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HR Scorecard

HR Scorecard

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Building and Using the HR Scorecard/Dashboard

Developing an HR Scorecard/Dashboard for Assessing and Reporting HR’s Impact on Your Company’s Bottom Line

Presented by Jeffrey L. Russell Co-Director

The Failure of HR Strategy
In a 2002 industry survey by SHRM . . . Only 34% of executives view HR as a strategic partner Only 44% of respondents indicated that their organization communicates its strategy well Only 22% indicated that general employees understand company’s strategy 21% indicated that HR only deals with operational issues vs. strategic ones Only 23% indicated that HR strategy was tightly integrated with company strategy Only 25% of HR departments use a balanced scorecard on HR’s contribution to strategy
[SHRM Research, N=1310, Aligning HR with Organization Strategy Survey]
© 2004, Russell Consulting, Inc. — Helping You Build and Sustain a Great Organization!

Our Learning Objectives
1. 2. 3. 4. 5. Describe the value and role of the HR Scorecard/Dashboard. Discuss the difference between leading and lagging indicators as measures of HR effectiveness. Identify the components of the HR Scorecard. Identify the key performance drivers and enablers that constitute the primary HR deliverables. Develop some preliminary HR Scorecard/Dashboard measures for your HR department and company.
© 2004, Russell Consulting, Inc. — Helping You Build and Sustain a Great Organization!

Your Greatest HR Challenges
In your table groups . . . . discuss: Meet & Greet — introduce yourself to your table partners The greatest HR challenge you and your company faces . . . The actions you and your company have taken to address these challenges . . . Your goals for this session . . . One question that you’d like to have answered by the end of the session . . .
© 2004, Russell Consulting, Inc. — Helping You Build and Sustain a Great Organization!

What is the Value of Tracking HR Effectiveness? How are you currently measuring HR effectiveness?
© 2004, Russell Consulting, Inc. — Helping You Build and Sustain a Great Organization!

Why Track HR Effectiveness? To guide decision making — It helps HR staff in how best to manage the HR system to support the company. To evaluate program/department effectiveness — It constitutes a “report card” to guide improvement efforts. © 2004. Russell Consulting. Inc. — Helping You Build and Sustain a Great Organization! .

Inc. and managers can understand. Document the effects of HR on company performance in credible ways that employees. . © 2004. The most effective measures of HR : 1. 3. . Russell Consulting. 2. consistent. Identify a clear. — Helping You Build and Sustain a Great Organization! .To Be Most Effective . and compelling connection between the company’s strategy and the work of each employee. line supervisors. Zero in on the critical few measures that have the greatest impact on the company’s bottom line.

— Helping You Build and Sustain a Great Organization! . Inc.The HR Deliverables HR Performance Drivers HR Performance Enablers Results Reinforcing the Drivers © 2004. Russell Consulting.

How do you know if your HR efforts are successful? How do you measure the effects or results of these HR. Russell Consulting. training. Inc.Measuring HR Results . . . — Helping You Build and Sustain a Great Organization! . and OD efforts? How will you know that your efforts and initiatives have paid off? © 2004.

Measuring Human Health What are the key signs of human health? How do you know if you are healthy or unhealthy? Which of your “vital signs” might you chart over time? What might happen if you ignore these vital signs? © 2004. Russell Consulting. — Helping You Build and Sustain a Great Organization! . Inc.

© 2004. Failing to measure these vital signs — or ignoring the signs can lead to .Measuring Health After the Fact Tracking your “vital signs” along the way can give you an early warning of emerging health concerns. Inc. — Helping You Build and Sustain a Great Organization! . . . Russell Consulting.

• Less effective at measuring the effects of specific changes made to the system. Inc. not what is happening. • Indicates the end result of the system. Characteristics • Outcome measure. Russell Consulting.Lagging Indicators Lagging indicators are outcome measures that help you gauge your HR progress by examining the final end result or outcomes of your collective efforts. © 2004. • Tells you what happened. — Helping You Build and Sustain a Great Organization! . Use of the “lagging” term reflects the delay or gap between your actions and a change in the final end result.

There is a business interest in and a direct financial benefit from improvement in these areas. Economy — GNP growth. HR Examples . Customer retention. Inc. etc. Employee retention. . © 2004. liver failure. blown tire. etc. unemployment rate. — Helping You Build and Sustain a Great Organization! . national debt. ? Lagging indicators have a direct bearing on a company’s bottom line. . Russell Consulting. Employee performance. death! Automobile — arrived safely at destination (or not). Employee productivity.Lagging Indicator Examples Non-HR Examples . . Health — heart attack. stroke. citation from traffic enforcement. engine failure. . Organizational performance.

Your Turn . . What are some lagging indicators that you could use to measure the results of the effectiveness of your HR efforts? © 2004. . — Helping You Build and Sustain a Great Organization! . Inc. Russell Consulting.

• Very responsive to changes in the system © 2004. • Can be tracked over time. there is less of a delay between your actions and a change in the system. Characteristics • Process measure. They are the performance drivers — the key factors that enable the overall end result (outcome) you want to achieve. Inc. Since leading indicators measure the results from your processes. • Immediate feedback to the system. • Provides an “early warning” of emerging results. Russell Consulting.Leading Indicators Leading indicators are process measures that help you gauge incremental progress you are making toward key HR outcome (lagging) measures. — Helping You Build and Sustain a Great Organization! . • Tells you what is happening now.

odometer. speedometer. body temperature. While there is a business interest in improvement in these areas. . GPS coordinates. . % increase in internal people expressing interest in position Number of positive comments from customers ? Leading indicators have an indirect bearing on a company’s bottom line. stock market value. Economy — home starts.Leading Indicator Examples Non-HR Examples . A reduction in absenteeism in key positions. exchange rates. indicator lights. etc. rumble strips on the roadway. . oil level. . — Helping You Build and Sustain a Great Organization! . etc. there may not be an immediate financial benefit to the company. layoffs. cholesterol levels. Health — Heartbeat. blood sugar levels. engine temperature. capital equipment purchases. blood pressure. Russell Consulting. public confidence. Increasing retention © 2004. HR Examples . Inc. Automobile — gas gauge. etc.

Inc. What are some leading indicators that you could use to measure your HR progress toward the goal of retaining staff in key customer contact positions? © 2004. . Russell Consulting. — Helping You Build and Sustain a Great Organization! .Your Turn . .

Inc. Encourages HR flexibility and change. Focuses on leading indicators. © 2004. Demonstrates HR’s contribution to strategy implementation and to the company’s bottom line. Helps HR managers focus on and manage their strategic responsibilities. — Helping You Build and Sustain a Great Organization! .The HR Scorecard 1. 3. 4. Identifies the differences between HR doables and HR deliverables. 5. Russell Consulting. 2.

— Helping You Build and Sustain a Great Organization! . Russell Consulting. Inc.The HR Dashboard © 2004.

Russell Consulting.HR and the Business Scorecard HR Scorecard Business Balanced Scorecard HR Systems Financial Results HR Competencies HR Strategic Focus HR Deliverables Core Business Strategy Customer Satisfaction and Results HR Practices Business Process and Systems Improvement © 2004. Inc. — Helping You Build and Sustain a Great Organization! .

Strategic Objectives People First Credit Union Be the Financial Institution of Choice Attract and Retain High Investment Members Increase Assets Increase Financial Strength Reduce Cost Per Member Financials Manage loan portfolios Increase return on assets Offer above market rates Reduce bad loans ratio Scorecard Dimensions Members Identify product and service differentiators Increase member satisfaction Increase member retention Expand membership Develop member selfservice Increase online banking Offer diverse financial products Cross-sell products Performance Drivers Streamline processes Increase efficiencies Reduce transaction costs Operations Ensure reliability Develop specialized financial products Manage member relationships Develop sales tools for MSRs Develop targeted marketing program Develop superior service capability Develop marketing program Conduct competitive analysis Automate processes HR Performance Drivers HR Deliverables High levels of employee job satisfaction [Leading] High levels of internal customer satisfaction [Leading] Low turnover in the MSR position [Lagging] Highly competent MSR staff [Lagging] Staff knowledge of the Credit Union's Strategy [Leading] .

3. 4. Russell Consulting. Develop the HR Scorecard/Dashboard. Define/Describe Your Business Strategy.Developing Your Scorecard 1. — Helping You Build and Sustain a Great Organization! . © 2004. Identify the High Leverage HR Deliverables. Develop a Strategy Map. 5. Inc. Identify Key Components of the HR Architecture that Support the HR Deliverables. 2.

. © 2004. .Your Turn . — Helping You Build and Sustain a Great Organization! . . . . Identify high leverage HR deliverables . . Begin developing your strategy map . . Define your company’s business strategy . Russell Consulting. Inc. .

High Leverage Specific actions where a small. well-focused effort could produce the most significant and enduring improvements or changes in the target outcomes. © 2004. Russell Consulting. — Helping You Build and Sustain a Great Organization! . Inc.

Russell Consulting. Inc.The HR Scorecard Balancing value creation with cost controls and efficiencies HR Systems HR Competencies HR Strategic Focus HR Deliverables Involves identifying both performance drivers and enablers to support the company’s strategic priorities HR Practices © 2004. — Helping You Build and Sustain a Great Organization! .

HR Systems HR Competencies HR Competencies HR Competencies HR Strategic Focus HR Deliverables HR Practices • Operational efficiency • High Performance Work System — knowledge and use of best practices in HR • Employee relations/advocacy • Strategy execution • Change agent © 2004. Russell Consulting. — Helping You Build and Sustain a Great Organization! . Inc.

High Performance Work System Links selection and promotion decisions to a validated competency model. © 2004. — Helping You Build and Sustain a Great Organization! . Russell Consulting. Enacts compensation and performance management policies that attract. Develops strategies that provide timely and effective support for skills required for strategy implementation. and motivate high-performance employees. Inc. retain.

Russell Consulting. Inc.Example Elements of HPWS Average merit increases granted by job classification and performance Number and quality of cross-functional teams Number of employee suggestions generated and implemented Percent of total salary at risk Quality of employee feedback systems Number of hours of training received by new employees Merit pay differential between high-performing and low-performing employees Proportion of the workforce that receives formal performance feedback from multiple sources (360 feedback) Number of exceptional candidates recruited for each strategic (key) job opening From The HR Scorecard © 2004. — Helping You Build and Sustain a Great Organization! .

Russell Consulting. Inc.HR Systems HR Practices HR Practices HR Competencies HR Strategic Focus HR Deliverables HR Practices • Staff competency model • Recruitment and selection • Employee orientation • Compensation and benefits • Performance measurement • Labor-management relations • Effective work design • Internal customer satisfaction • Communication • Training and development • Succession planning © 2004. — Helping You Build and Sustain a Great Organization! .

Inc. Russell Consulting.HR Systems HR Systems HR Systems HR Competencies HR Strategic Focus HR Deliverables HR Practices • Internal HR alignment • HR alignment with company strategy • Matching HR strategy to the company culture • Differentiating HR services to match the different needs of different departments/strategic business units © 2004. — Helping You Build and Sustain a Great Organization! .

Identify your key “high leverage” HR “doables” and enablers in your: HR Competencies HR Practices HR System © 2004. .Your Turn . Russell Consulting. Inc. . — Helping You Build and Sustain a Great Organization! . Building from your HR Deliverables . . .

— Helping You Build and Sustain a Great Organization! . Russell Consulting. Inc.Creating Measures of Your HR System Alignment Assessing staff perceptions of the internal alignment of your HR practices — Are they internally consistent with one another? Assessing staff perceptions of the external alignment of your HR practices: To what extent do your HR deliverables enable the company’s performance drivers and strategic objectives? To what extent do your HR practices enable/support your HR deliverables? © 2004.

& Benefits Work Organization HR Cost Control HR Value —— -25 —— 0 +25 —— -50 0 +20 —— -35 +75 -5 0 —— +25 +45 +10 0 0 -10 -20 -5 -35 -15 -25 0 -50 -35 +25 0 +75 +20 -5 0 .Measuring Internal HR System Alignment HR Practices Recruitment & Selection Training and Development Performance Management Compensation & Benefits Work Organization Recruitment & Selection Training and Development Performance Management Measuring the “fit:” -100 = at cross purposes 0 = little or no effect 100 = mutually reinforcing Comp.

. — Helping You Build and Sustain a Great Organization! .Your Turn How aligned is your HR system? Do your HR practices work together or at cross purposes? Complete the worksheet . Russell Consulting. . And find out! © 2004. Inc.

Measuring the “fit:” Measuring External HR System Alignment People First Performance Drivers Increase member satisfaction Expand membership Manage member relationships Increase efficiencies Develop product differentiators High levels of job satisfaction High levels of internal customer satisfaction -100 = counter productive 0 = little or no effect 100 = significantly enables HR Deliverables Stability in MSR position Highly competent MSR staff Staff aware of CU strategy +80 +20 +50 -10 +20 +50 +30 +30 +20 +30 -80 -80 -50 -40 0 -20 -30 -30 -80 -80 +20 +15 +15 +10 +15 .

Measuring External HR System Alignment HR Deliverables High levels of job satisfaction High levels of internal customer satisfaction Stability in MSR position Highly competent MSR staff Staff aware of CU strategy Recruitment & Selection Training and Development Performance Management Measuring the “fit:” -100 = counterproductive 0 = little or no effect 100 = significantly enables HR Practices Compensation & Benefits Work Organization +75 +30 -30 +20 +10 +30 0 +10 +50 +20 +10 -10 -20 +10 +10 +20 0 -20 +5 +40 +40 -20 +20 +10 +30 .

TPI at Sears [Total Performance Indicators] Key performance drivers at Sears: Attitudes about the job . . . © 2004. — Helping You Build and Sustain a Great Organization! . Inc. . Attitudes about the company . . Russell Consulting.

4. Russell Consulting. My work gives me a sense of accomplishment.About the Job . 1. I like the kind of work I do. 3. How do your physical working conditions influence your overall attitude about your job? 6. I am proud to say I work for Sears. How does the way you are treated by those who supervise you influence your overall attitude about your job? © 2004. How does the amount of work that you are expected to do influence your overall attitude about your job? 5. — Helping You Build and Sustain a Great Organization! . Inc. . . 2.

— Helping You Build and Sustain a Great Organization! . 10. 9. 7. . Sears is making the changes necessary to compete successfully. To what extent do you see a connection between the work you do and the company’s strategic objectives? © 2004. .About the Company . I feel good about the future of the company. Inc. I understand our business strategy. 8. Russell Consulting.

© 2004. Overall Job Satisfaction — 10-point scale. etc. pay/benefits. Russell Consulting. — Helping You Build and Sustain a Great Organization! . supervision. Open-Ended Questions — (a) what people like best about working for credit union and (b) ideas to improve QWL.Dimensions of the EAS Quality of Worklife Dimensions: leadership. Job Descriptive Index — six dimensions. Inc. communication. [53 questions] Core Values — Measuring the “gap” between actions and aspirations.

Quarterly Survey — (a) 20 questions. Sample Size — 60 to 65 employees. (b) five core values.1%. Validity — accurate +/. 2. Russell Consulting. 3. 4. — Helping You Build and Sustain a Great Organization! . Confidentiality — external consultant. Inc. Administration — e-mail link to survey. and (d) two open-ended questions. Reporting Results — Three “instruments” on the HR Dashboard © 2004. 5. (c) overall satisfaction.Quarterly HR Dashboard 1. 6.

© 2004. Inc. The Credit Union’s managers and supervisors have clearly communicated the future direction and goals of the Credit Union to me. I feel appreciated for the good work that I do. — Helping You Build and Sustain a Great Organization! . Russell Consulting. My direct supervisor gives me clear performance expectations that enable me to do quality work.Example Survey Statements Strongly Disagree Disagree slightly disagree slightly agree Agree Strongly Agree 1 2 3 4 5 6 I feel pride and a sense of accomplishment in the work that I do. I have input into how I perform my job.

Current Never Almost Never Sometimes Generally Almost Always Always 1 Desired Never 2 Almost Never 3 Sometimes 4 Generally 5 Almost Always 6 Always 1 2 3 4 5 6 The difference between “current” and “desired = A “gap of 2. Inc. Russell Consulting. take calculated risks and learn from experience.0 © 2004.Example Value Statements Embrace change: proactively seek improvement. anticipate and support change to meet corporate strategies and goals. — Helping You Build and Sustain a Great Organization! .

Overall Job Satisfaction Considering everything. 1 2 3 4 5 6 7 8 9 10 Very Dissatisfie d Very Satisfied © 2004. Russell Consulting. — Helping You Build and Sustain a Great Organization! . how satisfied are you overall with working at People First Credit Union? Place a mark in the box that best reflects your overall job satisfaction level here. Inc.

Core Values. and Overall Job Satisfaction.What is the HR Dashboard? The Credit Union’s HR Dashboard is a panel of indicators that present a reading of the relative health/satisfaction of credit union employees on three dimensions: QWL Score. 3/03 .

Cooperation Employee Growth HR Scorecard 4.10 4.22 4.64 4.36 4.13 4.QWL Dimensions QWL Dimensions Leadership Management Communication Pay & Benefits Empowerment Job Pride Work Environment Dept.20 4.00 4.60 4.70 4.HR Dashboard -.50 4.36 4.24 4.80 4.40 4.18 4.69 4.30 Mean December 2003 .44 Dashboard Value 4.44 4.

5 4. 02 April 03 July 03 Sept. 03 Dec.4 Mean QWL Score 4.1 1995 1998 2001 June '01 Sept.6 4. '01 Dec.3 4.8 Scale: 1 = Strongly Disagree to 6 = Strongly Agree 4.7 4. '01 March '02 June 02 Sept.2 4. 03 December 02 Time of Employee Assessment .HR Dashboard: Composite QWL Score 4.

'01 Dec. '01 March '02 June 02 Sept.HR Dashboard: Core Values Gap 1.8 .2 Mean Core Values Gap 1. 02 April 03 July 03 Sept.6 1995 1998 2001 June '01 Sept. 03 Dec. 03 December 02 Time of Employee Assessment .6 Ideal Gap = 0 1.4 1.0 .

2 1.0 .HR Dashboard: Core Values Gap .8 Promote a harmonious balance of work/non-work 1. 03 Time of Employee Assessment .8 .4 1.Work-Life Balance 1. '01 Dec. 03 Dec.6 2001 June '01 Sept. '01 March '02 June 02 Sept.6 Ideal Gap = 0 1. 02 December 02 April 03 July 03 Sept.

'01 June 02 December 02 Retail Time of Employee Assessment . '01 June '01 March '02 Sept.0 4. 02 April 03 July 03 Sept.4 QWL Score 4.2 Support Mean 4.6 4. 03 Dec. 03 Dec.0 1995 1998 2001 Sept.HR Dashboard: Composite QWL Score 5.8 What happened after this assessment? 4.

HR Dashboard: Job Satisfaction 8.0 1995 1998 2001 Sept.0 Job Satisfaction 6. '01 June 02 December 02 July 03 Retail Time of Employee Assessment . 03 Dec. 02 April 03 Sept.5 Support Mean 6. 03 Dec.5 8.0 7.5 7. '01 June '01 March '02 Sept.

03 June '01 Dec. 03 Dec.6 1995 1998 2001 Sept. '01 March '02 Sept. — Helping You Build and Sustain a Great Organization! .0 Core Values Gap .2 1.4 Desired “gap is 0 1. Inc.HR Dashboard: Core Values Gap 1. 02 April 03 Sept. Russell Consulting.8 Support Values Gap Mean .6 What happened after this assessment? 1. '01 June 02 December 02 July 03 Retail Values Gap Time of Employee Assessment © 2004.

Russell Consulting. Variable pay. HR programs and services. 2. Inc. Lessons learned — What did we do that worked? Didn’t work? © 2004. 4.Applying the Dashboard 1. Managerial performance feedback. — Helping You Build and Sustain a Great Organization! . 3.

Russell Consulting. Inc. — Helping You Build and Sustain a Great Organization! . Explore the differences between groups (retail vs. © 2004. Relationship to other critical measures: Member/Customer Satisfaction Member Retention Financial Performance Employee Satisfaction Internal Customer Service 6. support). Focus of monthly management meetings. 7.Applying the Dashboard 5.

02 Dec.Comparison of Financial Critical Measures The Business Scorecard: Critical Measures 30 20 ROA Financial Score Cust. 02 10 OJS HR Dashboard TIME . 01 March 02 June 02 Sept. 01 Dec. Satisfaction ETA QWL HR Dashboard Mean 0 March 01 June 01 Sept.

com .RussellConsultingInc. and organizational performance issues.Thank you for the opportunity to guide you along the HR Scorecard journey! Best of luck in your efforts at strengthening the effectiveness of HR programs For more information on HR. visit our website: www. OD.

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