using hr measurement to improve performance

Using HR Measurement to Improve Performance

Presented byRuth Wright

Associate Director, Leadership and Human Resources Research

OMHRA Spring WorkshopApril 6, 2011

www.conferenceboard.ca

Overview

• Aligning HR and organization strategy• Organizational and HR Priorities• External and internal threats and opportunities

• Strategic workforce planning• Measuring HR Value• Talent Management as an

organizing framework– Level of insight


Overview continued

• Some trends and measures− HR organizational metrics− Acquiring talent− Developing people− Leading and managing− Engaging the workforce− Rewards


Human Resources Trends & Metrics


Profile of Respondents

• Sample size: 167• Private Sector: 58%• Highly Unionized• Average age: 42• Over age 45: 45%• Survey closed Jan. 09


Aligning HR and Organizational

Strategy


Why the Pressure to Measure?• Organizations are paying more attention

to performance management • Firm expenditures on people rising

– there is more pressure to account for results

• HR needs evidence to support strategy-related recommendations and investments


Where Should HR Focus its Measurement Efforts?

What really matters? An efficient HR organization

– affects about 1% of organizational costs

Well-designed HR interventions – are we pulling the right levers?

Leveraging people to achieve organizational goals – how can we enhance human capability to

drive results?


Measuring What MattersConsider Four Strategy TypesBureaucratic- Top-down hierarchical structureLow Cost- Low wages, focus on cost and controlHigh involvement- Knowledge intensive, participative, flat structure- High commitment to employee development and careersGlobal- Interesting work, hire best talent- Low commitment to development and careers

Source: Ed Lawler 111, Talent


Strategic Workforce Planning

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Strategic Workforce Planning

A process that connects HR strategy and practices to business strategy to ensure the company has the right people in the right place at the right time and at the right cost.


Where Does Your Company Face Human Capital Risks?

• Loss of key personnel– Aging workforce, downsizing, low engagement, inhospitable

cultures • Skills shortages

– Internal and external talent supply – rapid technological change and business transformation– Intransigent unions, change adverse cultures– Underinvestment in building workforce capacity

• Succession issues – Underdeveloped leadership pipeline– Age compression at senior management and executive levels

Human Capital Risk Leads to Business Risk


How significant is each of the following types of HC risk to your company’s business performance?

Mary Young, The Conference Board Inc.


Thinking About Human Capital Risk


Threats on the Horizon

Today…• Unemployment

hovers below 8%• Labour force

growth healthy• Persistent skills

shortages

In 3-5 years…• LF growth shrinks,

unemployment below 6%

• Retirements outpace growth

• Extreme skills shortages


5.06.07.08.09.0

10.011.012.013.0

Sources: The Conference Board of Canada; Statistics Canada.

Unemployment Rate

Natural rate

Unemployment Rate vs. Natural Rate (percent), 1981-2015


0.20.40.60.81.01.21.41.61.82.0

2001-2005 2006-2010 2011-2015 2016-2020 2021-2025 2026-2030

Labour Force Growth(average annual growth)

Source: The Conference Board of Canada


Challenges Recruiting Quality Candidates


Canadian Workforce is Aging

• Average age of government sample is 43– 44 in education and health

• Nearly half are over age 45• 12% of education and health sample

eligible to retire, 6% of government sample– Less than 2% expected to go??

• Are demographers wrong?


Mixed Performance in Developing Diverse Talent

• Half of sample track new hires• One quarter track promotions• One fifth track the applicant pool• 13% track learning and development• 4% track grievances/complaints• Only women were represented in executive

ranks (20%)– Less than half the sample reported on representation

of Aboriginal peoples, people with disabilities and visible minorities


Threats in the Municipal Context?

Today…• Growth in some

areas, contraction in others

• Persistent skills shortages

• Pressure on costs

In 3-5 years…• Retirements

escalate?• Extreme skills

shortages?• Structural changes?


Organizational and

HR Priorities


Top Human Capital Challenges(public sector)

1. Aging workforce2. Attracting and recruiting employees3. Leadership capacity4. Retaining employees5. Skills shortages


Strategic Human Resource Priorities (public sector)

1. Succession management2. Management/leadership development2. Strategic workforce planning4. Knowledge transfer and management5. Employee engagement 5. Career planning and pathing


Most Critical HR Priorities forGlobal Executives

1. Managing talent– Talent pools, effective staffing of leadership

positions

2. Improving leadership development– Corporate capabilities have declined

3. Strategic workforce planning– Current capabilities rated as low

4. Employee engagement – Concern about aftermath of recession

5. Improving employer brandingSource: Boston Consulting Group. Creating People Advantage 2010, September 2010


Valuing Talent


Talent Management as an Organizing Framework

What is Talent Management? …a comprehensive and dynamic process of

building the talent pool through the development of aligned and integrated processes, practices and shared accountabilities by leaders around the human resource fundamentals of attraction, selection, development and retention of talent.

Source: The Conference Board of Canada


Talent Management...• Begins with defining the “business”…

no matter whether that is serving the public or manufacturing automobiles

• Then creating and aligning the organization’s strategic human resource plan and all people-related practices to the strategic direction of the business


• Business Strategy & Plan

• People Strategies

• Talent Management Components / Processes

Human resource Talent Management

Acquire Develop Lead and manage Engage Reward

TALENT MANAGEMENT STRATEGIES & PROCESSES

BETTER TALENT

e.g., high retention of top performers

ORGANIZATIONAL SUCCESS

e.g., high innovation

Organizational Effects of Talent Management


Talent Management Processes:• Acquire

• Engage

• Reward

• Lead and Manage

• Develop

Talent Management Framework

Engage

Reward

Lead &ManageDevelop

Acquire

PEOPLE ASSETS


Categories of People Measures

“What is the relationship between the changes in the quality of the employees and our competitive success?”

Impact

“What is the relationship between our HR practices and the quality of our people?” These metrics should chart changes in employees’ ability, opportunity, motivation, and performance.

Effectiveness

“What is the level and quality of HR practices produced from the resources (time and money) spent?”

Efficiency

Source: John Boudreau and Pete Ramstad, HC BRidge™


Changes from 2005 Survey

• Use of measures more sophisticated– Using broader range of metrics

• More focus on segmenting talent– Higher “N’s”

• More robust leadership/talent pipeline• Emergence of new HR function

– Strategic workforce planning, measurement and analytics


Metrics’ Maturity Over Time• Efficiency level measures are a natural

starting point– Most HR organizations can track

demographics and cost-related variables• Measurement efforts progress and

mature over time• Not for the faint of heart

– Commitment required– May not make sense in some contexts


Summary• Public sector faces paradox of constraint

and innovation• Private sector learned from mistakes of

previous recessions—can public sector?• Breathing room now but labour market will

tighten. Skills shortages never went away.• Focus on building workforce of tomorrow

– Capabilities– Culture


Contact Me

Ruth WrightAssociate Director, Leadership and Human Resources Research

The Conference Board of Canada,

255 Smyth Road, Ottawa, ON K1H 8M7

Tel. (613) 526-3090 x369 Fax (613) 526-5359

[email protected] www.conferenceboard.ca

using hr measurement to improve performance

Documents

hr trends

hr measurement

hr prioritiesexternal

hr activities

overviewaligning hr

talent management continuum

talent management process

value of talent