Defining Value and Measuring HR

Mark O Donnell, Director and Practice Leader, Human Capital Advisory Services, Consulting

Agenda
Introduction HR Strategy Understanding the business Define your HR Strategy Measuring Impact of HR Assess HR Function Reassess HR Service Delivery Conclusion Questions 2 6 8 14 18 25 34 42

Defining the Value of HR

2011 Deloitte Touche Tohmatsu

Context

If you cant quantify the value that HR has on the Business, how do you prove your worth?

Defining the Value of HR

2011 Deloitte Touche Tohmatsu

Marketplace Trends

Competition for funds and resources is todays reality

Major change and turbulent market conditions make it hard for Boards to determine what the strategy should be Top management want to know the Return On Investment for all they spend including leadership development and talent initiatives These more complex economic conditions offer an opportunity not only to rethink business strategies but also HR strategy, if HR is core to the business strategy More and more of our clients are telling us that there is particular focus on HR departments to ensure that All HR investments deliver quantifiable measurable value. How can HR demonstrate a quantifiable return on investment for Human Capital initiatives? Which HR initiatives can be directly targeted at building organisation capability that has a bottom-line impact either increasing the organisations revenue or reducing costs?

Defining the Value of HR

2011 Deloitte Touche Tohmatsu

People are Critical to Business Performance

More than 85% of senior business executives and HR leaders agree that people are vital to every aspect of their organisations performance HR leaders and senior business executives agree the most critical people issues are:

Leadership development and pipeline

Talent management Creating a high-performance culture Training and development

Source: Aligned at the Top, a global survey on people and business challenges conducted by Deloitte Touche Tohmatsu and the Economist Intelligence Unit

2011 Deloitte Touche Tohmatsu

There is a gap between HR capabilities and business needs

Senior business executives want HR to be more effective Only 4% describe HR as highly effective in addressing the needs of the business 60% describe HR as only moderately effective

People and HR are often treated as separate conversations

People issues are considered strategic, e.g. leadership development and pipeline, talent management, creating a high-performance culture, training and development

HR issues are perceived as administrative, e.g. compensation and benefits, performance evaluations, HR operating efficiency
HR is often out of the loop on strategic issues Percentage of companies that rarely or never consult their senior HR team on key business issues:
Mergers and acquisitions (63%) Compliance and regulation (26%) Talent (25%)
2011 Deloitte Touche Tohmatsu

HR Strategy

Defining the Value of HR

2011 Deloitte Touche Tohmatsu

HR Strategy Deloitte view

A HR strategy should help an organisation create unique competitive advantage by outlining how the HR function and the services it offers will create business value and address the companys most pressing strategic challenges. The strategy should identify priorities for investment in HR products and services and in HR service delivery (people, process, technology, operations, etc.) to help address the organisations most pressing strategic challenges. The strategy should include a roadmap for how the HR function will execute on the strategy. The strategy should also outline the foundational HR capabilities required to effectively execute the strategy.

Typically, the HR strategy will be a two to three year strategy, but it should be refreshed every year.

Before forming your strategy you need to understand the Business

2011 Deloitte Touche Tohmatsu

Understanding Business Strategy

Defining the Value of HR

2011 Deloitte Touche Tohmatsu

Questions to Ask
What does the Business do to drive performance? Who are our shareholders and what do they want? What does our Business do?

2011 Deloitte Touche Tohmatsu

What do the sections of the EVM HC represent?

1. Value Drivers
How value is created

2011 Deloitte Touche Tohmatsu

Value Drivers - How Value is Created

2011 Deloitte Touche Tohmatsu

EVM HC: Changing the Mindset of How HR Operates

HR has traditionally been viewed as an overhead cost that is highly transaction-based. Behind every great product, service, and innovation are people.

S HAR E H O LD E R VALU E

Revenue Growth

Operating Margin

Asset Efficiency

Expectations

Price

Volume

Direct Costs (COGS)

Indirect Costs (SG&A)

Income Taxes

Property, Plant & Equip.

Inventory

Receivables & Payables

Company Strengths

External Factors

Sustained Growth Merger Integration New Market Entry Sales force Transformation Rewards Transformation

Global Labor Shortage Workforce Planning New Market Entry Global Mobility Learning and Development Outsourcing and Offshoring

Risk & Compliance Global Workforce Security Regulatory Compliance Risk Management

Future Capabilities Change Management Global Program Management Leadership Development

2011 Deloitte Touche Tohmatsu

Human Capital Dimensions - Categories of Improvement Focus

The Human Capital Dimensions embedded within the map show the seven major Human Capital categories of improvement within an organisation.
Human Capital Dimensions
Talent Strategies:
Talent-focused activities to execute short and long term business objectives

Learning and Development:

Activities in support of employee and executive development

Change Management and Transformation:

Activities focused on the people implications of major business events

Organizational Strategies:
Activities in support of business initiatives that focus on developing organization and team structures

Employee Rewards and Benefits:

Activities that link employees work experience to their commitment and contribution to business value

Governance, Risk, and Compliance:

Activities to proactively manage the people-related aspects of risk, regulations, security, compliance, and ethics

HR Strategy and Services:

Activities focused on HR strategy and service delivery
2011 Deloitte Touche Tohmatsu

Define HR Strategy

14

Defining the Value of HR

2011 Deloitte Touche Tohmatsu

Step 1: Understand Strategic Priorities & Business Context

Example: +10% Annual Growth Target Improve Product Development Pipeline and Deployment Increase Share of Revenue Capture from Advertising Improve Product and Service Mix
Volume

Revenue Growth

Price Realization

Acquire New Customers

Retain and Grow Current Customers

Leverage IncomeGenerating Assets

Strengthen Pricing

Marketing & Sales

Product & Service Innovation

Account Management

Cross- Sell/ Up -Sell

Retention

Cash /Asset Management

Demand & Supply Management

Price Optimization

2011 Deloitte Touche Tohmatsu

Step 2: Identify Issues & Challenges

Example Strategic priorities and HR strategic actions:

Exponential Headcount Increase: Focus on recruiting and selection, retention practices, talent placement, and employee development. HR Organization Transformation: Optimize the HR function. Enterprise Cost Reduction: Maximize investments and spend on human capital to focus on business issues, operational efficiencies, and process excellence. Focus on Customer Service: Build a culture of high performance and innovation with a focus on the customer. Post Merger Integration: Support rationalization of core process, technology, people, and policy with a defined project portfolio.

2011 Deloitte Touche Tohmatsu

Deloittes HR strategy framework

Deloitte HR Strategy Framework

Define Value 1. Understand business strategy 2. Define HR strategy

3. Identify HRs meaning

HR

Align HR Services 4. Segment stakeholders 5. Prioriti`se HR investments 6. Design HR services

Strategy

Deliver Value
Deliver Value 7. Establish a delivery model for HR services 8. Upgrade the companys HR capabilities 9. Continuously improve HR operations 10. Communicate the value of HR services

2011 Deloitte Touche Tohmatsu

Measuring Impact of HR

18

Defining the Value of HR

2011 Deloitte Touche Tohmatsu

HR Balanced Scorecard?
The Balanced Scorecard fills the void that exists in most management systems the lack of a systematic process to implement and obtain feedback about strategy (Kaplan & Norton, 1996).

The Balanced Scorecard is a means of connecting key decisions and control, that measures the value created by initiatives to the core business areas, compares program benefits to costs including: Customer Experience: How do customers see us? Business Impact & Satisfaction Measurements Talent Strategies: What must we excel at? Learning and application measures knowledge, skills and attitudes and on-the-job behaviours Process and Innovation: Can we continue to improve and create value? Financial Focus: How do we look to shareholders?

The HR Balanced Scorecard aligned to business strategies measures improvement in customer value
19

Defining the Value of HR

2011 Deloitte Touche Tohmatsu

Best Practice Design: Characteristics of a Successful Scorecard

Characteristics Reason

Involves the scorecard owner in the design

Only this person knows the answers

Makes efficient use of managers time

Management time is scarce

Understandable & transferable

Must be communicated across the organisation

Easily aligned across the organisation

Help the whole company work towards a common goal

20

Defining the Value of HR

2011 Deloitte Touche Tohmatsu

Value of a Balanced Scorecard

The Balanced Scorecard examines the evidence of key HR Initiatives linking them to business performance measures that drive Business Strategy The value of using a Balanced Scorecard, HR can fuel more sustainable employee initiatives with longer-lasting results

The Balanced Scorecard works as an umbrella concept that links together organisational objectives, ways of thinking and management tools.

HR Value HR Value

21

Defining the Value of HR

2011 Deloitte Touche Tohmatsu

Overall HR Scorecard Client Example

Potential Metrics Financial Average termination cost Cost of turnover Cost of acquisition per hire HR Training spend (per Manager / Director / Executive) HR FTE Ratio SLA compliance Vendor Management FTE Ratio+ HR Operating Expense/FTE Customer Experience Hiring Manager satisfaction with quality of new hires Employee satisfaction with Career Zone Employee satisfaction with career progression Business unit satisfaction with organisation design support Employee engagement index Frequency of communication Response rates on effectiveness surveys Employee HRO satisfaction Self-service availability rate Portal usage penetration rates Talent Number of critical positions and critical workforce segments identified Retention of new hires Retention rates by critical workforce segments Leadership stability rates Number of internal leadership appointments Share of leaders reviewed in talent review process Timeliness of talent reviews Number of employee referrals Diversity of leadership team Outsourcer turnover rate

Process / Innovation Line manager use of recruitment centers Share of employees with basics in place day one Time to efficiency for new hires Time to identify & approve leadership training request Course enrollment and completion rates Share of positions with successor identified Number of job families for which there are established career paths Share of business using consistent change leadership framework Number of issues at level 1, level 2 or level 3 support

Legend (Link to Critical HR Capabilities) Talent Management Leadership Development Organisational Development HR Administration

2011 Deloitte Touche Tohmatsu

Metrics for critical HR capabilities and services can be identified

Potential Talent Management Metrics Client Example
Financial
Cost of workforce planning process

Customer Experience
Business unit satisfaction with workforce planning process

Process & Innovation

Workforce planning process performed annually and linked to budgeting process

Talent
Number critical positions and critical workforce segments identified Share of critical jobs held by those with high / low performance levels Share of new hires receiving top performance rating Management accountability for the quality of new hires Share of new hires leaving the organizations within 6 months Employee tenure by sourcing method Poor quality hire rate

Workforce Planning & Segmentation

Talent Sourcing & Acquisition

Cost of sourcing & acquisition process Cost of acquisition per hire Business case savings realization for Career Zone implementation Referral bonus cost per hire

Hiring Manager satisfaction with recruiting process Hiring Manager satisfaction with quality of new hires Employee satisfaction with Career Zone

Number of positions where talent pool is already identified Time to fill positions Recruitment source ratio Requisition response rate Referral conversion rate Applicant conversion rate Interview conversion rate (First) offer acceptance rate Ratio of contractors to full-time staff Share of employees with basics in place day 1 (phone computer, etc) Time to efficiency for new hires Number of lateral moves within a business unit Number transfers between business units Time to fill positions with internal transfer Share positions filled with internal candidates Number of recognition awards granted

Cost of on-boarding process

On-Boarding &

Employee / Manager satisfaction with on-boarding process

Orientation
Cost of recognition practices Average termination cost Cost of turnover Compensation impact of replacement hires Employee satisfaction with recognition practices Recognition rate of the employment brand by critical workforce segments

Management accountability for onboarding process Retention of new hires Voluntary turnover rate (by department, level, workforce segment) Retention of high performers Retention of critical segments Leadership stability rate Accession rate Percentage of referral hiring

Retention

client x Case use in Roadmap Section

2011 Deloitte Touche Tohmatsu

Align HR Services

Deloitte HR Strategy Framework

Define Value 1. Understand business strategy 2. Define HR strategy 3. Identify HRs primary performance levers

Align HR Services 4. Assess HR Function 5. Design HR services

HR

Strategy

Deliver Value
Deliver Value 7. Establish a delivery model for HR services 8. Upgrade the companys HR capabilities 9. Continuously improve HR operations 10. Communicate the value of HR services

2011 Deloitte Touche Tohmatsu

Assessing your HR Function

25

Defining the Value of HR

2011 Deloitte Touche Tohmatsu

HR Maturity Assessment
We have developed an HR Maturity Model to meet this objective. The HR Maturity Model captures our views on leading practices for talent management, as well as for each of the key elements of our HR service delivery model: HR strategy, HR customers, HR roles, and HR enables.

2011 Deloitte Touche Tohmatsu

Deloitte Global HR Maturity Tool Dimensions

Talent Maturity Talent Strategy & Plan Talent Metrics Talent Geographic Reach & Diversity Attraction Development Retention Work Environment Innovation Employer Brand & EVP Talent Governance & Leadership Talent Infrastructure Talent Attitudes & Culture HR Strategy & Service Delivery Maturity

HR Strategy Alignment
Business Strategy Impact HR & Talent Strategy Alignment Business Alignment Customer Segmentation HRs Role in Key Talent Decisions HR Planning Effectiveness HR Metrics HR Capability HR Enablers (e.g. Policy, Process,
Governance, Reporting & Technology)

HR Customer Segmentation
Employees Managers Executives Non-Employees Applicants Retirees

HR Credibility

HR Service Delivery Roles

Business Partner CoE SSC Outsourcer Vendor Manager

HR Service Delivery Enablers

Processes Procedures, & Compliance Integrated Technologies HR Portal & Self-Service Reporting & Analytics Governance, Service-Level Agreements (SLAs) & Metrics
2011 Deloitte Touche Tohmatsu

Talent Maturity Model

DEVELOPING
We do not have a talent strategy or our talent strategy is in development or under revision

BASIC
Our talent strategy and our organizations strategy are aligned

PROGRESSING
Our talent strategy is an essential component of our organizations strategy, without it our business strategy would be incomplete

ADVANCED
Our talent strategy and our organizations strategy are seamlessly integrated and directionally consistent

MARKET LEADING
Our organizations strategy is informed and influenced by our talent insights and predictions We make informed business decisions about where to place our talent investments, and are able to predict the returns that we will get
We take full advantage of the global diverse talent market today, and we are well positioned to continue to do so in the future We are always able to attract the talent that we need, when we need it, and in the quantities required to achieve all our organizations goals

STRATEGY & PLAN

METRICS

We have a small number of talentfocused metrics that provide us with some of the information that we require

We have a set of talent-focused metrics in place, however we are not sure of what we invest in talent and what our overall return is
We have a regional / national talent focus and are making some progress on our diversity agenda

We know how much we invest in our talent, although it is not always clear what return we get for that investment
Our approach to talent has an international dimension to it and we have made significant progress on our diversity agenda We are able to attract some of the talent that we need, some of the time to achieve our organizations goals

We know how much we invest in our talent and we know what return we get for that investment

GEOGRAPHIC REACH & DIVERSITY

We have a local focus on talent and limited diversity

The global diverse talent market is of value to us today

ATTRACTION

We consistently face challenges in attracting the talent we need to achieve our organizations goals

We sometimes find it difficult to attract the talent that we need to achieve our organizations goals

We are able to attract most of the talent that we need, most of the time to achieve our organizations goals

DEVELOPMENT

We are evaluating which talent and leadership development programs to invest in

Our talent and leadership development programs exist in pockets and are often tactical in nature

We have a number of significant talent and leadership development programs that are coordinated across our organization

Our talent and leadership development programs are highly inter-connected and have beneficial effects on our talent

Our talent and leadership development programs deliver all the benefits that both our organization and talent demands

RETENTION

We typically struggle to retain our talent

We can retain some of our talent some of the time

We have structured and organized our working environment to support our mandate and meet the needs of our talent

We can retain selected talent

We can retain most of our talent most of the time

The way that we are structured and organized enables us to maximize the contributions that our talent makes to our mutual success We regularly compare our approach to managing talent with other organizations and we typically remain ahead of our competitors

We are able to retain our talent all of the time and proactively manage turnover

WORK ENVIRONMENT

There are ways that we could improve our working environment to support our mandate and meet the needs of our talent Our talent initiatives are rudimentary in nature, but we are considering implementing some innovative ideas

Our working environment is flexible and adjusts to meet the evolving needs and desires of our talent while continuing to support our mandate We continue to evolve and improve our talent management approach often we build on what has worked well in other organizations

We put our talent at the heart of our organization, our talent itself drives how we are structured and organized We are originators of industry leading talent management thinking and best practices our competitors typically copy what we do

INNOVATION

We have implemented a number of innovative talent focused initiatives

EMPLOYER BRAND & EMPLOYEE VALUE PROPOSITION

We are beginning to develop our employer brand and define our employee value proposition

We proactively manage our employer brand and have a well defined employee value proposition

We are an employer of choice and have a clearly articulated and supported employee value proposition

We are the leading employer of choice for the talent that we need now

We are able to adjust our employer brand and employee value proposition to meet our evolving organization and talent requirements
Our executives eagerly devote substantial amounts of their time to talent, in addition their rewards are also directly linked to talent KPIs Our talent systems, processes, information and service delivery capability are flexible and have industrial scale capacity

GOVERNANCE & LEADERSHIP

Our HR function is responsible for all the talent initiatives in our organization

Our HR function typically leads our talent management initiatives, with input from senior executives

Our talent initiatives are sponsored by senior executives, and are implemented within a common governance structure

Talent is a significant and regular item at our executive and board meetings, we use agreed protocols to facilitate our decision making We have a full suite of efficient, effective and integrated talent systems, processes, information and service delivery capability

TALENT INFRASTUCTURE

We have limited talent systems, processes and service delivery capability, though we are beginning to identify some initiatives to rectify this Some of us believe that the management of talent is important to the success of our organization

We have a handful of tactical talent systems, our processes are being developed and our service delivery capability is evolving As an organization we believe that the management of talent is important to the success of our organization

We have most of the talent systems, processes, information and service delivery capability that we need

ATTITUDES & CULTURE

Talent management is embedded in our ways of working

Successful people in our organization generally have a talent mindset

Talent management is in our organizational DNA

2011 Deloitte Touche Tohmatsu

HR Strategy Alignment Maturity Model

DEVELOPING
ORGANIZATION STRATEGY IMPACT

BASIC
Our HR leadership is asked to help create plans to execute on our organizations strategy

PROGRESSING
Our HR leadership has some involvement in organization strategy formulation and is an active participant in execution

ADVANCED
Our HR leadership is actively involved in organization strategy formulation and execution

MARKET LEADING
Our HR team leadership has an equal voice at the table in overall organization strategy formulation and execution

Our HR leadership is not involved in organization strategy formulation or execution planning

HR & TALENT STRATEGY ALIGNMENT

We have an HR strategy but no articulated talent strategy

We have an HR strategy but it is not clearly aligned to our Talent and Organization strategies

We have both a Talent strategy which outlines the organizations talent needs and an HR strategy that details how HR will deliver organization requirements

Our HR strategy articulates how we will deliver on the organizations talent strategy

Our HR strategy and our talent strategy are seamlessly integrated and directionally consistent in supporting the organizations strategy

BUSINESS ALIGNMENT

We do not have a clear understanding of the overall organizational value chain and how people add value

We have a general understanding of the overall organizational value chain but cannot clearly articulate how people add value

We are beginning to be able to articulate how people add value in the overall organizational value chain, and use this to shape our overall HR & Talent strategies

We use our deep understanding of the overall organizational value chain and how people add value to guide our HR & Talent strategies

We use our deep understanding of the overall organizational value chain and how people add value to identify and create targeted HR & Talent strategies for critical workforce segments

CUSTOMER SEGMENTATION

Our HR activities do not target different customer segments and we do not measure customer service levels

Our HR activities do not target different customer segments, but we do measure customer service levels

Our HR strategy does identify different target customer needs; we measure customer service levels for most HR roles and services in our organization Our HR team provides the business guidance on some talent decisions (e.g., terminations, recruiting)
We have a rigorous process for assessing HR priorities and impact on the organization and our budget is built on outcomes of the process

Our HR strategy and service delivery reflect a higher investment in the most critical customer groups and we measure customer service more rigorously among these customers Our HR team is a sought after advisor for all key talent decisions

Our most critical customer groups receive higher investment; we ensure our top HR talent is focused on delivering service to them Our HR team proactively identifies talent issues and facilitates business decision making

HRS ROLE IN KEY TALENT DECISIONS

Our HR team learns about key talent decisions and actions after the action is taken

Our HR team is asked to execute on talent decisions after a decision is made by the organization

HR PLANNING EFFECTIVENESS

We react to issues as they arise, with no formal process or tools for assessing HR priorities

We create an HR budget at the start of the year based on a high level view of priorities

Organization and other functional leaders provide input in our process for assessing HR priorities and provide additional budget Our balanced scorecard for HR includes organization metrics in addition to HR metrics, and predictive analysis of metrics is used in HR planning We have a career development rotation program in place to rotate HR talent between Business Partner, Center of Expertise and Shared Services roles We have a systematic perspective on HR enablement and look to adjust the appropriate HR enablers when changes are made

Our process of assessing HR priorities includes predictive analytics and measures of ROI to inform our decisions

HR METRICS

We have very limited HR metrics

We have some HR metrics, primarily focused on outputs vs. leading indicators (e.g., retention, offer acceptance)

We have a balanced scorecard for HR that includes financial, customer service, process efficiency and innovation metrics

Key talent/HR metrics are part of the overall organization scorecard, and predictive analysis of metrics is used in organization planning

HR CAPABILITY

There are significant gaps in HR capability required to deliver on our HR activities

We have most of the HR functional capability that we need, but there are still some HR functional gaps

We have identified critical HR capabilities and have most that we need, but there are still some business capability gaps (e.g., business acumen, analytical skills) We are beginning to adopt a systematic perspective on HR enablement, however do not always adjust the appropriate HR enablers when changes are made

We have a career development rotation program in place to rotate talent between HR and business roles

HR ENABLERS
(e.g. Policy, Process, Governance, Reporting & Technology)

We do not take a coordinated approach to enabling our HR service delivery through policy, process, governance, reporting and supporting technology

We are have the basics in place to enable HR service delivery, but we are lacking in consistency and more advanced capabilities

We take a proactive approach to continuously improving service delivery through the adoption of leading practices in HR enablement

HR CREDIBILITY

HR has low credibility in the organization, and is viewed only as a back office function

HR has some credibility in the organization and is viewed as capable of providing technical expertise in some areas of HR

HR has high credibility as an expert in functional HR areas

HR has high credibility both in functional HR expertise and ability to contribute to organization success

HR leaders are considered strong candidates for succession to broader organization leadership roles

2011 Deloitte Touche Tohmatsu

HR Customer Segmentation Maturity Model

DEVELOPING
We rarely interact with customers at the executive level

BASIC
We react to infrequent requests for information from Executives, typically regarding compensation matters
We react to a fairly broad set of talent requests from managers, but provide few customized services and service delivery options for managers We treat employees and managers as distinct customers, but continue to deliver one size fits all HR services and support through faceto-face and phone interactions with generalists/HR BPs

PROGRESSING
We are beginning to work more frequently with executives on a broader range of HR/talent matters We proactively work with managers on a fairly broad set of HR/talent requests, but still provide few customized services and service delivery options We offer one size fits all employee service through shared service centers and limited self-service options; employees can still access information through generalists / HR BPs We have tailored processes and policies in place to manage contractors and other nonemployees and HR provides support to the organization in execution Our automated application process and tracking capability allows us to be responsive to all applicants, but our technology is not linked to HRMS requiring duplicative data entry upon hire

ADVANCED
Our HR leader is a member of the executive team and we work proactively with the executives to address business issues
We are viewed as partners in addressing most HR/talent issues, and we provide customized HR services for managers and tailored service delivery options We offer tailored employee services for critical employee segments, with broad shared services and selfservice options; employees must use these channels for inquiries and transactions

MARKET LEADING
Talent is a regular topic at executive meetings, and HR proposes key issues and solutions proposed for discussion
We are viewed as partners in addressing most HR/talent issues, and we have built significant talent management capability among our managers to handle most issues We are pioneers in creating innovative self-service options for our employees, with sophisticated, branded employee portal technologies; our employees do most transactions through selfservice

EXECUTIVES

MANAGERS

We respond reactively to requests from managers on a limited set of HR/talent issues

EMPLOYEES

Employees are our primary customers and we provide basic, one size fits all HR services and support through face-to-face and phone interactions with generalists/HR Business Partners (BPs)

NON-EMPLOYEES (i.e. Contractors)

HR does not manage contractors or other non-employees and does not know what relationships are in place throughout the organization

HR does not manage contractors or other non-employees, but we do track relationships with them through manual processes

We have a strategy in place for the effective utilization of contractors or other non-employees vs. regular employees and partner with the organization in execution

We proactively partner with the organization to consider alternatives to optimize our use of regular and contract or nonemployee workforce
We leverage our sophisticated technologies to target new sources of applicants, strengthen relationships, and manage our sourcing, selection and new hire processes effectively and efficiently

APPLICANTS

We do not have processes in place to effectively manage applicants

We have varied processes in place to track and manage applicants, but accountability is not clear and the processes are not supported by technology and are cumbersome

We treat applicants as an important customer segment, developing relationships and leveraging our technologies to effectively manage the process

RETIREES

We provide ad hoc support to retirees as required

We provide support to retirees as required through centralized internal or outsourced vendor support for pension and other questions and transactions

In addition to providing support for questions and transactions, we provide access to retirees to organization portals for information

In addition to providing support for questions and transactions, we proactively communicate with retirees regarding organization updates

We treat retirees as a potential contributor to our ongoing success, delivering high quality service to meet their needs and providing a channel for them to provide innovative ideas, candidate referrals, etc.

2011 Deloitte Touche Tohmatsu

HR Roles Maturity Model

DEVELOPING
Our HR business partners (BPs) are generalists who spend the majority of their time processing administrative activities and responding to employee or manager inquiries We have HR technical specialists but they are not organized in Centers of Expertise (CoE) and may not have the depth or breadth of expertise we need to support the organizations needs

BASIC
Some of our HR BPs are developing relationships with leaders which allow them to have greater impact; however, most still spend a significant amount of time on administrative activities

PROGRESSING
The majority of our HR BPs are developing relationships with leaders which allow them to have greater impact; however, most still spend 30-50% of their time on administrative activities

ADVANCED
Our HR BPs are senior resources who focus their time on providing coaching and advice on talent issues and opportunities to leaders and are rarely involved in day to day administrative activities
We have leading edge capability in some of our CoEs which focus on developing innovative solutions to our most challenging organizational needs and our CoE talent has strong consulting and change management skills

MARKET LEADING
Our HR BPs are strategic advisors who provide coaching and advice to leaders on both talent and broader business issues; many of our HR BPs come from line roles in the organization
We have leading edge capability in all our CoEs and frequently assess their focus to ensure we are supporting the most pressing organization needs; our HR talent rotates through CoE, HR BP and line roles in our organization

HR BUSINESS PARTNERS (BP)

CENTERS OF EXPERTISE (CoE)

We have some CoEs which focus on developing policies and programs based on HR expertise vs. in depth understanding of the organizations needs

Our CoEs develop new programs and policies to support the organizations needs based on input from our HR BPs, and our leaders and employees

SHARED SERVICES

We do not leverage HR shared services in our organization

We leverage limited shared services capability, primarily with respect to payroll and benefit administration processing and limited employee inquiry capability

We leverage shared services to support multiple HR processes, including transaction processing, employee and manager inquiries, and some advisory services

Our shared service organization leverages leading edge workflow, case management and self-service technologies to optimize efficiency and enhance effectiveness; we have well defined performance indicators and service level agreements

Our shared services organization delivers with leading efficiency, effectiveness and cost metrics; we are frequently approached by other organizations to share leading practices in shared services

OUTSOURCER

We may currently outsource specific services, but have no overall strategy for outsourcing

We currently outsource specific services, and did complete a sourcing analysis before making the decision to outsource

We have developed an overall sourcing strategy for HR, assessing benefits and challenges of outsourcing several HR processes

Our sourcing strategy included an assessment of full outsourcing of our shared services capabilities

We monitor changes in the outsource service provider market and benchmark our internal shared service capability or our outsourced services to ensure we are leading edge
We effectively manage large outsource relationships as an integral component of our overall HR service delivery model and governance structure; our organization and our vendors both benefit from enhancements in service delivery

VENDOR MANAGER

We do not have vendor management capability in HR and have limited access to vendor management capability in other functions of our organization

We have limited vendor management capability in HR or other functions in our organization, but no formal accountability exists for management of HR vendors

We have clarified accountability for management of HR vendors within HR or other functions in our organization, with support for negotiation and management of contracts

We have built sophisticated vendor management capability in HR or other functions in our organization to ensure we optimize our vendor relationships and services provided; we have created an overall vendor management strategy and carefully manage our SLAs

2011 Deloitte Touche Tohmatsu

HR Enablers Maturity Model

DEVELOPING BASIC
There is significant local variation in process; process documentation is held locally and is not easily accessible

PROGRESSING

ADVANCED
We have global processes with minimal local variations; processes are held centrally and are readily accessible, and metrics for each process are defined

MARKET LEADING
We have a clear process architecture, with Six Sigma compliant process documentation; global processes with minimal local variations are held on an accessible knowledge base Our HR policies and procedures are globally consistent, up-to-date, and can be easily accessed electronically; corporate HR takes a proactive role in driving harmonization enabling further standardization and automation of processes We have a fully functioning, robust HRMS that includes all modules (i.e. Organization and Positions, Recruitment, Compensation, Benefits, Talent Management, Payroll and Time, and Learning); workflow and OCR functionalities are fully leveraged We have an enhanced HR portal that includes a wide range of selfservice and workflow functionality using advanced technology such as interactive forms; the knowledge base is completely integrated

PROCESSES

We do not have any global processes; we have little or no documentation of local processes

There are some global processes, with some local variations; process documentation is centrally held

POLICIES & COMPLIANCE

We have not documented any of our HR policies and they are very diverse across sites, units, entities, countries, etc.

We have documented some of our more global HR policies and procedures; however, most of our policies are inconsistent across our organization

There are some global policies, with some local variations; policy documentation is centrally held

We have global policies with minimal local variations; policies are held centrally and are readily accessible; the resulting impact on further process standardization and automation is limited

INTEGRATED TECHNOLOGY

We do not use a comprehensive HR technology platform and data is not maintained in a central location

We have an HR technology platform to manage personnel administration but do not use all functionality or it does not adequately meet the needs of the organization

We have a strong HR management system (HRMS) with some basic workflow but no Optical Character Recognition (OCR) functionality in place

Our HRMS supports the main people priorities of the organization and goes beyond administration to include functions like Recruiting or Performance Management; there is some enhanced workflow and basic OCR functionality in place

HR PORTAL & SELF-SERVICE

We do not have an HR portal, selfservice functionality or HR knowledge base

We have an HR knowledge base that is paper-based; we do not have an HR portal or any self-service functionality

We have a basic HR portal in place with basic self-services and the functionality for downloading and printing online forms for a wider range of processes; the HR knowledge base is not linked to portal Our reporting is transactional based (e.g. annual hires, annual turnover, etc); there is some automation however data and interpretation inconsistencies make it difficult to ensure full transparency, comparability and controllability across the organization

We have an HR portal that is integrated with robust employee and manager self-service (ESS and MSS) functionality and the HR knowledge base

REPORTING & ANALYTICS

We do very limited HR reporting

Our reporting is heavily manual with few standard reports defined

Our reports are extensively automated and provide analytical insight (e.g. period over period trending, integrating external data sources into workforce analysis and vice versa) to drive management decisions

We focus reporting on generating insight rather than numbers, and make standard reports available electronically, secured by portal roles; consistent and centrally available data is used for predictive and truly differentiating reporting
We have a cohesive HR governance structure with clearly defined roles and responsibilities and an HR scorecard is in place that links to the overall organization metrics

GOVERNANCE, SLAs & METRICS

We do not have HR governance structures or metrics in place

We have informal HR governance structures and metrics but they are not clearly articulated

We have some formal HR governance structures and metrics but their mandates are not clear

Our HR governance structures are well defined and are followed most of the time and metrics are in place to assess overall HR efficiency and effectiveness

2011 Deloitte Touche Tohmatsu

Deliver Value

Deloitte HR Strategy Framework

Define Value 1. Understand business strategy 2. Define HR strategy 3. Identify HRs primary performance levers

HR

Align HR Services 4. Segment stakeholders 5. Prioritise HR investments

Strategy

Deliver Value
Deliver Value 7. Establish a delivery model for HR services 8. Upgrade the companys HR capabilities 10. Communicate the value of HR services

2011 Deloitte Touche Tohmatsu

Establish and Re-assess HR Service Delivery Model

34

Defining the Value of HR

2011 Deloitte Touche Tohmatsu

Service Delivery Models - Leading Practices The Evolution of HR Service Delivery

HR Service Delivery Framework (mid-90s) Deloitte HR Service Delivery Framework

Traditional Ulrich model was used to describe the high level, basic relationships and players in the transformed HR organization, showing how the three building blocks of Shared Services Operations, Business Partners and Centres of Excellence interacted with managers and employees.

Ensure HR service delivery model is aligned to deliver effectively on Business & HR Strategies.
Review Customers to determine if unique HR requirements exist for different customer segments. Assess how effectively service is being delivered through retained and outsourced HR Roles Evaluate the effectiveness of Enablers that HR can leverage to deliver efficient and effective service.
2011 Deloitte Touche Tohmatsu

Service Delivery Models - Leading Practices The Four Building Blocks

The building blocks that make up the four key roles in the operating model are Group HR, CoEs, SSC and Business Partners
Represents HR at the Exco level. Group HR is the business partner to the Exco. Sets the tone and pace of the HR strategy, in line with the Group business strategy. Owns the maintenance of the strategic framework for the CoEs to develop the HR policy blueprint. Responsible for managing succession planning and HR issues for Exco -2.

Group HR

Business Partners

Drives the strategic people issues, aligning group and SBU/Divisional HR strategies. Provides SBU/division with local geographical input for Group policy blueprint development. Acts as a business consultant maximising the value talent brings to the SBU. Manages SBU/country-specific HR issues but does not perform local transactions. Provides input to the prioritisation of HR-owned business projects, providing subject matter expertise to HR projects and acting as the change management agent.

Centres of Expertise

Designs and develops deep technical capability in areas of HR that drive strategic agenda. Innovates, designs and develops HR strategies, policies and processes in line with latest industry thinking. Provides expert guidance to HRBPs and senior executives in the SBUs/Divisions. Resolves complex issues escalated from the Shared Service Centre and HRBPs.

Shared Services

Provides standardised, consistent, accurate, fit for purpose transactional and functional expertise to HR, delivering high quality, efficient administration for all HR transactions. Customer-focused contact centres providing the first point of call for employees and managers for advice, guidance and query resolution. Responsible for continuous improvement of delivery of HR processes and technology utilisation by HR.

2011 Deloitte Touche Tohmatsu

Service Delivery Models - Leading Practices Service Provision

RECIPIENT OF SERVICES FROM
This matrix summarises the relationship each team within the model has with the other HR teams, and some of the key responsibilities. Group HR Owns the skills development, succession planning and career planning of HR professionals

Group HR

Centre of Expertise

Shared Services

Business Partners

P R O V I D E S S E R V I C E S T O

Group HR provides the CoE with the framework for developing HR policies that enable the execution of the corporate HR strategy Provides the cohesiveness for the CoE teams to work together to deliver the strategy in an aligned way

Group HR ensures the HR service delivery model operates effectively, ensuring clarity of roles and responsibilities in the delivery of all HR services

Provides BPs with a framework for the consistent execution of the BP role, within the dynamics of different SBU/Divisional cultures and environments Owns succession planning working with BPs who manage the talent pipeline

Centre of Expertise Internal Consultants to the business

The CoE provides expert input into the development of the corporate HR strategy by Group HR

The CoE owns the end-to-end processes for HR delivery, integration between processes and provides guidance to the SSC for continuous improvement in HR process delivery Resolves complex issues escalated from the SSC

The CoE provides strategic consulting support to the BPs, advising on complex and strategic people-management issues and provide guidance on the use of HR policies and tools to meet the businesss needs

Shared Services Delivers high quality and efficient HR services to managers and employees, maximising self-service and emulating the brand in the way it delivers customer services

SSC provides the appropriate HR services support requested by Group HR, for example administration of HR issues

The SSC operationalises strategies and policies developed by the CoE, operating efficient high quality processes and providing front line support to managers and employees BPs act as a conduit between the business and SSC, interpreting customer needs and feedback from the coal face, managing the performance expectations of the business and SSC Resolves complex queries escalated from the SSC

SSC delivers high quality and efficient HR processes to the SBU to agreed SLAs, liaising with Business Partners to ensure customer satisfaction Manages queries form managers and employees

Business Partners The face of HR to the business

BPs provide input to Group HR on the current and future needs of the business from HR, along with direct and indirect feedback on customer satisfaction with HR service delivery

BPs provide guidance to CoEs on the strategic direction and priorities of the business including future needs BPs act as a conduit between the business and CoEs translating business priorities and needs

2011 Deloitte Touche Tohmatsu

Service Delivery Models - Leading Practices The Business Partner Role Assumptions / Attributes
Business Partners Role
Work with Business Unit to translate business needs into HR requirements and working environment Identify the organizational capabilities required to execute the business strategy Acts as a consultant most frequently on issues related to strategy execution and change, talent management, employee engagement, performance management, employee relations Responsible for implementing initiatives at the business unit level and may support the design of specialized or customized training, communications, and recruiting Broker of services between specialized internal groups (e.g. Total Rewards) and the business Collaborate with Centers of Expertise to create innovative HR solutions Provide feedback to Centers of Expertise about HR solution effectiveness Support culture change taking direction from the business leadership Develop the leadership and manage the talent pipeline in the Business Unit

Business Partners do:

Analyze and investigate business / people issues and trends within the bank Deliver HR services in line with business needs Focus on consultative support and HR solution delivery to senior line management Challenge the business in order to ensure aligned and integrated people strategy, and fair people management Support all HR products and services, including any required changes and ensures client complies Coach line managers in people management Ensure effective execution of HR policies and processes in their business Ensure compliance with local legislation and regulatory requirements Interact with the Workers Council on individual issues

Business Partners Attributes

Client relationship management People strategy development Contracting/stakeholder management Influencing Business acumen Consulting Resource management Policy implementation/ communication Negotiation Conflict resolution Change management Marketing Business planning Program Management Analytical skills (Interpret reporting)

Business Partners dont:

Support line managers and employees in day-to-day administration Execute design and development of HR programs, procedures or policies Manage employee data Report on workforce-related data Resolve individual EE queries; have non-managerial employees as clients Undertake people management responsibilities on behalf of line managers Interact with the Workers Council on group issues

Capabilities
Facilitating organization change Business acumen Client service delivery Organizational design Consulting Personal and professional impact Coaching and influencing 2011 Deloitte Touche Tohmatsu

Service Delivery Models - Leading Practices The CoEs Role Assumptions / Attributes
CoEs Role
Provide expert solutions and services to the Business Units, across the whole of the enterprise Customers of the CoEs are typically the BP. May also be contacted by the business and / or contact the business themselves Keep appraised of leading practices, monitor and evaluate future legislation and market trends in their areas of specialty Align the innovation agenda with the needs and directions of the SBUs/divisions Develop and deploy innovative HR policies, products and processes and create strategy, policy, programs, and tools for local implementation Align policies and solutions across the enterprise as appropriate Collaborate with each other to deliver comprehensive solutions to the Business Partners Monitor solutions, vendors, SSC processing, and employee feedback to drive continual improvement Act as the final escalation point for advice on customer queries, transactions and requests that the SSC cannot resolve

CoEs do:
Lead the development of product strategy Partner BPs in consulting with the business to create innovative solutions when standardized products are not sufficient Provide subject matter expertise, advice and guidance to BPs and HRS Support functional specialists in the resolution of complex technical queries and the delivery of streamlined products and services Research and develop / source best solutions and new concepts with respect to people management, products and services

Coordinate and work with results of internal and external benchmarking to create and share pools of best practice
Design organizational metrics for CoE products and interventions when weaknesses are detected Partner with HRS when developing new products to ensure effective deliverability Communicate product changes and updates to BP and HRS

CoEs Attributes
Subject matter expertise Content strategy development Solution design Policy development Innovation Advisory Consulting Contracting /stakeholder management Matrix management Market intelligence/ best practice (push) Business understanding at Organisational, Regional, Divisional level Metric definition e.g. org effectiveness and product impact Analytical skills (Interpret reporting) Quality and risk management

CoEs dont:
Undertake operational administrative processing Manage and administer data Manage and perform any operational transactions Consult in systems and administrative process design and development Manage services vendors Interact with employees on day-to-day matters Get involved in the execution of HR policies

Capabilities
Facilitating change Innovation Personal and professional impact Business acumen Thought leadership Consulting skills Client focus 2011 Deloitte Touche Tohmatsu

Service Delivery Models - Leading Practices The Shared Services Role Assumptions / Attributes
Shared Services Role
Provide administrative support for the rest of HR, including: Manage and process HR transactions (e.g., pay changes, performance management) and provide any retained administrative/ transactional process support Produce outputs (e.g., standard letters, changes in terms/conditions) Maintain employee data Serve as single point of contact for HR queries and requests (when questions can not be answered through self-service) Resolve queries and requests and escalating to other HR areas as appropriate Liaise with HR Business Partners and Centers of Expertise to achieve resolution of customers queries and requests Have performance management processes, metrics and vendor management to ensure continuous improvement Control operational cost and quality Are governed by service level agreements that meet the needs of the Business Units Use technology to support customer contact

Shared Services do:

Provide first point of contact for the provision of employee and manager advice, guidance and query resolution Significantly reduce HRBP and CoE involvement in routine administrative tasks and inquiries Provide answers to basic and more complex inquiries Focus on solution delivery and execution Perform organizational and data analytics and quality management Support problem solving, case management and issue resolution Deliver commoditized products and standardized services Deliver and maintain self service offerings Monitor HR compliance Have specialist expertise e.g. Payroll, training Have responsibility for implementing necessary changes process changes in partnership with global process owner Process HR transactions

Shared Services Attributes

Customer service Transactional processing Policy measurement/ metrics tracking Reporting e.g. provision of reports Technology efficiency improvement Process efficiency Cost effectiveness Management of consistent delivery of services Vendor management Query resolution Analytical skills (KPIs) Contracting /stakeholder management

Shared Services dont:

Work with managers in solving business challenges Allow deviation from agreed standard processes and procedures

2011 Deloitte Touche Tohmatsu

Key steps in delivering value through HR

1.

Continuously improve HR operations

Implement robust systems and leading practices to deliver HR services Establish appropriate service levels and performance targets Maintain a competitive cost structure relative to industry benchmarks Implement Lean Sigma or other continuous improvement methods to help improve operational excellence

2.

Communicate the value of HR services

Understand the value of HR services Develop execution plans for specific constituencies Implement an integrated communication process and obtain feedback Create an innovative brand statement and/or logo that helps reinforce the HR value proposition

2011 Deloitte Touche Tohmatsu

Conclusion

42

Defining the Value of HR

2011 Deloitte Touche Tohmatsu

Conclusion
1. 2. 3. 4. 5. 6. Understand the Business Define your Strategy Build Measures Assess Current Re-evaluate how HR is Delivered Communicate

2011 Deloitte Touche Tohmatsu

44

2011 Deloitte Touche Tohmatsu