademarks of KPMG International. 12
  13. 13. Applications of Performance Measurement A. Measurement directs behaviour B. Measurement focuses attention C. Measurement facilitates feedback D. Measurement improves execution E. Measurement improves decision making F. Measurement provides early warning signals This document is CONFIDENTIAL and its circulation and use are RESTRICTED. © 2010 KPMG, the Indian member firm of KPMG International, a Swiss cooperative. All rights reserved. The KPMG logo and name are trademarks of KPMG International. 13
  14. 14. This document is CONFIDENTIAL and its circulation and use are RESTRICTED.© 2010 KPMG, the Indian member firm of KPMG International, a Swiss cooperative. All rights reserved. The KPMG logo and name are trademarks of KPMG International. 14
  15. 15. Applications of Performance Measurement A. Measurement directs behaviour B. Measurement focuses attention C. Measurement facilitates feedback D. Measurement improves execution E. Measurement improves decision making F. Measurement provides early warning signals G. Measurement increases alignment This document is CONFIDENTIAL and its circulation and use are RESTRICTED. © 2010 KPMG, the Indian member firm of KPMG International, a Swiss cooperative. All rights reserved. The KPMG logo and name are trademarks of KPMG International. 15
  16. 16. “Human Resources is our weakest department.” - Saudi Arabian Petrochemical General Manager This document is CONFIDENTIAL and its circulation and use are RESTRICTED. © 2010 KPMG, the Indian member firm of KPMG International, a Swiss cooperative. All rights reserved. The KPMG logo and name are trademarks of KPMG International. 16
  17. 17. Leaders Rely on their Best 60% of U.K. managers view HR as administrative 58% believe HR lacks the capability to develop talent management and other key strategies - CIPD, 2009 This document is CONFIDENTIAL and its circulation and use are RESTRICTED. © 2010 KPMG, the Indian member firm of KPMG International, a Swiss cooperative. All rights reserved. The KPMG logo and name are trademarks of KPMG International. 17
  18. 18. If you can’t demonstrate you’re effective,you’re invisible This document is CONFIDENTIAL and its circulation and use are RESTRICTED. © 2010 KPMG, the Indian member firm of KPMG International, a Swiss cooperative. All rights reserved. The KPMG logo and name are trademarks of KPMG International. 18
  19. 19. Measurement Trends and Uses Topic 2 This document is CONFIDENTIAL and its circulation and use are RESTRICTED. © 2010 KPMG, the Indian member firm of KPMG International, a Swiss cooperative. All rights reserved. The KPMG logo and name are trademarks of KPMG International. 19
  20. 20. Measuring Human Resource Performance 1. Human Resource Audit 2. Benchmarking and Best Practices 3. Strategic Measures 4. Transformational This document is CONFIDENTIAL and its circulation and use are RESTRICTED. © 2010 KPMG, the Indian member firm of KPMG International, a Swiss cooperative. All rights reserved. The KPMG logo and name are trademarks of KPMG International. 20
  21. 21. Human Resource AuditThis document is CONFIDENTIAL and its circulation and use are RESTRICTED.© 2010 KPMG, the Indian member firm of KPMG International, a Swiss cooperative. All rights reserved. The KPMG logo and name are trademarks of KPMG International. 21
  22. 22. The Four-Part HR Audit 1. HR Standards Assessment Audit • Human capital strategies and workforce planning • Business partnership role and alignment with business units • Policies and procedures • Job analysis, job description, and job evaluation documentation • Recruitment, selection and other staffing practices • Performance management and appraisal • Training and development assessments, plans and programs; evaluation of impact and learning transfer • Compensation, reward and benefits programs (including promotions and increases) • Discipline and grievance handling • Organization structure, process, people and design • Employee relations and communication • Employee services • Succession planning, career development and talent management • Records management, HRIS processes and confidentially This document is CONFIDENTIAL and its circulation and use are RESTRICTED. © 2010 KPMG, the Indian member firm of KPMG International, a Swiss cooperative. All rights reserved. The KPMG logo and name are trademarks of KPMG International. 22
  23. 23. The Four-Part HR Audit 1. HR Standards Assessment Audit 2. HR Compliance Audit1 1 Werther, W. and Keith Davis. (1996) Human Resource Management and Personnel Management (5th edition) New York: McGraw- Hill. The authors recommend organizations look for broader compliance than solely within the HR Department. This document is CONFIDENTIAL and its circulation and use are RESTRICTED. © 2010 KPMG, the Indian member firm of KPMG International, a Swiss cooperative. All rights reserved. The KPMG logo and name are trademarks of KPMG International. 23
  24. 24. The Four-Part HR Audit 1. HR Standards Assessment Audit 2. HR Compliance Audit 3. HR Level of Service Audit This document is CONFIDENTIAL and its circulation and use are RESTRICTED. © 2010 KPMG, the Indian member firm of KPMG International, a Swiss cooperative. All rights reserved. The KPMG logo and name are trademarks of KPMG International. 24
  25. 25. Level of Service Audit Value is defined by the receiver more than the giver. This document is CONFIDENTIAL and its circulation and use are RESTRICTED. © 2010 KPMG, the Indian member firm of KPMG International, a Swiss cooperative. All rights reserved. The KPMG logo and name are trademarks of KPMG International. 25
  26. 26. The Level of Service Audit This document is CONFIDENTIAL and its circulation and use are RESTRICTED. © 2010 KPMG, the Indian member firm of KPMG International, a Swiss cooperative. All rights reserved. The KPMG logo and name are trademarks of KPMG International. 26
  27. 27. The Four-Part HR Audit 1. HR Standards Assessment Audit 2. HR Compliance Audit 3. HR Level of Service Audit 4. HR Transactional Audit This document is CONFIDENTIAL and its circulation and use are RESTRICTED. © 2010 KPMG, the Indian member firm of KPMG International, a Swiss cooperative. All rights reserved. The KPMG logo and name are trademarks of KPMG International. 27
  28. 28. The Four-Part HR Audit This document is CONFIDENTIAL and its circulation and use are RESTRICTED. © 2010 KPMG, the Indian member firm of KPMG International, a Swiss cooperative. All rights reserved. The KPMG logo and name are trademarks of KPMG International. 28
  29. 29. Benchmarking and1. Best Practices This document is CONFIDENTIAL and its circulation and use are RESTRICTED. © 2010 KPMG, the Indian member firm of KPMG International, a Swiss cooperative. All rights reserved. The KPMG logo and name are trademarks of KPMG International. 29
  30. 30. Benchmarking 1. Use valid and reliable methodology This document is CONFIDENTIAL and its circulation and use are RESTRICTED. © 2010 KPMG, the Indian member firm of KPMG International, a Swiss cooperative. All rights reserved. The KPMG logo and name are trademarks of KPMG International. 30
  31. 31. Benchmarking 1. Use valid and reliable methodology 2. Ideally, have a large sample population This document is CONFIDENTIAL and its circulation and use are RESTRICTED. © 2010 KPMG, the Indian member firm of KPMG International, a Swiss cooperative. All rights reserved. The KPMG logo and name are trademarks of KPMG International. 31
  32. 32. Benchmarking 1. Use valid and reliable methodology 2. Ideally, have a large sample population 3. Gather comparative data from a broad cross-section of industries This document is CONFIDENTIAL and its circulation and use are RESTRICTED. © 2010 KPMG, the Indian member firm of KPMG International, a Swiss cooperative. All rights reserved. The KPMG logo and name are trademarks of KPMG International. 32
  33. 33. Benchmarking and Best Practices 1. Use valid and reliable methodology 2. Ideally, have a large sample population 3. Gather comparative data from a broad cross-section of industries 4. Ensure “performance leaders” are prepared to share This document is CONFIDENTIAL and its circulation and use are RESTRICTED. © 2010 KPMG, the Indian member firm of KPMG International, a Swiss cooperative. All rights reserved. The KPMG logo and name are trademarks of KPMG International. 33
  34. 34. HR Best Practices Be prepared to look outside your industry and operational unit Be aware of current “Best Practise” concerns This document is CONFIDENTIAL and its circulation and use are RESTRICTED. © 2010 KPMG, the Indian member firm of KPMG International, a Swiss cooperative. All rights reserved. The KPMG logo and name are trademarks of KPMG International. 34
  35. 35. Strategic Measures This document is CONFIDENTIAL and its circulation and use are RESTRICTED. © 2010 KPMG, the Indian member firm of KPMG International, a Swiss cooperative. All rights reserved. The KPMG logo and name are trademarks of KPMG International. 35
  36. 36. Strategic Measures 1. Balanced Scorecard 2. Strategy Map This document is CONFIDENTIAL and its circulation and use are RESTRICTED. © 2010 KPMG, the Indian member firm of KPMG International, a Swiss cooperative. All rights reserved. The KPMG logo and name are trademarks of KPMG International. 36
  37. 37. Strategy Map This document is CONFIDENTIAL and its circulation and use are RESTRICTED. © 2010 KPMG, the Indian member firm of KPMG International, a Swiss cooperative. All rights reserved. The KPMG logo and name are trademarks of KPMG International. 37
  38. 38. Transformational Measures1. This document is CONFIDENTIAL and its circulation and use are RESTRICTED. © 2010 KPMG, the Indian member firm of KPMG International, a Swiss cooperative. All rights reserved. The KPMG logo and name are trademarks of KPMG International. 38
  39. 39. Customer Delight Effort HR must embrace the concept of the internal customer Internal customers are less interested in being “Delighted” [the most recent trend in Customer Service] The ‘effort’ needed to get Human Resources to provide what line managers require is an operational cost Managing costs is even more critical to profitability than growing the business organically What line managers want is a satisfactory solution to their service issues This document is CONFIDENTIAL and its circulation and use are RESTRICTED. © 2010 KPMG, the Indian member firm of KPMG International, a Swiss cooperative. All rights reserved. The KPMG logo and name are trademarks of KPMG International. 39
  40. 40. 1. Customer Effort Score 1. Customer Effort Score (CES) is a more effective predictive measure than Customer Satisfaction (CSAT) and Net Promoter Score (NTS) Harvard Business Review, July-August 2010 2. Using the score to meet customers’ expectations: a) head off the need for follow-up calls, b) learn from disgruntled internal customers, A Complaint is a Gift, Berrett-Koehler, 1996 c) focus on problem solving. This document is CONFIDENTIAL and its circulation and use are RESTRICTED. © 2010 KPMG, the Indian member firm of KPMG International, a Swiss cooperative. All rights reserved. The KPMG logo and name are trademarks of KPMG International. 40
  41. 41. Measuring Service Quality An innovative model developed in the 1980s was specifically designed for the service environment, and then refined Zeithaml, Parasuraman and Berry. Delivering Quality Service: Balancing Customer Perceptions and Expectations, New York: Free Press, 1990. This document is CONFIDENTIAL and its circulation and use are RESTRICTED. © 2010 KPMG, the Indian member firm of KPMG International, a Swiss cooperative. All rights reserved. The KPMG logo and name are trademarks of KPMG International. 41
  42. 42. 2. RATER Reliability consistency of service quality lack of errors Assurance ability to maintain service quality procedures for addressing quality problems Tangibles the physical environment the service provided Empathy sensitivity to customer concerns Responsiveness speed; effectiveness of the response This document is CONFIDENTIAL and its circulation and use are RESTRICTED. © 2010 KPMG, the Indian member firm of KPMG International, a Swiss cooperative. All rights reserved. The KPMG logo and name are trademarks of KPMG International. 42
  43. 43. Workforce Planning Workforce planning is a well-known analytical service provided by HR to executives and line management Workforce Planning has internal application as well This document is CONFIDENTIAL and its circulation and use are RESTRICTED. © 2010 KPMG, the Indian member firm of KPMG International, a Swiss cooperative. All rights reserved. The KPMG logo and name are trademarks of KPMG International. 43
  44. 44. 3. Capacity Measurement KPMG’s Resource-Demand Model This document is CONFIDENTIAL and its circulation and use are RESTRICTED. © 2010 KPMG, the Indian member firm of KPMG International, a Swiss cooperative. All rights reserved. The KPMG logo and name are trademarks of KPMG International. 44
  45. 45. Partnership Relationships Also referred to as “alliances” in broader business literature HR has been increasingly developing external and internal partnership relationships since the early 90s: Internal External 1. Operational Outsourcing 2. Strategic Offshoring Measurement focuses effort and energy on outcomes, as well as interpersonal and inter-group dynamics plus mutual or win-win benefits This document is CONFIDENTIAL and its circulation and use are RESTRICTED. © 2010 KPMG, the Indian member firm of KPMG International, a Swiss cooperative. All rights reserved. The KPMG logo and name are trademarks of KPMG International. 45
  46. 46. 4.a Collaboration Inventory Key Performance Indicators (adapted from the Wilder Collaboration Factors Inventory) can be measured and reported using a BSc format People Initiatives Turnover and Churn Rate Safety and Health Succession Activity Coaching and Development Employee Engagement Organizational Initiatives Collaboration Initiatives Service Quality Human Joint Problem Solving Customer Service Joint Project & Operational Planning Strategic Alignment Resource Leadership Commitment Project and Service Management Knowledge Sharing Growth and Innovation HR Competencies Projects Undertaken Impact This document is CONFIDENTIAL and its circulation and use are RESTRICTED. © 2010 KPMG, the Indian member firm of KPMG International, a Swiss cooperative. All rights reserved. The KPMG logo and name are trademarks of KPMG International. 46
  47. 47. 4.b Alliance Metrics Alliance Development Alliance Implementation Mission vision Damage control Time to decision Revenue goals Time to implementation Faster sales cycles Capability enhancement Customer satisfaction Return on investment Cost savings Return on equity Improved cycle time Return on labour hours Outsourcing SWOT team quick action Goal attainment Vantage Partners This document is CONFIDENTIAL and its circulation and use are RESTRICTED. © 2010 KPMG, the Indian member firm of KPMG International, a Swiss cooperative. All rights reserved. The KPMG logo and name are trademarks of KPMG International. 47
  48. 48. Case Study Topic 3This document is CONFIDENTIAL and its circulation and use are RESTRICTED.© 2010 KPMG, the Indian member firm of KPMG International, a Swiss cooperative. All rights reserved. The KPMG logo and name are trademarks of KPMG International. 48
  49. 49. Re-engineering HR Service DeliveryThe Firm : Private healthcare providerRevenue: $60 million (2003)Locations: 23 citiesEmployees: 2500HR Department Size: 11 (1:250 ratio)HR Issues: 50% turnover (2000) pay freeze (1995-2000) $750,000 spent on newspaper job adsLine Manager Issues: HR hiring too slow lost paperwork calls not returned for 24-48 hours up to 80 employees per period not paid This document is CONFIDENTIAL and its circulation and use are RESTRICTED. © 2010 KPMG, the Indian member firm of KPMG International, a Swiss cooperative. All rights reserved. The KPMG logo and name are trademarks of KPMG International. 49
  50. 50. Re-engineering Steps 1. Determined improvement imperative 2. Established work group commitment 3. Launched “Work Out” (modelled on GE) 4. Gathered data, Pareto Analysis and Process Mapping 5. Applied LEAN Methodology 6. Performance standards and KPI; Service contract 7. Communication, Implementation and Measurement This document is CONFIDENTIAL and its circulation and use are RESTRICTED. © 2010 KPMG, the Indian member firm of KPMG International, a Swiss cooperative. All rights reserved. The KPMG logo and name are trademarks of KPMG International. 50
  51. 51. For more information: This document is CONFIDENTIAL and its circulation and use are RESTRICTED. © 2010 KPMG, the Indian member firm of KPMG International, a Swiss cooperative. All rights reserved. The KPMG logo and name are trademarks of KPMG International. 51
  52. 52. Questions AnswersThis document is CONFIDENTIAL and its circulation and use are RESTRICTED.© 2010 KPMG, the Indian member firm of KPMG International, a Swiss cooperative. All rights reserved. The KPMG logo and name are trademarks of KPMG International. 52

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