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.

1. People & Change Advisory
Measuring Human
Resource Performance
A presentation for ASHRM
November 30, 2010
Advisory

2. Agenda
1. Basic Concepts and Principles
2. Measurement Trends and Uses
3. A Case Study
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3. About KPMG
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4. KPMG’s Regional and International Credentials
A Truly Global Firm Selection of KPMG’s international and regional clients
KPMG is the global network of International Regional
professional services firms
whose aim is to turn Adobe Intel Corporation
Al Ahlia Investment Company
understanding of information, Pepsi Leisure Initiatives
Al Ahlia Chemicals
industries and business trends Armstrong World Industries Arab Building Industrial
Lucent Technologies
Armco Resources
into value. With more than McGraw Hill
Bank of Kuwait and the Middle
AT & T BIS (TCI) Mellon
140,000 people worldwide, Bank Boston East*
Motorola
KPMG member firms provide Boeing Pacific Gas & Electric
Burgan Bank
assurance, tax and legal, financial BP Amoco PeopleSoft, Inc.
Commercial Bank of Kuwait
advisory and consulting services Bryant Technology EQUATE Petrochemical
Port Authority of NY & NJ
California State Univ. Company
from more than 750 cities in 152 SBC
Gulf Bank
Computer Associates Sears
countries. Computron Global Investment House
Society General
California State Univ. Gulfinvest International
KPMG International is managed The MITRE Corporation
Gulf Investment House
Deutche Bank Visa International
globally by an executive team of Fed. Home Loan Bank – NY Kuwait Institute for Scientific
Wachovia Bank
seven partners through three First Security Corp. York International
Research
operating regions; the Americas, First Union Mobile Telecommunications
Europe (including Middle East Fleet Financial Company
Gap Inc. Oman International Bank
and Africa) and Asia Pacific. Saudi Arabian Airlines
General Electric
Gillette Saudi Arabian Basic Industries
Global Resorts Corporation
Saudi Aramco
United Nations Development
Fund
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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
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6. KPMG Industry Groups
Industry Groups
Information, Infrastructure,
Financial Consumer Industrial
Communication & Government & Private Equity
Services Markets Markets
Entertainment Healthcare
Investment Banking Retail Automotive Communications Building Fundraising
Retail Banking Food, Beverages & Chemicals Media Construction Investments and
Insurance Tobacco Pharmaceuticals Electronics Transportation / Logistics Deals
Leasing Consumer Products Forestry Software and business Healthcare / Life sciences Portfolio
Investment Management Apparel / Textiles Mining services/ Management
and Funds Paper / Packaging Oil and Gas Hotels & Leisure Realising Value
Real Estate Power and Utilities Printing / Publishing
Aerospace / Defence
Diversified Industrials
Steel and other metals
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7. Basic Concepts and Principles
Topic 1
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8. The HR Value Proposition
People Management Solutions
Tailored to Fit
The Needs of Your Organization
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9. What do we mean by Measurement?
Definition: Performance Measurement
The ongoing monitoring and reporting of program
accomplishments, particularly progress toward pre-
established goals.
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10. Types of Measurement
1. Predictive
2. Baseline
3. In-Process (Formative)
4. Retrospective (Summative)
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11. Principles for Good Measurement
1. Avoid measurement dysfunction.
“…performance measurement systems can deliver a [sand
storm] of meaningless data.”
- Mike Hammer
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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.
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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
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14. This document is CONFIDENTIAL and its circulation and use are RESTRICTED.
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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
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16. “Human Resources is our
weakest department.”
- Saudi Arabian Petrochemical General Manager
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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
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18. If you can’t
demonstrate
you’re
effective,
you’re invisible
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19. Measurement Trends and Uses
Topic 2
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20. Measuring Human Resource Performance
1. Human Resource Audit
2. Benchmarking and Best Practices
3. Strategic Measures
4. Transformational
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21. Human Resource Audit
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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
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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.
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24. The Four-Part HR Audit
1. HR Standards Assessment Audit
2. HR Compliance Audit
3. HR Level of Service Audit
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25. Level of Service Audit
Value is defined by the receiver more than the giver.
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26. The Level of Service Audit
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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
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28. The Four-Part HR Audit
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29. Benchmarking and
1.
Best Practices
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30. Benchmarking
1. Use valid and reliable methodology
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31. Benchmarking
1. Use valid and reliable methodology
2. Ideally, have a large sample population
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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
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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
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34. HR Best Practices
Be prepared to look outside your industry and operational
unit
Be aware of current “Best Practise” concerns
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35. Strategic Measures
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36. Strategic Measures
1. Balanced Scorecard
2. Strategy Map
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37. Strategy Map
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38. Transformational Measures
1.
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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
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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.
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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.
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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
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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
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44. 3. Capacity Measurement
KPMG’s Resource-Demand Model
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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
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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
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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
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48. Case Study
Topic 3
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49. Re-engineering HR Service Delivery
The Firm : Private healthcare provider
Revenue: $60 million (2003)
Locations: 23 cities
Employees: 2500
HR Department Size: 11 (1:250 ratio)
HR Issues: 50% turnover (2000)
pay freeze (1995-2000)
$750,000 spent on newspaper job ads
Line Manager Issues: HR hiring too slow
lost paperwork
calls not returned for 24-48 hours
up to 80 employees per period not paid
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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
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51. For more information:
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52. Questions
Answers
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