HR activities, such as training, staffing, orientation,
discipline, and benefits, are difficult to directly connect to operational
performance metrics, such as sales, profitability, costs, delivery, quality,
and service. And they tend to be reactive, not proactive. Consultant Rick
Buchman shows you how to connect the dots.
So they had 4 hours of training; does that mean that
profitability is up? asks Buchman, who is president and CEO of Hayward
Enterprises, Inc. Buchman co-authored Balanced Scorecard Strategy for
Dummies. He offered his metrics tips at a recent BLR®-sponsored webinar.
Start improving your metrics by answering these
questions, says Buchman:
What would you like to have had in place 2 years ago, or
even much earlier, that could have helped you with your current issues? (Put it
in place now, Buchman says.)
What metrics would have been able to help you see these
and other issues coming, and what steps could you have taken to better equip
the organization for the challenges you face today?
Say high turnover is a current problem. Were there
indicators? What could you have done?
Buchman’s Strategic
Approach to Enabling Better Decisions
1. Employ and integrate a ”System for Management” that:
Aligns organizational strategy definition and direction
to HR strategic initiatives;
Enables HR metric selection, tracking, and alignment to
performance; and
Provides “flags” or “triggers” in a proactive way for
timely decisions and appropriate adjustments.
2. Ensure visibility to critical key performance
indicators (KPIs), metrics that show shifts in performance as they are
happening, and that trigger decisions points.
3. Design and implement a quick, responsive decision
process (This is the bottom line, says Buchman.) that provides flexible,
innovative, and practical contingency planning and execution, consisting of
several key elements. Among others:
Management System (Metrics), that is, “intelligence” feed
and consolidation that provides for:
Timely detection (see it),
Interpretation (understand what is happening and why), and
Root cause and response (preplanned actions).
Management “War gaming” scenarios that identify potential
contingencies and figure out what to do if/when they occur. No more surprises,
because you have thought about it already and planned for it.
An effective, timely “decision process” in place and
active.
A feedback process to assess and adjust the decision
process as appropriate to changing conditions.
3 HR Capability
Requirements of the Organization
Buchman offers three capabilities HR must focus on:
Technical skills, knowledge, and competencies to
design, produce, deliver, and support the products and services
Other skills and capabilities beyond technical
necessary (but not directly related to the product)—leadership, project
management, functional competencies (i.e., financial competency, systems
thinking)
HR practice skills, knowledge, and competencies,
such as career planning, employee development, coaching/facilitating, problem
solving, conflict management, etc.
Layered on top of that are the processes that HR manages
and executes to support the organization—staffing/hiring, resource planning,
training and development, compensation and benefits, performance appraisals,
personnel data management, labor relations, succession planning, etc.
HR Impact Example
Do unfilled positions relate to company performance? How
do you measure, how do you know?
What’s the correlation between the number of key open
positions and suboptimal performance? Studies in the health care,
pharmaceutical, governmental and engineering industries over the past 2 to 3
years have highlighted the following, says Buchman:
60% nursing turnover the first year for one healthcare
organization cost in the $100 millions
State and federal jobs unfilled are increasing, resulting
in extended hours, inefficiency, additional cost
Lack of key competencies and technical skills, and lack
of stability and consistency for key positions, drive increased costs in
product and service design, delivery, and service.
Now you have the link you need between the metric and the
bottom line.
Key Contributors
Here are three key contributors to meaningful metrics,
says Buchman:
Quality of Alignment (or misalignment) of
Knowledge, Skills & Abilities (KSA) to the needs of the business,
especially for the future 3 to 5 years.
Level of Proactivity vs. Reactivity of Metrics related
to sustained performance. We want key indicators not to say we failed, but to
indicate before the failure.
Competitive Advantage, that is, the benefits,
bonuses, working environment, everything it takes to get (and keep) the “best
of the best.” Where do the investment vs. return lines cross?
Source: HR
Daily Adviser
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