Russell PowerPoint - HR Scorecard - PDF
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Building and Using the HRScorecard/DashboardDeveloping an HR Scorecard/Dashboard forAssessing and Reporting HR’s Impact on YourCompany’s Bottom LinePresented by Jeffrey L. RussellCo-Director
The Failure of HR StrategyIn a 2002 industry survey by SHRM . . . Only 34% of executives view HR as a strategic partner Only 44% of respondents indicated that their organizationcommunicates its strategy well Only 22% indicated that general employees understandcompany’s strategy 21% indicated that HR only deals with operational issuesvs. strategic ones Only 23% indicated that HR strategy was tightly integratedwith company strategy Only 25% of HR departments use a balanced scorecard onHR’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 Objectives1.Describe the value and role of the HRScorecard/Dashboard.2.Discuss the difference between leading and laggingindicators as measures of HR effectiveness.3.Identify the components of the HR Scorecard.4.Identify the key performance drivers and enablersthat constitute the primary HR deliverables.5.Develop some preliminary HR Scorecard/Dashboardmeasures for your HR department and company. 2004, Russell Consulting, Inc. — Helping You Build and Sustain a Great Organization!
What is the Valueof Tracking HREffectiveness?How are youcurrentlymeasuring HReffectiveness? 2004, Russell Consulting, Inc. — Helping You Build and Sustain a Great Organization!
Why Track HR Effectiveness? To guide decision making — It helps HRstaff in how best to manage the HRsystem to support the company. To evaluate program/departmenteffectiveness — It constitutes a “reportcard” to guide improvement efforts. 2004, Russell Consulting, Inc. — Helping You Build and Sustain a Great Organization!
To Be Most Effective . . .The most effective measures of HR :1. Identify a clear, consistent, and compellingconnection between the company’s strategyand the work of each employee.2. Zero in on the critical few measures thathave the greatest impact on the company’sbottom line.3. Document the effects of HR on companyperformance in credible ways thatemployees, line supervisors, and managerscan understand. 2004, Russell Consulting, Inc. — Helping You Build and Sustain a Great Organization!
The HR Deliverables HR PerformanceDrivers HR PerformanceEnablersResultsReinforcingthe Drivers 2004, Russell Consulting, Inc. — Helping You Build and Sustain a Great Organization!
Measuring HR Results . . . How do you know if your HRefforts are successful? How do you measure theeffects or results of these HR,training, and OD efforts? How will you know that yourefforts and initiatives havepaid off? 2004, Russell Consulting, Inc. — Helping You Build and Sustain a Great Organization!
Measuring Human Health What are the key signs ofhuman health? How do you know if youare healthy or unhealthy? Which of your “vitalsigns” might you chartover time? What might happen if youignore these vital signs? 2004, Russell Consulting, Inc. — Helping You Build and Sustain a Great Organization!
Measuring Health After the Fact Tracking your “vital signs” along the waycan give you an early warning ofemerging health concerns. Failing to measure these vital signs — orignoring the signs can lead to . . . 2004, Russell Consulting, Inc. — Helping You Build and Sustain a Great Organization!
Lagging IndicatorsLagging indicators are outcomemeasures that help you gaugeyour HR progress by examiningthe final end result or outcomesof your collective efforts.Use of the “lagging” term reflectsthe delay or gap between youractions and a change in the finalend result.Characteristics Outcome measure. Indicates the endresult of the system. Tells you whathappened, not what ishappening. Less effective atmeasuring the effectsof specific changesmade to the system. 2004, Russell Consulting, Inc. — Helping You Build and Sustain a Great Organization!
Lagging Indicator ExamplesNon-HR Examples . . . Health — heart attack, liver failure, stroke, death! Automobile — arrived safely at destination (or not), enginefailure, blown tire, citation from traffic enforcement, etc. Economy — GNP growth, national debt, unemploymentrate, etc.HR Examples . . . Employee retention.Employee performance.Organizational performance.Customer retention.Employee productivity.?Lagging indicators have adirect bearing on a company’sbottom line. There is abusiness interest in and adirect financial benefit fromimprovement in these areas. 2004, Russell Consulting, Inc. — Helping You Build and Sustain a Great Organization!
Your Turn . . .What are some laggingindicators that youcould use to measurethe results of theeffectiveness of yourHR efforts? 2004, Russell Consulting, Inc. — Helping You Build and Sustain a Great Organization!
Leading IndicatorsLeading indicators are processmeasures that help you gaugeincremental progress you aremaking toward key HR outcome(lagging) measures. Since leading indicators measure theresults from your processes, there isless of a delay between your actionsand a change in the system. They are the performance drivers — thekey factors that enable the overall endresult (outcome) you want to achieve.Characteristics Process measure. Immediate feedback tothe system. Tells you what ishappening now. Can be tracked overtime. Provides an “earlywarning” of emergingresults. Very responsive tochanges in the system 2004, Russell Consulting, Inc. — Helping You Build and Sustain a Great Organization!
Leading Indicator ExamplesNon-HR Examples . . . Health — Heartbeat, body temperature, blood sugar levels,cholesterol levels, blood pressure, etc. Automobile — gas gauge, engine temperature,speedometer, odometer, oil level, indicator lights, rumblestrips on the roadway, GPS coordinates, etc. Economy — home starts, capital equipment purchases,layoffs, stock market value, public confidence, exchangerates, etc.HR Examples . . . Increasing retention A reduction in absenteeismin key positions. % increase in internal peopleexpressing interest in position Number of positive commentsfrom customers ?Leading indicators have anindirect bearing on a company’sbottom line. While there is abusiness interest in improvementin these areas, there may not bean immediate financial benefit tothe company. 2004, Russell Consulting, Inc. — Helping You Build and Sustain a Great Organization!
The HR Scorecard1. Focuses on leading indicators.2. Identifies the differences between HRdoables and HR deliverables.3. Demonstrates HR’s contribution to strategyimplementation and to the company’sbottom line.4. Helps HR managers focus on and managetheir strategic responsibilities.5. Encourages HR flexibility and change. 2004, Russell Consulting, Inc. — Helping You Build and Sustain a Great Organization!
The HR Dashboard 2004, Russell Consulting, Inc. — Helping You Build and Sustain a Great Organization!
HR and the Business ScorecardHR CompetenciesHR ScorecardBusiness Balanced ScorecardHR SystemsFinancial ResultsHR Strategic FocusHR PracticesHR DeliverablesCore BusinessStrategyCustomerSatisfaction andResultsBusiness Processand SystemsImprovement 2004, Russell Consulting, Inc. — Helping You Build and Sustain a Great Organization!
Strategic ObjectivesPeople First Credit UnionBe the FinancialInstitution of ChoiceIncrease FinancialStrengthAttract and Retain HighInvestment nage loanportfoliosOffer abovemarket ratesScorecard DimensionsIdentify productand servicedifferentiatorsEnsurereliabilityDevelop specializedfinancial productsDevelop targetedmarketing programIncrease returnon assetsOffer diversefinancial productsManage memberrelationshipsDevelop superiorservice capabilityReduce badloans ratioExpandmembershipIncrease membersatisfactionIncreasememberretentionReduce CostPer MemberDevelopmember selfserviceCross-sellproductsDevelop salestools for MSRsDevelopmarketingprogramIncreaseonline bankingPerformance actioncostsHR DeliverablesHR Performance DriversHigh levels ofemployee jobsatisfaction[Leading]High levels ofinternal customersatisfaction[Leading]Low turnover in theMSR positionHighly competentMSR staff[Lagging][Lagging]Staff knowledge ofthe Credit Union'sStrategy[Leading]
Developing Your Scorecard1. Define/Describe Your Business Strategy.2. Develop a Strategy Map.3. Identify the High Leverage HRDeliverables.4. Identify Key Components of the HRArchitecture that Support the HRDeliverables.5. Develop the HR Scorecard/Dashboard. 2004, Russell Consulting, Inc. — Helping You Build and Sustain a Great Organization!
Your Turn . . . Define your company’sbusiness strategy . . . Begin developing yourstrategy map . . . Identify high leverage HRdeliverables . . . 2004, Russell Consulting, Inc. — Helping You Build and Sustain a Great Organization!
High LeverageSpecific actions where asmall, well-focused effortcould produce the mostsignificant and enduringimprovements or changes inthe target outcomes. 2004, Russell Consulting, Inc. — Helping You Build and Sustain a Great Organization!
The HR ScorecardBalancing value creationwith cost controls andefficienciesHR SystemsHRCompetenciesInvolves identifying bothperformance drivers andenablers to support thecompany’s strategic prioritiesHR StrategicFocusHRDeliverablesHR Practices 2004, Russell Consulting, Inc. — Helping You Build and Sustain a Great Organization!
HR SystemsHR CompetenciesHRCompetenciesHRCompetenciesHR StrategicFocusHRDeliverablesHR Practices Operational efficiency High Performance Work System — knowledge and use of bestpractices in HR Employee relations/advocacy Strategy execution Change agent 2004, Russell Consulting, Inc. — Helping You Build and Sustain a Great Organization!
High Performance Work System Links selection and promotion decisions to avalidated competency model. Develops strategies that provide timely andeffective support for skills required forstrategy implementation. Enacts compensation and performancemanagement policies that attract, retain,and motivate high-performance employees. 2004, Russell Consulting, Inc. — Helping You Build and Sustain a Great Organization!
Example Elements of HPWS Average merit increasesgranted by job classificationand performance Number and quality ofcross-functional teams Number of employeesuggestions generated andimplemented Percent of total salary atrisk Quality of employeefeedback systems Number of hours of trainingreceived by new employees Merit pay differentialbetween high-performingand low-performingemployees Proportion of the workforcethat receives formalperformance feedback frommultiple sources (360feedback) Number of exceptionalcandidates recruited foreach strategic (key) jobopeningFrom The HR Scorecard 2004, Russell Consulting, Inc. — Helping You Build and Sustain a Great Organization!
HR SystemsHR PracticesHRCompetenciesHR StrategicFocusHRDeliverablesHR PracticesHR Practices Staff competency model Recruitment and selection Employee orientation Compensation and benefits Performance measurement Internal customersatisfaction Communication Training and development Succession planning Labor-management relations Effective work design 2004, Russell Consulting, Inc. — Helping You Build and Sustain a Great Organization!
HR SystemsHR SystemsHRCompetenciesHR SystemsHR StrategicFocusHRDeliverablesHR Practices Internal HR alignment HR alignment with company strategy Matching HR strategy to the company culture Differentiating HR services to match the different needs ofdifferent departments/strategic business units 2004, Russell Consulting, Inc. — Helping You Build and Sustain a Great Organization!
Your Turn . . .Building from your HR Deliverables . . . Identify your key “high leverage” HR“doables” and enablers in your: HR Competencies HR Practices HR System 2004, Russell Consulting, Inc. — Helping You Build and Sustain a Great Organization!
Creating Measures of YourHR System Alignment Assessing staff perceptions of the internal alignmentof your HR practices — Are they internally consistentwith one another? Assessing staff perceptions of the external alignmentof your HR practices:¾ To what extent do your HR deliverables enablethe company’s performance drivers and strategicobjectives?¾ To what extent do your HR practicesenable/support your HR deliverables? 2004, Russell Consulting, Inc. — Helping You Build and Sustain a Great Organization!
Measuring the “fit:”Measuring InternalHR System Alignment-100 at cross purposes0 little or no effect100 mutually reinforcingHR PracticesRecruitment& SelectionTraining andDevelopmentPerformanceManagementComp. &BenefitsWorkOrganizationHR CostControlHRValueRecruitment &Selection——-250-50-35 25-10Training andDevelopment-25—— 250 75 45-20PerformanceManagement0 25—— 20-5 10-5Compensation& Benefits-500 20——00-35WorkOrganization-35 75-50——0-15
Measuring the “fit:”Measuring ExternalHR System Alignment-100 counter productive0 little or no effect100 significantly enablesHR DeliverablesPeople FirstPerformanceDriversHigh levelsof jobsatisfactionHigh levelsof internalcustomersatisfactionStability inMSR positionHighlycompetentMSR staffStaff awareof CUstrategyIncrease membersatisfaction 80 50-80-20 20Expand membership 20 30-80-30 15Manage memberrelationships 50 30-50-30 15Increaseefficiencies-10 20-40-80 10Develop productdifferentiators 20 300-80 15
Measuring ExternalHR System AlignmentMeasuring the “fit:”-100 counterproductive0 little or no effect100 significantly enablesHR PracticesHR DeliverablesRecruitment& SelectionTraining andDevelopmentPerformanceManagementCompensation& BenefitsWorkOrganizationHigh levels of jobsatisfaction 75 30 10 20 40High levels ofinternal customersatisfaction 300-100-20Stability in MSRposition-30 10-20-20 20Highly competentMSR staff 20 50 10 5 10Staff aware of CUstrategy 10 20 10 40 30
TPI at Sears[Total Performance Indicators]Key performance drivers at Sears: Attitudes about the job . . . Attitudes about the company . . . 2004, Russell Consulting, Inc. — Helping You Build and Sustain a Great Organization!
About the Job . . .1.2.3.4.I like the kind of work I do.My work gives me a sense of accomplishment.I am proud to say I work for Sears.How does the amount of work that you are expectedto do influence your overall attitude about yourjob?5. How do your physical working conditions influenceyour overall attitude about your job?6. How does the way you are treated by those whosupervise you influence your overall attitude aboutyour job? 2004, Russell Consulting, Inc. — Helping You Build and Sustain a Great Organization!
About the Company . . .7. I feel good about the future of thecompany.8. Sears is making the changes necessary tocompete successfully.9. I understand our business strategy.10. To what extent do you see a connectionbetween the work you do and thecompany’s strategic objectives? 2004, Russell Consulting, Inc. — Helping You Build and Sustain a Great Organization!
Dimensions of the EAS Quality of Worklife Dimensions: leadership,communication, supervision, pay/benefits, etc. [53questions] Core Values — Measuring the “gap” between actionsand aspirations. Job Descriptive Index — six dimensions. Overall Job Satisfaction — 10-point scale. Open-Ended Questions — (a) what people like bestabout working for credit union and (b) ideas toimprove QWL. 2004, Russell Consulting, Inc. — Helping You Build and Sustain a Great Organization!
Quarterly HR Dashboard1. Quarterly Survey — (a) 20 questions, (b) fivecore values, (c) overall satisfaction, and (d)two open-ended questions.2. Sample Size — 60 to 65 employees.3. Validity — accurate /- 1%.4. Administration — e-mail link to survey.5. Confidentiality — external consultant.6. Reporting Results — Three “instruments” onthe HR Dashboard 2004, Russell Consulting, Inc. — Helping You Build and Sustain a Great Organization!
Example Survey StatementsStronglyDisagreeDisagreeslightlydisagree 123slightlyagree 84AgreeStronglyAgree 56 I feel pride and a sense of accomplishment in the work that I do. I have input into how I perform my job. I feel appreciated for the good work that I do. My direct supervisor gives me clear performance expectations thatenable me to do quality work. The Credit Union’s managers and supervisors have clearlycommunicated the future direction and goals of the Credit Union tome. 2004, Russell Consulting, Inc. — Helping You Build and Sustain a Great Organization!
Example Value Statements Embrace change: proactively seek improvement;anticipate and support change to meet corporatestrategies and goals; take calculated risks and learnfrom experience.CurrentDesiredSometimesGenerallyAlways 8AlmostAlways s 1234NeverAlmostNever 12Never 85 6The difference between “current” and “desired A “gap of 2.0 2004, Russell Consulting, Inc. — Helping You Build and Sustain a Great Organization!
Overall Job SatisfactionConsidering everything, how satisfied are youoverall with working at People First CreditUnion? Place a mark in the box that bestreflects your overall job satisfaction level here.VeryDissatisfied12345678910 8 VerySatisfied 2004, Russell Consulting, Inc. — Helping You Build and Sustain a Great Organization!
What is the HR Dashboard?The Credit Union’s HR Dashboard is a panel of indicators thatpresent a reading of the relative health/satisfaction of creditunion employees on three dimensions:QWL Score, Core Values, and Overall Job Satisfaction.3/03
HR Dashboard -- QWL DimensionsQWL ation4.64Pay & Benefits4.18Empowerment4.69Job Pride4.44Work Environment4.22Dept. Cooperation4.13Employee GrowthDashboard Value4.36HR ecember 2003
HR Dashboard: Composite QWL Score4.8Scale: 1 Strongly Disagree to 6 Strongly Agree4.74.64.5Mean QWL Score4.44.34.24.1199520011998Sept. '01June '01March '02Dec. '01Time of Employee AssessmentSept. 02June 02April 03December 02Sept. 03July 03Dec. 03
HR Dashboard: Core Values Gap1.6Ideal Gap 01.4Mean Core Values Gap1.21.0.8.6199520011998Sept. '01June '01March '02Dec. '01Time of Employee AssessmentSept. 02June 02April 03December 02Sept. 03July 03Dec. 03
HR Dashboard: Core Values Gap - Work-Life BalancePromote a harmonious balance of work/non-work1.81.6Ideal Gap 01.41.21.0.8.62001Sept. '01June '01March '02Dec. '01Time of Employee AssessmentSept. 02June 02April 03December 02Sept. 03July 03Dec. 03
HR Dashboard: Composite QWL Score5.04.8What happened afterthis assessment?4.64.4QWL Score4.2MeanSupportRetail4.0199520011998Sept. '01June '01March '02Dec. '01Time of Employee AssessmentSept. 02June 02April 03December 02Sept. 03July 03Dec. 03
HR Dashboard: Job Satisfaction8.58.07.57.0Job t. '01June '01March '02Dec. '01Sept. 02June 02Time of Employee AssessmentA
1. Describe the value and role of the HR Scorecard/Dashboard. 2. Discuss the difference between leading and lagging indicators as measures of HR effectiveness. 3. Identify the components of the HR Scorecard. 4. Identify the key performance drivers and enablers that constitute the primary HR deliverables. 5. Develop some preliminary HR Scorecard .
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Assign a scorecard template to a new scorecard to transfer the scorecard components and their weightings to the scorecard. To guarantee that the components on the scorecard cannot be removed or modified, lock the scorecard. See Chapter 8 of the Hyperion Performance Scorecard – Sy
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How to Create a Successful Balanced Scorecard What is a Balanced Scorecard The balanced scorecard is a concept and tool first conceived by by Robert Kaplan and David Norton. The balanced scorecard idea debuted in the Harvard Business Review in 1992. "The balanced scorecard retains traditional financial measures. But financial measures tell the .
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HR function, and firm leadership with respect to their impact on the workforce and ulti-mately upon a firm's strategic success. FROM BUSINESS SCORECARD TO HR SCORECARD Our approach starts with Kaplan & Norton's Balanced Scorecard, a familiar concept in most firms. While maintaining the scorecard's CUSTOMER SUCCESS BUSINESS PROCESS SUCCESS
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