Developing HR Strategy

and Metrics
Concept of Strategy

• The direction and scope of an organization over the long term.

• It should match the resources of the organization to its changing
environment (markets, customers and other stakeholders).
• Strategy determines the direction where the organization is going
Concept of Strategy
• It is a long term plan
• It is the pattern of the organizations’s behaviour over time
(descriptive meaning of strategy)
• It is a perspective : a fundamental way of doing things
(mission)
• A ploy: a specific manoeuvre to outwit a competitor
Factors for Competitive Edge 4

• Unique (differentiation, focus)

• Hard to copy
• Sustainable
The Concept of Strategic Management

• Vision and mission

• Strategic goals
• Strategic plans
• Implementing the strategy
(business strategy via functional strategies)
• Managing strategy itself (goals, plans, implementation)
Strategic Fit
• Capabilities and resources to the environment
(opportunities and threats)
• The business (or corporate) strategy to functional
strategies and strategies of business units
• Every part of the strategy area should be mutually
supportive
What are HR Strategies?

• HR strategies set out what the organization intends to do

about its human resource management policies and
practices and how they should be integrated with the
business strategy and with each other. Key elements:
• Strategic objectives
• Plan of action
• „There is no great strategy only great execution” (Gratton
2000)
A good HR strategy:
• satisfy business needs
• is founded on detailed analysis
• can be turned into actionable programmes
• is coherent and integrated
• takes account of the needs of line managers, employees and other
stakeholders
An HR strategy can be
• Overarching / overall / general
• Specific: focuses on specific areas
• Talent management
• Development
• Reward management
• …
Overall HR strategies

• This describe the general intentions of the organization

about how people should be managed and developed and
what steps should be taken to ensure that the organisation
can attract and retain the people it needs; and ensure that
employees are committed, motivated, engaged.
Categories of overall strategies
• Evolutionary approach to HRM.
• Broad-bush statements of aims and purpose that set the
scene for more specific strategies.
• Specific and articulated plans to create sets of HR
practices and develop a coherent HR system.
• Conscious introduction of overall approaches to HRM
such as:
• High-performance management
• High-involvement management
High-Performance Management

• Aims to effect organizational performance through

people.
• HRM areas involved (HPWS – high performance work
systems):
• Recruitment & selection
• Training and development
• Reward management
• Performance management
High-Involvement Management

• Commitment ad involvement opposed to bureaucratic

control.
• Treating employees as partners. Providing opportunity for
the employee to control and understand their work.
• Communication for mutual understanding.
High-Commitment Management
• A form of management aimed at eliciting a commitment so that
behavior is primarily self-regulated rather than controlled.
Organizational relations based on trust.
• Approaches to achieve commitment:
• Career ladders and emphasis on trainability
• Functional flexibility
• Reduction of hierarchy, ending of status differentails
• Reliance on teams: dissemination, structuring work, problem solving
• Intrinsic satisfaction via job design
• Permanent employment with temporary workers
• Merit pay and profit sharing
• Involvement in quality management
Specific HR Strategies
• HC management
• High-performance management
• Corporate social responsibility
• Organization development
• Engagement
• Knowledge management
• Resourcing
• Talent management
• Learning and development
• Rewarding
• Employee relations
Steps to Build Up HR Strategy

• Step 1: Get the ‘big picture’

• Step 2: Develop a Mission Statement or Statement of Intent
• Step 3: Conduct a SWOT analysis of the organization
• Step 4: Conduct a detailed human resources analysis
• Step 5: Determine critical people issues
• Step 6: Develop consequences and solutions
• Step 7: Implementation and evaluation of the action plans
 Three Levels of Metrics
Efficiency
• What range of
resources (financial
and non-financial)
Impact should be
considered?

Effectiveness • What is the

Efficiency
Source: Boudreau and Ramstead
appropriate level of
investments?
• How should
investable resources
be allocated to
maximize results?
 Three Levels of Metrics
Efficiency
• What range of
resources (financial
and non-financial)
Impact should be
considered?

Effectiveness • What is the

Efficiency
Source: Boudreau and Ramstead
appropriate level of
investments?
• How should
investable resources
be allocated to
maximize results?
 The Role of HR
Future / Strategic Focus

Strategic Partner Change Agent

• Strategic HR Planning • Staffing
• HR as Business Partner • Organizational design
• Culture and Image • Survey action planning
• Performance measurement
• Training and development
Processes People

Administrative Employee Relations

Expert Expert
• Compensation • Employee relations
• Benefits • Labor relations
• HR information systems • Safety & workers’ compensation
• Compliance • Diversity and EEO

Day to Day Operational Focus

 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; 401K employee
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.
 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.
 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.
 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.
 Basic Process for HR
Strategy

Identify
Scan the Identify Develop Communicate
Strategic
External People HR the
Business
Environment Issues Strategy HR Strategy
Issues
 The Common HR Approach

The Inside-Out Approach

Communicate
HR practices, Articulate how
to the business
processes, what we do
what a good
and adds value to
job we are
systems The business
doing

Source: Patrick Wright

 The Better HR Planning Approach

The Outside-In Approach

Develop an Use the metrics

Identify the
HR strategy to demonstrate
business model
to execute the or prove how
components
business model we are driving
and areas to
with relevant business
drive value
metrics performance

Source: Patrick Wright

 Metrics Model

HR People Organization

Efficiency Efficiency Efficiency

• Time to Hire • Direct Labor Costs • Cost per Unit
• Cost per Hire • Indirect Labor Costs • Shrinkage
• Headcount Ratio • Positions Unfilled • Defects/Scrap

Effectiveness Effectiveness Effectiveness

• Customer Survey • Employee • Customer
Satisfaction Satisfaction
• “At the Table”
• Leadership Capability • Revenue Growth
• Practice/Process
Impact • Talent Retention • Market Share
• % Black Belt Leaders
Source: Patrick Wright
• Employer Brand
Do We Really Measure how HR is Driving
Business Performance?

Business Actual HR

Objectives Measures
 Headcount

 Driven to Win  Turnover Rates

 Flexible  Succession Candidates

 Time to-fill, train, on-board
 Embracing Risk  Cost Reduction

 Creative  Training Completed

Grievances
 Global 
 Client Satisfaction Surveys
 Fast  Performance/Potential Ratings
 Sales per employee
 Best practices recognized
 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
 Three Levels of Metrics
Impact
• What is the link
between sustainable
strategic success and
human resource
Impact management?
• Which talent pools
Effectiveness are most critical for
competitive
advantage?
Efficiency
• How could improving
human capital
increase value?
Source: Boudreau and Ramstead
 Business Environment

Company

HR Department

Inputs Outputs

Internal
Feedback:
Efficiency
Effectiveness
External
Feedback:
Impact
 Scope of HR Measurement
Approaches

Scorecards Strategic Impact

and Organizational Effectiveness
Drill Downs Validity and Rigor
Causation
Data Systems Leading Indicators
and Portals

Benchmarks

Ad hoc HR
Measures

Source: Center for Effective Organizations, USC

 Building an Impact Model

 Do you understand your business

partner/client’s 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
Tough Times for Top Executives

“Over the past three years, nearly 40 percent

of the top 2500 CEOs have been removed
from their posts. Nearly all of them, due to a
failure to execute the strategy.” Bossidy and
Charan
 Execution
Strategy

Alignment
=
Successful Execution

People Processes

To execute strategy you need to align your strategy, process and people!
 The biggest questions facing
CEOs today
 How do I know if my company is aligned?

 How do I create the alignment I want?

 How do I maintain the alignment I want?

 The Alignment Challenge
Fast -
Logical !
Strategy

Alignment
=
Successful Execution

Slow . . .
And follows a People Processes
Fast -
different logic . . . Logical !

Success and speed of execution depend on people alignment,

Yet this is the hardest element to align!
 Grounded in Management
Theories from key disciplines

 Strategic Thinking
 Marketing
 Operations
 Human Resources
 Organizational Culture
 Included an analysis of four
large data bases

 Organizational DNA
 Customer Focused Cultures
 Employee Behavior
 Organizational Culture
 The Alignment of People

Five Key Elements Strategy

 Marketplace Approach
Alignment
 Customer Focus =
Successful Execution
 Leadership Behavior

 Performance Processes
People Processes

 Culture
 Impact Measurement
It’s all about Change

Impact measurement is not about numbers … its about

change
Numbers only provide you with a common and specific
language
If your clients don’t know you they won’t trust you
Fear of being “found out”
 Higher Values for HR
Success for those who:
Provide new thinking on old topics
Balance increased strategic role with employee
champion role
Closely align HR strategies to business needs
Navigate hard economic times without damaging
higher order or systems mechanisms
Use systems thinking and measurement (efficiency,
effectiveness and impact)
Help create systems and process for today’s
realities and deleting systems that do not add value
 Key Attributes for the
21st Century HR Professional
• Why vs How
• Let me show you something
you don’t already know

INTELLIGENCE

ACCOUNTABILITY CURIOSITY

• Hit it to me / My team • So much to learn

• How good: So little time
- Do I HAVE to be? • I wonder what will
- CAN I be? happen today

Source: Steve Miranda

Faster up the Learning Curve
HIGHER PERFORMANCE SOONER

WHAT YOU
NEED TO KNOW

PROCESS
Pushing The HR Curve

Success = Intelligence + Access