The document discusses future metrics for measuring the impact and effectiveness of HR. It begins by outlining three levels of metrics: efficiency, effectiveness, and impact. Efficiency measures resources and investments, effectiveness examines policies and practices, and impact evaluates the link between human capital and business success. It then examines the changing role of HR from administrative expert to strategic partner. While more HR professionals see themselves as strategic partners, time spent on strategic activities has not increased. The document also reviews internal and external benchmarks for measuring HR. Finally, it emphasizes the need to demonstrate how HR drives business performance through impact metrics that link human capital to value creation.

1. Future of HR Metrics
A Brave New World

2. 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
EEO/AA
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
HR Continues to Evolve
& the model defines our aspirations
continue
to grow

3. The Role of HR
The 2002 Human Resource
Competency Study found that
43% of HR’s impact on business
performance came from its
strategic contribution.
Source: University of Michigan Business School

4. 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

6. Efficiency and
Effectiveness

7. Effectiveness
Efficiency
Impact
Three Levels of Metrics
Efficiency
• What range of
resources (financial
and non-financial)
should be
considered?
• What is the
appropriate level of
investments?
• How should
investable resources
be allocated to
maximize results?
Source: Boudreau and Ramstead

8. Effectiveness
Efficiency
Impact
Three Levels of Metrics
Effectiveness
• 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 policies and
practices?
Source: Boudreau and Ramstead

9. Internal and External
Historical
Benchmarks

10. The Role of HR
People
Processes
Future / Strategic Focus
Day to Day Operational Focus
Strategic Partner
• Strategic HR Planning
• HR as Business Partner
• Culture and Image
Change Agent
• Staffing
• Organizational design
• Survey action planning
• Performance measurement
• Training and development
Employee Relations
Expert
• Employee relations
• Labor relations
• Safety & workers’ compensation
• Diversity and EEO
Administrative
Expert
• Compensation
• Benefits
• HR information systems
• Compliance

11. 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.

12. 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
Employee Relations Expert
# 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.

13. 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.
Change Agent

14. 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.
Strategic Partner

15. Starting with the
Business Strategy

16. Basic Process for HR
Strategy
Scan the
External
Environment
Identify
Strategic
Business
Issues
Develop
HR
Strategy
Communicate
the
HR Strategy
Identify
People
Issues

17. The Common HR Approach
HR practices,
processes,
and
systems
Articulate how
what we do
adds value to
The business
Communicate
to the business
what a good
job we are
doing
The Inside-Out Approach
Source: Patrick Wright

18. The Better HR Planning
Approach
Identify the
business model
components
and areas to
drive value
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
The Outside-In Approach
Source: Patrick Wright

19. Efficiency
• Time to Hire
• Cost per Hire
• Headcount Ratio
Effectiveness
• Customer Survey
• “At the Table”
• Practice/Process
Impact
Efficiency
• Direct Labor Costs
• Indirect Labor Costs
• Positions Unfilled
Effectiveness
• Employee Satisfaction
• Leadership Capability
• Talent Retention
• % Black Belt Leaders
• Employer Brand
Efficiency
• Cost per Unit
• Shrinkage
• Defects/Scrap
Effectiveness
• Customer Satisfaction
• Revenue Growth
• Market Share
Organization
HR People
Metrics Model
Source: Patrick Wright

20. 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

22. 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

23. Impact

24. Effectiveness
Efficiency
Three Levels of Metrics
Impact
• 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 capital
increase value?
Impact
Source: Boudreau and Ramstead

25. Company
Business Environment
HR Department
Outputs
Inputs
Internal
Feedback:
Efficiency
Effectiveness
External
Feedback:
Impact

26. Scope of HR Measurement
Approaches
Source: Center for Effective Organizations, USC
Ad hoc HR
Measures
Benchmarks
Data Systems
and Portals
Scorecards
and
Drill Downs
Strategic Impact
Organizational Effectiveness
Validity and Rigor
Causation
Leading Indicators

27. Building an Impact
Model
 Do you understand your business
partner/client’s 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

29. 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

30. Food for thought
 “… it is not the lack of a strategy that causes
[Senior Executives] to lose sleep, but rather their
organization’s 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

31. Execution
Strategy
People Processes
Alignment
=
Successful Execution
To execute strategy you need to align your strategy, process and people!

32.  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 biggest questions facing
CEOs today

33. The Alignment Challenge
Strategy
People Processes
Alignment
=
Successful Execution
Fast -
Logical !
Fast -
Logical !
Slow . . .
And follows a
different logic . . .
Success and speed of execution depend on people alignment,
Yet this is the hardest element to align!

35. What is the
Alignment of
People?

36. Dr. Albert A. Vicere
Pennsylvania State
University
Dr. Elena Granell
Instituto De Empressa,
Madrid
Dr. Miles H. Overholt
Human Resource Institute &
Riverton Management
Consulting Group
Jay J. Jamrog
Human Resource Institute
The University of Tampa
Research Team

37. Research Questions
Strategy
People Processes
Alignment
=
Successful Execution
 Can we identify disconnects
between people and 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

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

39. Included an analysis of four
large data bases
 Organizational DNA
 Customer Focused Cultures
 Employee Behavior
 Organizational Culture

40. The Alignment of People
Strategy
People Processes
Alignment
=
Successful Execution
Five Key Elements
 Marketplace Approach
 Customer Focus
 Leadership Behavior
 Performance
 Culture
Processes

41. Impact Measurement
It’s 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 don’t know you they won’t
trust you
Fear of being “found out”

42. 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 today’s
realities and deleting systems that do not add
value

44. Conclusion

45. Key Attributes for the
21st Century HR Professional
INTELLIGENCE
ACCOUNTABILITY CURIOSITY
Source: Steve Miranda
• Hit it to me / My team
• How good:
- Do I HAVE to be?
- CAN I be?
• So much to learn
So little time
• I wonder what will
happen today
• Why vs How
• Let me show you something
you don’t already know

46. Faster up the Learning Curve
WHAT YOU
NEED TO KNOW
HIGHER PERFORMANCE
PROCESS
SOONER

47. Pushing The HR Curve
Success = Intelligence + Access
Source: Steve Miranda

48. It’s Not HR’s
Productivity
We Should
Be Concerned
About
The “Evolving” HR Professional
Never Forgets…

49. Getting Computers
To Do the Work
Is A
Waste of Time
The “Evolving” HR Professional
Never Forgets…

50. Because You
Can Do It
Doesn’t Mean
You Should
Do It
The “Evolving” HR Professional
Never Forgets…

51. “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 the
Species by Natural Selection”, 1859
Charles Darwin, “On the Origin of the
Species by Natural Selection”, 1859