Using Human Capital Metrics to Assess Workforce and HR Strategy

Dr. Bonalyn Nelsen School of Management Nazareth College

bnelsen8@naz.edu

You cant manage what you cant measure

What are the key metrics/criteria your HR function uses to evaluate its effectiveness? What are the key metrics/criteria your business uses to evaluate its effectiveness? What is the connection between the two?

Human Capital Measurement State of Readiness Conference Board Research Findings (2005)

Fully 78% of firms routinely track and report people measures (i.e., turnover, absenteeism, compensation, etc.).
Only 31% of HR departments have anyone on the HR staff who understands the companys strategic Key Performance Indicators (KPIs).

Only 25% of HR departments have anyone on staff who can both understand the companys KPIs and link them to people measures.
Only 19% of HR departments deliver people measurement reports to all levels of the management team (business partners). Only 12% of firms use human capital measures to help the company meet its strategic targets of Key Performance Indicators (KPIs).

Source: Gates, S. (2005) Measuring more than efficiency. Report # R-1356-04-RR, New York, NY: The Conference Board, Inc.

The Present State of HR

Firms are demanding that HR demonstrate its value. HR functions are responding by trying to develop metrics. In most cases, these metrics have no demonstrated relationshipor even an articulated relationshipto important business outcomes. SoHow do we use metrics to assess workforce and HR strategy?

Using Human Capital Metrics to Assess Workforce and HR Strategy

External
Business Strategy

Differentiation
Workforce Strategy

Internal
HR Strategy

Business Scorecard

Workforce Scorecard

HR Scorecard

Performance Index
Dashboard

Performance Index
Dashboard

Performance Index
Dashboard

Sample Scorecards
External
Business Strategy

Differentiation
Workforce Strategy

Internal
HR Strategy

Scorecard Metrics:
Financial Success Customer Success Workforce Success Business Process Success

Scorecard Metrics:
Strategic A Positions Strategic Mindset Strategic Capabilities Strategic Behavior Investment Strategy (equity vs. equality)

Scorecard Metrics:
HR Practices (Selection, Rewards, Development, Performance Mgmt.) HR Function Success (Capabilities, Bench Strength, Systems, Policies)

Developing Workforce and HR Scorecards

1.

Business Scorecard or Strategy Map:

Value Partitioning, Core Competency Analysis, Value Chain Analysis Human Capital Mapping, Competency Profiling, HC Investment Strategy HR Architecture Mapping, Linkage Analysis, HR Competency Profiling, Workforce Planning Applications

2.

Workforce Scorecard:

3.

HR Scorecard:

4. 5.

Develop and Articulate Metrics Strategy. Identify and Assemble Scorecard Metrics, Indexes, Dashboards and integrate with HRIT system.