HR Metrics A Critical Component of Strategic HR in the Public Sector

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HR Metrics- A Critical Component of Strategic
HR in the Public Sector
Sunil J. Ramlall, Ph.D. Associate Professor of
Management School of Business, Hamline
University Minnesota, USA
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Relationship between HRM and Performance

• Is there a direct correlation between the quality
  of human resources in the public sector and
  government performance and national development?
• How well are your HR practices aligned to your
  ministrys outcomes?
• Do you know if HR helps in national development?

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HR Continues to Evolve the model defines our
aspirations
continue to grow
Add Value Maximize Upside
Strategic HR Planning
Culture Image
Organizational Design
HR as Business Partner
Survey Action Planning
Staffing
EEO/AA
Impact/Contribution to the Business
Training Development
Employee Relations
Performance Management
Labor/Union Relations
Compensation
HR Information Systems (HRIS)
Benefits
Safety Workers Compensation
Compliance
Limit Liability Protect Downside
Labor Employee Personnel
Human
Organizational Relations Relations
Resources
Effectiveness
A Century of Evolution in the Function
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Redefining HR in the Public Sector

• The field of HRM has evolved significantly in the
  past decades as external and internal pressures
  have forced governments to redefine the role of
  the state and recalibrate public administration
  capacities (Bertucci, 2006).
• Number of innovative policies and practices, many
  of them borrowed from the private sector, now
  being introduced in public sector personnel
  management with--the intent being to deal with
  escalating costs and to better manage performance
  and increase efficiency.

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• Every day, HR professionals in the public sector
  face challenges in recruiting and retaining
  talent, transacting critical personnel actions,
  and promoting and supporting employee success
• In many cases, however, these activities are
  conducted without access to appropriate and
  timely information. As a result, decisions may be
  more reactive and tactical than strategic. The
  result is that HR's efficiency and effectiveness
  may suffer.

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• As governments face the significant challenges of
  an aging workforce and increased competition for
  talent from the private sector, HR metrics
  becomes a more important tool. HR must strive to
  become ever more relevant to an organization's
  operations.
• HR metrics are a bit like the weather--everyone
  talks about them, no one does anything about them.

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UN Report

• In 2005, the United Nations (UN) issued an
  important volume in its series of World Public
  Sector Reports that focused on human resource
  management. Development of World Public Sector
  Reports was a recommendation made by the UN
  Committee of Experts in Public Administration
  (CEPA).

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Comparing Approaches to Strategic HR in the
Private and Public Sector
What are the outputs of the HR strategies and to
what extent are these outputs
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The Role of HR

• The 2002 Human Resource Competency Study found
  that 43 of HRs impact on business performance
  came from its strategic contribution.

Source University of Michigan Business School
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Three Levels of Metrics

• Efficiency
• What range of resources (financial and
  non-financial) should be considered?
• What is the appropriate level of investments?
• How should investable resources be allocated to
  maximize results?

Efficiency
Source Boudreau and Ramstead
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Three Levels of Metrics

• Effectiveness
• What unique combination of policies and
  practices would best build the necessary human
  capital?
• What factors link policies and practices to human
  capital enhancement?
• What attributes distinguish effective from
  ineffective policies and practices?

Effectiveness
Source Boudreau and Ramstead
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The Role of HR
Future / Strategic Focus

• Change Agent
• Staffing
• Organizational design
• Survey action planning
• Performance measurement
• Training and development

• Strategic Partner
• Strategic HR Planning
• HR as Business Partner
• Culture and Image

People
Processes

• Employee Relations Expert
• Employee relations
• Labor relations
• Safety workers compensation
• Diversity and EEO

• Administrative Expert
• Compensation
• Benefits
• HR information systems
• Compliance

Day to Day Operational Focus
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HR Roles - Ulrich

• Human Capital Developer
• Employee Advocate (vs. employee champion)
• HR Leader
• Strategic Partner (vs. change agent)
• Functional Expert (vs. administrative expert)

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Administrative Expert
Compensation
Payroll as --total operating costs
(benchmarked) compensation targets benchmarked
against peer companies turnover rates quality
of management review and Board material.
Benefits
Medical cost per participant dental cost per
participant retirement participation rate
saved in union negotiations.
HRIS Systems Support
HRIS implementation on time and within budget
customer satisfaction.
Compliance
New EEO Charges Old EEO Charges Closed
Progress on AA Goals Outcomes of Inspections and
Audits.
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Employee Relations Expert
Employee Relations
Turnover rates, Best Place to Work rankings,
legal compliance, efficiency, union activity (or
lack thereof).
Labor Relations
Absence of the extreme negative (strikes,
slowdowns, sit-downs, boycotts) outcome of new
contracts, both immediate longer term
timeliness quality of new contracts
productivity per employee safety quality
measures.
Safety and Workers Compensation
Incidents value of accidents employees
trained required training certifications
completed audit results.
Diversity EEO
Attitude survey measures of perceived fairness
people trained in Diversity Awareness and
Diversity Leadership programs perceived
tolerance.
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Change Agent
Staffing
to Fill Days to Fill Filled Quality of
Hires Retention of Hires.
Organizational Design
Benchmarking headcount effectiveness of
communications key processes (no bottlenecks)
spans and layers management ratios.
Survey Action Planning
Employee satisfaction results at the work group
level rolled up to Business Unit level norms
available for Business Unit analysis.
Performance Management
Performance Reviews Timeliness and Quality /
Positions with written accountabilities and
measures other measures vary with the position.
Training Development
Programs Days/Person Training Impact of
Training effectiveness measures within new
groups.
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Strategic Partner
Strategic HR Planning
Quality of succession management program
assessment. Quality of Bench Strength. Quality
of Succession Plan Follow-up ( Actions
Completed).
HR as Business Partner
Any business measure of effectiveness.
360-Degree Feedback on the extent to which HR is
considered a partner by those they support.
Culture and Image
Employee Satisfaction data quality of the
description and utilization of culture image
understanding standing on the Fortune 100
Greatest Places to Work.
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Starting with the Business Strategy
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Basic Process for HR Strategy
Scan the External Environment
Identify Strategic Business Issues
Develop HR Strategy
Communicate the HR Strategy
Identify People Issues
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The Common HR Approach
The Inside-Out Approach
HR practices, processes, and systems
Articulate how what we do adds value to the
business
Communicate to the business what a good job we
are doing
Source Patrick Wright
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The Better HR Planning Approach
The Outside-In Approach
Identify the business model components and areas
to drive value
Develop an HR strategy to execute the business
model with relevant metrics
Use the metrics to demonstrate or prove how we
are driving business performance
Source Patrick Wright
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Metrics Model
Organization
HR
People

• Efficiency
• Time to Hire
• Cost per Hire
• Headcount Ratio
• Effectiveness
• Customer Survey
• At the Table
• Practice/Process Impact

• Efficiency
• Cost per Unit
• Shrinkage
• Defects/Scrap
• Effectiveness
• Customer Satisfaction
• Revenue Growth
• Market Share

• Efficiency
• Direct Labor Costs
• Indirect Labor Costs
• Positions Unfilled
• Effectiveness
• Employee Satisfaction
• Leadership Capability
• Talent Retention
• Employer Brand

Source Patrick Wright
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Do We Really Measure how HR is Driving Business
Performance?

• Business
• Objectives
• Driven to Win
• Flexible
• Embracing Risk
• Creative
• Global
• Fast

• Actual HR
• Measures
• Headcount
• Turnover Rates
• Succession Candidates
• Time to-fill, train, on-board
• Cost Reduction
• Training Completed
• Grievances
• Client Satisfaction Surveys
• Performance/Potential Ratings
• Sales per employee
• Best practices recognized

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The Role of HR

• When executives were asked to select which
  descriptor best described the view of HR held
  their organizations, only 34 indicated that HR
  was viewed as a strategic partner.
• SHRM/Balanced Scorecard Collaborative
• A major shortcoming in many companies is a lack
  of measurement on the impact of HR.
• Accenture High Performance Workforce Study

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Impact
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Three Levels of Metrics

• Impact
• What is the link between sustainable strategic
  success and human resource management?
• Which talent pools are most critical for
  competitive advantage?
• How could improving human capital increase value?

Impact
Source Boudreau and Ramstead
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Business Environment
Company
HR Department
Outputs
Inputs
InternalFeedbackEfficiencyEffectiveness
External FeedbackImpact
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Scope of HR Measurement Approaches
Value
Scorecards and Drill Downs
Strategic ImpactOrganizational
EffectivenessValidity and RigorCausationLeading
Indicators
Data Systems and Portals
Benchmarks
Ad hoc HR Measures
Time
Source Center for Effective Organizations, USC
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Building an Impact Model

• Do you understand your business
  partner/clients pain?
• are they interested in relieving that pain?
• do they see it as value added work?
• Can you specify the business requirements?
• lengthy boring process
• critical to your success

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Significant Role for HR

• Is HR a critical partner in helping to .
• Reduce poverty?
• Increase the literacy rate?
• Reduce crime?
• Increase GDP and GNP?
• Increase efficiency at the ministries?
• Create a more productive workforce?
• Create a better standard of living for the
  citizens of the country?