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HR Standards & metrics driving good governance, slides by Marius Meyer, CEO of SABPP.
1. APPLYING HR STANDARDS & METRICS
TO PROMOTE SOUND HR GOVERNANCE,
RISK, COMPLIANCE
12th Africa Corporate Governance Conference
Marius Meyer, CEO: SABPP
15 July 2014
@SABPP1
2. Agenda
• Clarifying the need for national and international
HR Standards
• Identify HR metrics to measure bottom-line impact
of HR
• Managing people risks in business
• Creating an ethical organisation culture
• Conclusion
3. Critical questions
1. How many of you would like to eat in a
restaurant without standards?
2. Or stay in a hotel without standards?
3. Or send your child to a school (or pre-
school) without standards?
4. Or get operated in a hospital without any
standards?
5. Or fly back home on an airline without
standards?
4. Then when it comes to HR …
Why do we continue to
manage people and govern
the most precious part of our
organisations (i.e. people)
without standards?
5. Top facts about HR
• Human Capital is the biggest concern for
CEOs (PwC).
• Only 18% of CEOs feel confident that they
have the right people in place to execute
strategy (CEB).
• Human Capital is the biggest risk in
business (HCI Africa).
• Skills crisis is the top obstacle to economic
growth.
• Strikes cost SA R197 million per day.
6. More facts about HR
• SA losing R12 billion a year due to absenteeism.
• Only 5% of employees understand business
strategy.
• World-wide only 13% of employees actively
engaged.
• Companied with engaged employees outperform
others by 202% (Dale Carnegie).
• Companies with good HR Practices outperform
others by treating HR as critical business function,
these companies are 105% more profitable.
• Average ROI on wellness programmes: 300%.
8. Why standards ?
The chair that you're sitting on, or the desk your computer is
perched on, are held together by bolts and screws.
Humble bolts and screws also hold together our children's bicycles
- and also the aircraft we trust our lives to during business trips or
holiday travel.
The diversity of screw threads used to represent big problems for
industry, particularly in maintenance, as lost or damaged nuts and
bolts could not easily be replaced. A global solution is supplied in
the ISO standards for metric screw threads.
The credit card you may have used to buy your holiday can be
used worldwide because all its basic features are based on ISO
standards.
We are so familiar with many objects, like credit or telephone
cards, that we tend to assume they just "fell out of the sky". In fact,
the ease with which we can use them can be traced back to an ISO
standard.
Today standard users account
for 78% of the FTSE 100, 53% of
the Nikkei, and 44% of both the
Fortune 500 and Hang Seng
listed companies.
9. Globally standards are a framework for consistency &
continuous improvement and managing risk through
controls
“Consistency is far better
than rare moments of
greatness “
Strengthening the
human factor in
management systems
10. Example of inconsistency –
paternity leave
• South Africa – 3 days
• Ghana – 5 days
• Cameroon – 10 days
• Kenya – 14 days
• Australia – 14 days
• Sweden – 60 days
• UK – 12 months (parents sharing)
11. Why a national HR Standard?
• We need to improve the quality of HR
practice.
• HR will not be seen as a true profession
without standards.
• Inconsistencies – practices, sites, business
units, companies, industries.
• Too many bad examples of things going
wrong – Marikana, Medupi.
• Raising the bar for the HR profession and
business impact.
15. Global approaches to standards
• Production and safety lead – ISO standards
• Professional standards – accounting
• Top global companies – their own standards
• Canada – HR Standards & Metrics
• USA – HR Metrics (SHRM)
• ISO HR project started
• South African National HR Standards
16. Market reaction to project
• All over SA (all 9 provinces)
• USA (SHRM and ISO)
• UK (CIPD)
• Australia
• Netherlands
• Zimbabwe
• Zambia
• Botswana
• Namibia
• Lesotho
• Swaziland
• Kenya
• Ghana
• Malaysia
17. ❶ STRATEGIC HR
MANAGEMENT STANDARD
DEFINITION
Strategic HR Management is a systematic
approach to developing and implementing
long-term HRM strategies, policies and plans
that enable the organisation to achieve its
objectives.
SABPP (2013)
18. STRATEGIC HR
MANAGEMENT STANDARD
OBJECTIVES
1.2.1 To ensure the HR strategy is derived from and aligned to the
organisation’s objectives in consultation with key organisational
stakeholders.
1.2.2 To analyse the internal and external socio-economic, political and
technological environment and provide proactive people-related business
solutions.
1.2.3 To provide strategic direction and measurements for strategic
innovation and sustainable people practices.
1.2.4 To provide a foundation for the employment value proposition of the
organisation.
1.2.5 To establish a framework for the HR element of the organisation’s
governance, risk and compliance policies, practices and procedures which
balance the needs of all stakeholders.
SABPP (2013)
19. STRATEGIC HR
MANAGEMENT STANDARD
IMPLEMENTATION
1.3.1 Translate the overall strategic intent of the organisation into HR strategy.
1.3.2 Position the strategic HR agenda as an integral part of strategic decision making and
operational plans.
1.3.3 Allocate HR resources and build capability to implement the HR mandate.
1.3.4 Provide the contextual foundation for the development of the policies, plans, practices
and procedures.
1.3.5 Allocate accountability and responsibilities for the execution of HR strategy.
1.3.6 Ensure the execution of the HR strategy is measured and monitored within the
governance framework of the organisation.
1.3.7 Drive continuous improvement and sustainability of the HR strategy through planned
reviews and integrated reporting.
SABPP (2013)
20. HR RISK MANAGEMENT
DEFINITION
HR Risk Management is a systematic
approach of identifying and addressing people
factors (uncertainties and opportunities) that
can either have a positive or negative effect
on the realisation of the objectives of an
organisation.
SABPP (2013)
❸
21. HR RISK MANAGEMENT
OBJECTIVES
3.2.1 To increase the probability and impact of positive events and decrease the
probability and impact of negative events caused by people factors on the
achievement of organisational objectives.
3.2.2 To align HR and people management practices within the governance, risk
and compliance framework and integrated reporting model of the organisation.
3.2.3 To ensure appropriate risk assessment practices and procedures relating to
people factors are embedded within the organisation.
3.2.4 To ensure appropriate risk controls are designed and applied to HR
activities and interventions.
3.2.5 To contribute in creating and sustaining a risk culture in an organisation
which also encourages innovation and creativity.
SABPP (2013)
23. H R R I S K S – 8 African countries
• Safety - accidents
• Skills shortages/gaps
• Incompetence
• Employee
disengagement
• Strikes & poor
employment
relationships
• Fraud/corruption
• Stress
• Staff turnover
• Low staff satisfaction –
impact on customer
satisfaction
• Cyber security
• Conflict/disputes
• Diversity problems
• Sexual harassment
• Expatriate issues
• Non-compliance
24. 181 babies died in state hospitals last year.
Human errors, faulty equipment
& cover-up by senior medical staff were key
factors.
Infection-control nurse retired, and her post not
filled.
Critical shortage of nurses & clinical engineers
who are responsible for maintaining ventilators.
Senior doctors presented inaccurate stats to their
bosses to cover up poor management practices.
Doctors failed to alert DoH to the crisis, even
though a few nurses had raised the alarm to
management.
Public sector case study
25. STAFF COMPLAINTS:
Shortage of nurses, leading to
overworked staff being vulnerable to
human error.
High baby-to-nurse ratio – babies not
getting adequate care and attention.
Specialist doctors consult junior doctors
on the phone without personally
accessing high-risk cases.
Inadequate training for medical staff.
30 May 2010
If you don’t manage HR risks
26. HR RISK MANAGEMENT
IMPLEMENTATION
3.3.1 Position the role of HR in influencing and communicating the organisational risk
culture.
3.3.2 Assess potential positive and negative people factor risks to achieving organisational
objectives.
3.3.3 Identify and evaluate the potential risk impacts with regard to strategic and operational
HR activities.
3.3.4 Decide on appropriate risk tolerances for the different components of the HR function.
3.3.5 Design and implement appropriate people-based risk management systems, metrics,
risk controls, and HR practices which will contribute to mitigate the potential risks.
3.3.6 Ensure all HR risk practices conform to the organisational governance, risk and
compliance strategies and policies including integrated reporting.
SABPP (2013)
28. ⓭ HR MEASUREMENT
DEFINITION
HR measurement is a continuous process of
gathering, analysing, interpreting and
presenting quantitative and qualitative data to
measure and align the impact of HR practices
on organisational objectives, including
facilitating internal and external auditing of HR
policies, processes, practices and outcomes.
SABPP (2013)
29. HR MEASUREMENT
OBJECTIVES
13.2.1 Determine measurement approaches, methodologies and metrics to
assess the effectiveness and efficiency of HR practices.
13.2.2 Identify relevant measurement areas for the purpose of integrated
reporting.
13.2.3 Implement appropriate tools and methods to measure timely the efficiency,
effectiveness and consistency of HR practices across the organisation.
13.2.4 Provide a clear framework for measuring HR impact on the bottom-line of
the organisation.
13.2.5 Develop performance indicators for HR service delivery and business
impact and present to the organisation in an appropriate HR Scorecard
SABPP (2013)
30. IMPLEMENTATION
13.3.1 Develop an integrated HR measurement and reporting
framework.
13.3.2 Set up management systems and resource the HR function to
collect and report on agreed people management metrics.
13.3.3 Develop and implement an HR scorecard.
SABPP (2013)
31. Towards National HR Metrics
• % of people meeting performance contracts
• % of outstanding performers
• Average time to resolve people issues
• % of payroll spent on training
• Training spent per employee (costs/FTE)
• Total amount spent on employees
• Number of training hours per employee (year)
• % of key positions with successors
• Vacancy rate (vacancies/headcount)
• Absenteeism rate (sick days/FTE)
• Labour turnover (people left/headcount)
• Diversity/employment equity profile (race, gender, disability)
32. Key Human Capital Metrics
• Revenue per employee (Revenue/FTE)
• Profit per FTE (Revenue-Operating cost/FTE)
• Human Capital ROI (benefits-costs/costs)
• Leadership quality index
• Employee engagement score
• Employee satisfaction score
• Organisation climate score
• Employer of choice index
• Human capital risk index (less than 10% risk)
• HR customer satisfaction score
36. HR governance defined:
is the act of leading,
directing & controlling
the HR function to
promote sound
corporate governance
in pursuit of the overall
business goal of
economic, social &
environmental
sustainability
38. OOPs !! What if ? the pilots had not
read the Instruction book
39. What if ? The ground staff didn't think that
house keeping was an important issue
Who insured it and will they pay ??
40. HR role
HR’s role is to guide and develop policies and ensure
that managers have a clear understanding of their
responsibilities. This applies in respect of, for
example, health and safety; fair employment practices;
recruitment and terminations; diversity and the
avoidance of discriminatory behaviour.
HR should participate at all levels in managing risks
within the company and contribute to ensuring ‘joined-
up thinking’ between different business functions.
HR should be represented at executive level and on
specialist company-wide committees – for example, on
the implementation of the Corporate Governance (King
3) requirements.
42. GUIDELINES FOR HR GRC
• Transform HR management to HR governance by taking
full responsibility for GRC in the HR space, but with a
clear link to overall GRC and business strategy
• Identify all stakeholders and engage with them
• Design and implement a robust HR risk management
plan
• Develop HR standards – good HR practices
• Infuse HR governance in your organisation
• Evaluate the impact of HR on the bottom-line
43. RATING SCALE TO ASSESS HR
PROBLEMATIC MEDIOCRE EXCELLENT
High Risk Medium Risk Low/no Risk
HR practice is non-existent,
has a low uptake or is applied
poorly. Little, no or poor
results are evident. Requires
urgent attention to move to
medium risk over short or
medium term.
Some pockets of excellence,
but they are isolated, and
applied inconsistently in
certain parts of company.
Some occasional positive
results comparable to typical
average HR standards. Should
be addressed before it
becomes problematic.
HR leading practice is well
infused, aligned and integra-
ted across the company and
applied consistently with clear
results. Comparable to world-
class standards. Should be
maintained, reinforced or used
as a model for other
companies.
44. SUSTAINABLE PERFORMANCE
“Whether a company sustains exceptional performance
depends first and foremost on whether it continues to
have the right people in power.”
45. Ethics Management Process …
Develop or revise code of ethics
& processes
Build an ethical
culture
Integrate
ethical
standards
Assess ethics
risk and
opportunities
Report & Disclose
Reference: Ethics SA www.ethicssa.org
46. National HR Governance Strategy Alignment
HR Professional Standards:
• HRMS (13)
• HRMSAS (13)
• HRPPS (30+)
HR Products/Services:
• CPD
• Mentoring
• Professional registration
• Research
• HR Academy – QCTO
• Curriculum standards
HR Metrics:
• National HR Scorecard
• HR Service Standards
HR Auditing:
• Internal Audit
• External Audit
King IV:
HR Governance
ISO: HR
Integrated
Reporting
HR Competencies
47. Conclusion
HR standards are needed to improve the
consistency and quality of HR management.
Consider the SABPP approach, process and
methodology, but develop your own HR
standards for your country.
Best wishes with your HR governance work.
For more information, contact us on executiveoffice@sabpp.co.za
48. Let us build well governed HR functions
professional@sabpp.co.za (Professional Registration)
xolani@sabpp.co.za (Professional Services)
kenneth@sabpp.co.za (Stakeholder Relations)
penny@sabpp.co.za (Research)
naren@sabpp.co.za (Learning & Quality)
marius@sabpp.co.za (Strategy inputs)
voice@sabpp.co.za (Social media)
Website : www.sabpp.co.za Blog: hrtoday.me
New office: 8 Sherborne Str, Parktown, South Africa
Tel: +27 11 482-8595 Fax: +27 11 482-4830
Cel: 082 859 3593 (Marius Meyer)
49. FOLLOW US ON :
@sabpp1
@mariussabpp
#hrstandards