measuring human resource performance

People & Change Advisory

Advisory

A presentation for ASHRM

Measuring Human Resource Performance

November 30, 2010

2© 2010 KPMG, the Indian member firm of KPMG International, a Swiss cooperative. All rights reserved. The KPMG logo and name are trademarks of KPMG International.This document is CONFIDENTIAL and its circulation and use are RESTRICTED.

Agenda

1. Basic Concepts and Principles2. Measurement Trends and Uses3. A Case Study


3

About KPMG


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7

Basic Concepts and PrinciplesTopic 1

© 2010 KPMG Al Fozan & Al Sadhan, the Kingdom of Saudi Arabia member firm of KPMG International, a Swiss cooperative. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative.

The HR Value Proposition

People Management Solutions Tailored to Fit

The Needs of Your Organization


What do we mean by Measurement?

Definition: Performance Measurement

The ongoing monitoring and reporting of program accomplishments, particularly progress toward pre-

established goals.


Types of Measurement

1. Predictive 2. Baseline3. In-Process (Formative)4. Retrospective (Summative)


Principles for Good Measurement

1. Avoid measurement dysfunction.“…performance measurement systems can deliver a [sand storm] of meaningless data.”

- Mike Hammer


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.


Applications of Performance Measurement

A. Measurement directs behaviour B. Measurement focuses attentionC. Measurement facilitates feedbackD. Measurement improves executionE. Measurement improves decision makingF. Measurement provides early warning signals


Applications of Performance Measurement

A. Measurement directs behaviour B. Measurement focuses attentionC. Measurement facilitates feedbackD. Measurement improves executionE. Measurement improves decision makingF. Measurement provides early warning signalsG. Measurement increases alignment


“Human Resources is our weakest department.”

- Saudi Arabian Petrochemical General Manager


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

Leaders Rely on their Best


If you can’t demonstrate

you’reeffective,

you’re invisible


19

Measurement Trends and UsesTopic 2


Measuring Human Resource Performance

1. Human Resource Audit2. Benchmarking and Best Practices3. Strategic Measures4. Transformational


Human Resource Audit


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



1. HR Standards Assessment Audit2. HR Compliance Audit1

1Werther, 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.



1. HR Standards Assessment Audit2. HR Compliance Audit3. HR Level of Service Audit


Level of Service Audit

Value is defined by the receiver more than the giver.


The Level of Service Audit



1. HR Standards Assessment Audit2. HR Compliance Audit3. HR Level of Service Audit4. HR Transactional Audit


1.Benchmarking and

Best Practices


Benchmarking

1. Use valid and reliable methodology


Benchmarking

1. Use valid and reliable methodology 2. Ideally, have a large sample population


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


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 industries4. Ensure “performance leaders” are prepared to share


HR Best Practices

Be prepared to look outside your industry and operational unitBe aware of current “Best Practise” concerns


Strategic Measures


Strategic Measures

1. Balanced Scorecard2. Strategy Map


Strategy Map


1.

Transformational Measures


Customer Delight Effort

HR must embrace the concept of the internal customerInternal 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 organicallyWhat line managers want is a satisfactory solution to their service issues


1. Customer Effort Score

1. Customer Effort Score (CES) is a more effective predictive measure than Customer Satisfaction (CSAT) and Net Promoter Score (NTS)

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.

Harvard Business Review, July-August 2010


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.


2. RATER

Reliability consistency of service qualitylack of errors

Assurance ability to maintain service qualityprocedures for addressing quality problems

Tangibles the physical environmentthe service provided

Empathy sensitivity to customer concerns

Responsiveness speed; effectiveness of the response


Workforce Planning

Workforce planning is a well-known analytical service provided by HR to executives and line managementWorkforce Planning has internal application as well


3. Capacity Measurement

KPMG’s Resource-Demand Model


Also referred to as “alliances” in broader business literatureHR has been increasingly developing external and internal partnership relationships since the early 90s:

Measurement focuses effort and energy on outcomes, as well as interpersonal and inter-group dynamics plus mutual or win-win benefits

Partnership Relationships

Internal External1. Operational Outsourcing2. Strategic Offshoring


People Initiatives

Turnover and Churn Rate Safety and Health Succession Activity Coaching and Development Employee Engagement

Growth and Innovation

HR Competencies Projects Undertaken Impact

Collaboration Initiatives

Joint Problem Solving Joint Project & Operational Planning Leadership Commitment Knowledge Sharing

Organizational Initiatives

Service Quality Customer Service Strategic Alignment Project and Service Management

Human Resource

Key Performance Indicators (adapted from the Wilder Collaboration Factors Inventory) can be measured and reported using a BSc format

4.a Collaboration Inventory


4.b Alliance Metrics

Alliance Development Alliance ImplementationMission vision Damage controlTime to decision Revenue goalsTime to implementation Faster sales cyclesCapability enhancement Customer satisfactionReturn on investment Cost savingsReturn on equity Improved cycle timeReturn on labour hours Outsourcing

Goal attainmentSWOT team quick action

Vantage Partners


48

Case StudyTopic 3


Re-engineering HR Service Delivery

The Firm :Revenue:

Locations:

Employees:

HR Department Size:

HR Issues:

Line Manager Issues:

Private healthcare provider$60 million (2003)

23 cities

2500

11 (1:250 ratio)

50% turnover (2000)pay freeze (1995-2000)$750,000 spent on newspaper job ads

HR hiring too slowlost paperworkcalls not returned for 24-48 hoursup to 80 employees per period not paid


Re-engineering Steps

1. Determined improvement imperative2. Established work group commitment3. Launched “Work Out” (modelled on GE)4. Gathered data, Pareto Analysis and Process Mapping5. Applied LEAN Methodology6. Performance standards and KPI; Service contract7. Communication, Implementation and Measurement


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