- 1. Defining Valueand Measuring HR Mark O Donnell,Director and
Practice Leader, Human Capital Advisory Services, Consulting
2. Agenda Defining the Value of HR Introduction2 HR Strategy 6
Understanding the business 8 Define your HR Strategy 14 Measuring
Impact of HR 18 Assess HR Function 25 Reassess HR Service Delivery
34 Conclusion 42 Questions 3. Context
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- If you cant quantify the value that HR has on the Business, how
do you prove your worth?
Defining the Value of HR 4. Marketplace Trends
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- Competition for funds and resources is todays reality
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- Major change and turbulent market conditions make it hard for
Boards to determine what the strategy should be
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- Top management want to know the Return On Investment for all
they spend including leadership development and talent
initiatives
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- These more complex economic conditions offer an opportunity not
only to rethink business strategies but also HR strategy, if HR is
core to the business strategy
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- More and more of our clients are telling us that there is
particular focus on HR departments to ensure thatAllHR investments
deliver quantifiable measurable value.
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- How can HR demonstrate a quantifiable return on investment for
Human Capital initiatives?
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- Which HR initiatives can be directly targeted at building
organisation capability that has a bottom-line impact either
increasing the organisations revenue or reducing costs?
Defining the Value of HR 5. People are Critical to Business
Performance
- More than 85% of senior business executives and HR leaders
agree that people are vital to every aspect of their organisations
performance
- HR leaders and senior business executives agree the most
critical people issues are:
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- Leadership development and pipeline
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- Creating a high-performance culture
Source:Aligned at the Top ,a global survey on people and
business challenges conducted by Deloitte Touche Tohmatsu and the
Economist Intelligence Unit 6. There is a gap between HR
capabilities and business needs
- Senior business executives want HR to be more effective
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- Only 4% describe HR as highly effective in addressing the needs
of the business
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- 60% describe HR as only moderately effective
- People and HR are often treated as separate conversations
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- People issues are considered strategic, e.g. leadership
development and pipeline, talent management, creating a
high-performance culture, training and development
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- HR issues are perceived as administrative, e.g. compensation
and benefits, performance evaluations, HR operating efficiency
- HR is often out of the loop on strategic issues
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- Percentage of companies that rarely or never consult their
senior HR team on key business issues:
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- Mergers and acquisitions (63%)
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- Compliance and regulation (26%)
7. HR Strategy Defining the Value of HR 8. HR Strategy Deloitte
view
- A HR strategy should help an organisationcreate unique
competitive advantageby outlininghow the HR function and the
services it offerswill create business value and address the
companys most pressing strategic challenges.
- The strategy shouldidentify priorities for investmentin HR
products and services and in HR service delivery (people, process,
technology, operations, etc.) to help address the organisations
most pressing strategic challenges.
- The strategy should include aroadmap for how the HR function
will execute on the strategy.
- The strategy should also outline thefoundational HR
capabilitiesrequired to effectively execute the strategy.
- Typically, the HR strategy will be a two to three year
strategy, but it should be refreshed every year.
- Before forming your strategy you need to understand the
Business
9. Understanding Business Strategy Defining the Value of HR 10.
Questions to Ask
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- What does the Business do to drive performance?
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- Who are our shareholders and what do they want?
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- What does our Business do?
11. What do the sections of the EVM HC represent? 1. Value
Drivers How value is created 12. Value Drivers -How Value is
Created 13. EVM HC: Changing the Mindset of How HR Operates
- HR has traditionally been viewed as an overhead cost that is
highly transaction-based.
- Behind every great product, service, and innovation are
people.
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- Sales force Transformation
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- Outsourcing and Offshoring
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- Global Workforce Security
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- Global Program Management
Operating Margin Asset Efficiency Expectations Revenue Growth
Volume DirectCosts (COGS) IndirectCosts (SG&A) IncomeTaxes S H
A R E H O L D E RV A L U E Property, Plant & Equip. Inventory
Receivables & Payables Company Strengths External Factors Price
14. Human Capital Dimensions -Categories of Improvement Focus
- The Human Capital Dimensions embedded within the map show the
seven major Human Capital categories of improvement within an
organisation.
Human Capital Dimensions Talent Strategies: Talent-focused
activities to execute short and long term business objectives
Learning and Development: Activities in support of employee and
executive developmentChange Management and Transformation:
Activities focused on the people implications of major business
events Organizational Strategies: Activities in support of business
initiatives that focus on developing organization and team
structures Employee Rewards and Benefits: Activities that link
employees work experience to their commitment and contribution to
business value Governance, Risk, and Compliance: Activities to
proactively manage the people-related aspects of risk, regulations,
security, compliance, and ethics HR Strategy and
Services:Activities focused on HR strategy and service delivery 15.
Define HR Strategy Defining the Value of HR 16. Step 1: Understand
Strategic Priorities &Business Context
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- +10% Annual Growth Target
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- Improve Product Development Pipeline and Deployment
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- Increase Share of Revenue Capture from Advertising
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- Improve Product and Service Mix
Acquire New Customers Retain and Grow CurrentCustomers Leverage
Income - Strengthen Pricing Marketing&Sales AccountManagement
Cross - Sell / Up - Sell Retention Demand&SupplyManagement
PriceOptimization Product&ServiceInnovation Cash /
AssetManagement Volume Price Realization Revenue Growth Generating
Assets 17. Step 2: Identify Issues & Challenges Example
Strategic priorities and HR strategic actions:Exponential Headcount
Increase: Focus on recruiting and selection, retention practices,
talent placement, and employee development. HR Organization
Transformation: Optimize the HR function. Enterprise Cost
Reduction: Maximize investments and spend on human capital to focus
on business issues, operational efficiencies, and process
excellence. Focus on Customer Service: Build a culture of high
performance and innovation with a focus on the customer. Post
Merger Integration: Support rationalization of core process,
technology, people, and policy with a defined project portfolio.
18. Deloittes HR strategy framework Deloitte HR Strategy
Framework
- Understand business strategy
Deliver Value 7. Establish a delivery model for HR services 8.
Upgrade the companys HR capabilities 9. Continuously improve HR
operations 10. Communicate the value of HR services Define
Value
- Prioriti`se HR investments
19. Measuring Impact of HR Defining the Value of HR 20. HR
Balanced Scorecard?
- The Balanced Scorecard is a means of connecting key decisions
and control, that measures the value created by initiatives to the
core business areas,compares program benefits to
costsincluding:
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- Customer Experience:How do customers see us?Business Impact
& Satisfaction Measurements
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- Talent Strategies:What must we excel at?Learning and
application measures knowledge, skills and attitudes and on-the-job
behaviours
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- Process and Innovation:Can we continue to improve and create
value?
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- Financial Focus:How do we look to shareholders?
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- The HR Balanced Scorecard aligned to business strategies
measures improvement in customer value
Defining the Value of HR The Balanced Scorecard fills the void
that exists in most management systems the lack of a systematic
process to implement and obtain feedback about strategy (Kaplan
& Norton, 1996). 21. Best Practice Design: Characteristics of a
Successful Scorecard Defining the Value of HR Involves the
scorecard owner in the design Characteristics Makes efficient use
of managers time Understandable & transferable Easily aligned
across the organisation Only this person knows the answers
Management time is scarce Must be communicated across the
organisation Reason Help the whole company work towards a common
goal 22. Value of a Balanced Scorecard HR Transformation HR Value
Defining the Value of HR HR Transformation HR Value Balanced
Scorecard
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- The Balanced Scorecard examines the evidence of key HR
Initiatives linking them to business performance measures that
drive Business Strategy
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- The value of using a Balanced Scorecard, HR can fuel more
sustainable employee initiatives with longer-lasting results
The Balanced Scorecard works as an umbrella concept that links
together organisational objectives, ways of thinking and management
tools. 23. Overall HR Scorecard Client Example
- Legend (Link to Critical HR Capabilities)
- Organisational Development
- Cost of acquisition per hire
- HR Training spend (per Manager / Director / Executive)
- Vendor Management FTE Ratio +
- Hiring Manager satisfaction with quality of new hires
- Employee satisfaction with Career Zone
- Employee satisfaction with career progression
- Business unit satisfaction with organisation design
support
- Employee engagement index
- Frequency of communication
- Response rates on effectiveness surveys
- Employee HRO satisfaction
- Self-service availability rate
- Portal usage penetration rates
- Line manager use of recruitment centers
- Share of employees with basics in place day one
- Time to efficiency for new hires
- Time to identify & approve leadership training request
- Course enrollment and completion rates
- Share of positions with successor identified
- Number of job families for which there are established career
paths
- Share of business using consistent change leadership
framework
- Number of issues at level 1, level 2 or level 3 support
- Number of critical positions and critical workforce segments
identified
- Retention rates by critical workforce segments
- Leadership stability rates
- Number of internal leadership appointments
- Share of leaders reviewed in talent review process
- Timeliness of talent reviews
- Number of employee referrals
- Diversity of leadership team
Potential Metrics 24. Metrics for critical HR capabilities and
services can be identified Financial Customer Experience Process
& Innovation Talent client x Case use in Roadmap Section
Potential Talent Management Metrics Client Example Workforce
Planning & Segmentation
- Cost of workforce planning process
- Business unit satisfaction with workforce planning process
- Workforce planning process performed annually and linked to
budgeting process
- Number critical positions and critical workforce segments
identified
- Share of critical jobs held by those with high / low
performance levels
Talent Sourcing & Acquisition
- Cost of sourcing & acquisition process
- Cost of acquisition per hire
- Business case savings realization for Career Zone
implementation
- Referral bonus cost per hire
- Hiring Manager satisfaction with recruiting process
- Hiring Manager satisfaction with quality of new hires
- Employee satisfaction with Career Zone
- Number of positions where talent pool is already
identified
- Requisition response rate
- Applicant conversion rate
- Interview conversion rate
- (First) offer acceptance rate
- Ratio of contractors to full-time staff
- Share of new hires receiving top performance rating
- Management accountability for the quality of new hires
- Share of new hires leaving the organizations within 6
months
- Employee tenure by sourcing method
On-Boarding& Orientation
- Cost of on-boarding process
- Employee / Manager satisfaction with on-boarding process
- Share of employees with basics in place day 1 (phone computer,
etc)
- Time to efficiency for new hires
- Management accountability for on-boarding process
Retention
- Cost of recognition practices
- Compensation impact of replacement hires
- Employee satisfaction with recognition practices
- Recognition rate of the employment brand by critical workforce
segments
- Number of lateral moves within a business unit
- Number transfers between business units
- Time to fill positions with internal transfer
- Share positions filled with internal candidates
- Number of recognition awards granted
- Voluntary turnover rate (by department, level, workforce
segment)
- Retention of high performers
- Retention of critical segments
- Leadership stability rate
- Percentage of referral hiring
25. Align HR Services Deloitte HR Strategy Framework
- Understand business strategy
- Identify HRs primary performance levers
Deliver Value 7. Establish a delivery model for HR services 8.
Upgrade the companys HR capabilities 9. Continuously improve HR
operations 10. Communicate the value of HR services Define
Value
26. Assessing your HR Function Defining the Value of HR 27. HR
Maturity Assessment
- We have developed an HR Maturity Model to meet this
objective.
- The HR Maturity Model captures our views on leading practices
for talent management, as well as for each of the key elements of
our HR service delivery model:HR strategy, HR customers, HR roles,
and HR enables.
28. Deloitte Global HR Maturity Tool Dimensions Talent Maturity
HR Strategy & Service Delivery Maturity
- Talent Geographic Reach & Diversity
- Talent Governance & Leadership
- Talent Attitudes & Culture
- HR & Talent Strategy Alignment
- HRs Role in Key Talent Decisions
- HR Planning Effectiveness
- HR Enablers(e.g. Policy, Process, Governance, Reporting &
Technology)
- HR Service Delivery Roles
- HR Service Delivery Enablers
- Governance, Service-Level Agreements (SLAs) & Metrics
29. Talent Maturity Model 30. HR Strategy Alignment Maturity
Model 31. HR Customer Segmentation Maturity Model 32. HR Roles
Maturity Model 33. HR Enablers Maturity Model 34. Deliver Value
Deloitte HR Strategy Framework
- Understand business strategy
- Identify HRs primary performance levers
Deliver Value 7. Establish a delivery model for HR services 8.
Upgrade the companys HR capabilities 10. Communicate the value of
HR services Define Value
- Prioritise HR investments
35. Establish and Re-assess HR Service Delivery Model Defining
the Value of HR 36. Service Delivery Models - Leading Practices The
Evolution of HR Service Delivery Deloitte HR Service Delivery
FrameworkEnsure HR service delivery model is aligned to deliver
effectively on Business & HR Strategies. Review Customers to
determine if unique HR requirements exist for different customer
segments. Assess how effectively service is being delivered through
retained and outsourced HR Roles Evaluate the effectiveness of
Enablers that HR can leverage to deliver efficient and effective
service. Traditional Ulrich model was used to describe the high
level, basic relationships and players in the transformed HR
organization, showing how the three building blocks of Shared
Services Operations, Business Partners and Centres of Excellence
interacted with managers and employees. HR Service Delivery
Framework (mid-90s) 37. The building blocks that make up the four
key roles in the operating model are Group HR, CoEs, SSC and
Business Partners
- Represents HR at the Exco level.
- Group HR is the business partner to the Exco.
- Sets the tone and pace of the HR strategy, in line with the
Group business strategy.
- Owns the maintenance of the strategic framework for the CoEs to
develop the HR policy blueprint.
- Responsible for managing succession planning and HR issues for
Exco -2.
Group HR Centres of Expertise
- Designs and develops deep technical capability in areas of HR
that drive strategic agenda.
- Innovates, designs and develops HR strategies, policies and
processes in line with latest industry thinking.
- Provides expert guidance to HRBPs and senior executives in the
SBUs/Divisions.
- Resolves complex issues escalated from the Shared Service
Centre and HRBPs.
Shared Services
- Provides standardised, consistent, accurate, fit for purpose
transactional and functional expertise to HR, delivering high
quality, efficient administration for all HR transactions.
- Customer-focused contact centres providing the first point of
call for employees and managers for advice, guidance and query
resolution.
- Responsible for continuous improvement of delivery of HR
processes and technology utilisation by HR.
Business Partners
- Drives the strategic people issues, aligning group and
SBU/Divisional HR strategies.
- Provides SBU/division with local geographical input for Group
policy blueprint development.
- Acts as a business consultant maximising the value talent
brings to the SBU.
- Manages SBU/country-specific HR issues but does not perform
local transactions.
- Provides input to the prioritisation of HR-owned business
projects, providing subject matter expertise to HR projects and
acting as the change management agent.
Service Delivery Models - Leading Practices The Four Building
Blocks 38. Service Delivery Models - Leading Practices Service
Provision Group HR Centre of Expertise Shared Services Business
Partners
- Owns the skills development, succession planning and career
planning of HR professionals
- Group HR provides the CoE with the framework for developing HR
policies that enable the execution of the corporate HR
strategy
- Provides the cohesiveness for the CoE teams to work together to
deliver the strategy in an aligned way
- Group HR ensures the HR service delivery model operates
effectively, ensuring clarity of roles and responsibilities in the
delivery of all HR services
- Provides BPs with a framework for the consistent execution of
the BP role, within the dynamics of different SBU/Divisional
cultures and environments
- Owns succession planning working with BPs who manage the talent
pipeline
- Internal Consultants to the business
- The CoE provides expert input into the development of the
corporate HR strategy by Group HR
- The CoE owns the end-to-end processes for HR delivery,
integration between processes and provides guidance to the SSC for
continuous improvement in HR process delivery
- Resolvescomplex issues escalated from the SSC
- The CoE provides strategic consulting support to the BPs,
advising on complex and strategic people-management issues and
provide guidance on the use of HR policies and tools to meet the
businesss needs
Shared Services Delivers high quality and efficient HR services
to managers and employees, maximising self-service and emulating
the brand in the way it delivers customer services
- SSC provides the appropriate HR services support requested by
Group HR, for example administration of HR issues
- The SSC operationalises strategies and policies developed by
the CoE, operating efficient high quality processes and providing
front line support to managers and employees
- SSC delivers high quality and efficient HR processes to the SBU
to agreed SLAs, liaising with Business Partners to ensure customer
satisfaction
- Manages queries form managers and employees
Business Partners The face of HR to the business
- BPs provide input to Group HR on the current and future needs
of the business from HR, along with direct and indirect feedback on
customer satisfaction with HR service delivery
- BPs provide guidance to CoEs on the strategic direction and
priorities of the business including future needs
- BPs act as a conduit between the business and CoEs translating
business priorities and needs
- BPs act as a conduit between the business and SSC, interpreting
customer needs and feedback from the coal face, managing the
performance expectations of the business and SSC
- Resolves complex queries escalated from the SSC
This matrix summarises the relationship each team within the
model has with the other HR teams, and some of the key
responsibilities. P R O V I D E SS E R V I C E ST O R E C I P I E N
TO FS E R V I C E SF R O M 39. Service Delivery Models - Leading
Practices The Business Partner Role Assumptions / Attributes
Business Partners Role Business Partners do:
- Work with Business Unit to translate business needs into HR
requirements and working environment
- Identify the organizational capabilities required to execute
the business strategy
- Acts as a consultant most frequently on issues related to
strategy execution and change, talent management, employee
engagement, performance management, employee relations
- Responsible for implementing initiatives at the business unit
level and may support the design of specialized or customized
training, communications, and recruiting
- Broker of services between specialized internal groups (e.g.
Total Rewards) and the business
- Collaborate with Centers of Expertise to create innovative HR
solutions
- Provide feedback to Centers of Expertise about HR solution
effectiveness
- Support culture change taking direction from the business
leadership
- Develop the leadership and manage the talent pipeline in the
Business Unit
- Analyze and investigate business / people issues and trends
within the bank
- Deliver HR services in line with business needs
- Focus on consultative support and HR solution deliveryto senior
line management
- Challenge the business in order to ensure aligned and
integrated people strategy, and fair people management
- Support all HR products and services, including any required
changes and ensures client complies
- Coach line managers in people management
- Ensure effective execution of HR policies and processes in
their business
- Ensure compliance with local legislation and regulatory
requirements
- Interact with the Workers Council on individual issues
Business Partners Attributes Business Partners dont:
- Client relationship management
- People strategy development
- Contracting/stakeholder management Influencing
- Policy implementation/ communication
- Analytical skills (Interpret reporting)
- Support line managers and employees in day-to-day
administration
- Execute design and development of HR programs, procedures or
policies
- Report on workforce-related data
- Resolve individual EE queries; have non-managerial employees as
clients
- Undertake people management responsibilities on behalf of line
managers
- Interact with the Workers Council on group issues
Capabilities
- Facilitating organization change
- Personal and professional impact
40. Service Delivery Models - Leading Practices The CoEs Role
Assumptions / Attributes CoEs Role CoEs do:
- Provide expert solutions and services to the Business Units,
across the whole of the enterprise
- Customers of the CoEs are typically the BP. May also be
contacted by the business and / or contact the business
themselves
- Keep appraised of leading practices, monitor and evaluate
future legislation and market trends in their areas of
specialty
- Align the innovation agenda with the needs and directions of
the SBUs/divisions
- Develop and deploy innovative HR policies, products and
processes and create strategy, policy, programs, and tools for
local implementation
- Align policies and solutions across the enterprise as
appropriate
- Collaborate with each other to deliver comprehensive solutions
to the Business Partners
- Monitor solutions, vendors, SSC processing, and employee
feedback to drive continual improvement
- Act as the final escalation point for advice on customer
queries, transactions and requests that the SSC cannot resolve
- Lead the development of product strategy
- Partner BPs in consulting with the business to create
innovative solutions when standardized products are not
sufficient
- Provide subject matter expertise, advice and guidance to BPs
and HRS
- Support functional specialists in the resolution of complex
technical queries and the delivery of streamlined products and
services
- Research and develop / source best solutions and new concepts
with respect to people management, products and services
- Coordinate and work with results of internal and external
benchmarking to create and share pools of best practice
- Design organizational metrics for CoE products and
interventions when weaknesses are detected
- Partner with HRS when developing new products to ensure
effective deliverability
- Communicate product changes and updates to BP and HRS
CoEs Attributes CoEs dont:
- Content strategy development
- Contracting /stakeholder management
- Market intelligence/ best practice (push)
- Business understanding at Organisational, Regional, Divisional
level
- Metric definition e.g. org effectiveness and product
impact
- Analytical skills (Interpret reporting)
- Quality and risk management
- Undertake operational administrative processing
- Manage and administer data
- Manage and perform any operational transactions
- Consult in systems and administrative process design and
development
- Interact with employees on day-to-day matters
- Get involved in the execution of HR policies
Capabilities
- Personal and professional impact
41. Service Delivery Models - Leading Practices The Shared
Services Role Assumptions / Attributes Shared Services Role Shared
Services do:
- Provide administrative support for the rest of HR,
including:
- Manage and process HR transactions (e.g., pay changes,
performance management) and provide any retained administrative/
transactional process support
- Produce outputs (e.g., standard letters, changes in
terms/conditions)
- Serve as single point of contact for HR queries and requests
(when questions can not be answered through self-service)
- Resolve queries and requests and escalating to other HR areas
as appropriate
- Liaise with HR Business Partners and Centers of Expertise to
achieve resolution of customers queries and requests
- Have performance management processes, metrics and vendor
management to ensure continuous improvement
- Control operational cost and quality
- Are governed by service level agreements that meet the needs of
the Business Units
- Use technology to support customer contact
- Provide first point of contact for the provision of employee
and manager advice, guidance and query resolution
- Significantly reduce HRBP and CoEinvolvement in routine
administrative tasks and inquiries
- Provide answers to basic and more complex inquiries
- Focus on solution delivery and execution
- Perform organizational and data analytics and quality
management
- Support problem solving, case management and issue
resolution
- Deliver commoditized products and standardized services
- Deliver and maintain self service offerings
- Have specialist expertise e.g. Payroll, training
- Have responsibility for implementing necessary changes process
changes in partnership with global process owner
Shared Services Attributes Shared Services dont:
- Policy measurement/ metrics tracking
- Reporting e.g. provision of reports
- Technology efficiency improvement
- Management of consistent delivery of services
- Contracting /stakeholder management
- Work with managers in solving business challenges
- Allow deviation from agreed standard processes and
procedures
42. Key steps in delivering value through HR
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- Continuously improve HR operations
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- Implement robust systems and leading practices to deliver HR
services
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- Establish appropriate service levels and performance
targets
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- Maintain a competitive cost structure relative to industry
benchmarks
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- Implement Lean Sigma or other continuous improvement methods to
help improve operational excellence
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- Communicate the value of HR services
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- Understand the value of HR services
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- Develop execution plans for specific constituencies
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- Implement an integrated communication process and obtain
feedback
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- Create an innovative brand statement and/or logo that helps
reinforce the HR value proposition
43. Conclusion Defining the Value of HR 44. Conclusion
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- Re-evaluate how HR is Delivered