Linking Corporate and HR Strategies

Source: 2003, Gary Dessler, Ph.D.

Figure 36

The Basic Architecture of HR

Source: Adapted from Brian Becker et al., The HR Scorecard: Linking People, Strategy, and Performance (Boston: Harvard Business School Press, 2001), p. 12.

Figure 38

Translating Strategy into HR Policy and Practice

Basic Model of How to Align HR Strategy and Actions with Business Strategy

Source: Adapted from Garrett Walker and J. Randal MacDonald, Designing and Implementing an HR Scorecard, Human Resources Management 40, no. 4 (2001), p. 370.

Figure 39

The HR Scorecard Approach

HR scorecard
Measures the HR functions effectiveness and efficiency in producing employee behaviors needed to achieve the companys strategic goals.

Creating an HR scorecard
Must know what the companys strategy is. Must understand the causal links between HR activities, employee behaviors, organizational outcomes, and the organizations performance.

Strategic HR Relationships

HR Activities

Emergent Employee Behaviors

Strategically Relevant Organizational Outcomes

Organizational Performance

Achieve Strategic Goals

Figure 310

HR SCORECARD PROCESS

The HR Scorecard Approach to Formulating HR Policies, Activities, and Strategies

Source: Copyright Gary Dessler, Ph.D.

Figure 311

Balanced scorecard

A balanced score card means achievement of balance in 4 aspects in an organization as follows: 1.1 Financial aspect: to succeed financially how should we appear to our shareholders.. how it contributes to profit. 1.2 Customer aspect: to achieve organization vision how should we appear to customerstheir expectations and how much we are successful in meeting it.. It covers market share, customer acquisition, customer retention and satisfaction, customer loyalty, customer profitability 1.3 Internal Business Process: What are the business process should we excel at in attaining growth. It includes CRM, post sale service process etc. 1.4 Learning and growth: to achieve aim how is the organization sustaining and the ability to change and improvementIt concerns with employee capabilities, IS capabilities, organizational climate for employee motivation, challenging status quo

HR scorecard

HR scorecard include components as follows: 2.1 Financial Perspective This perspective tries to answer questions relating to the financial measures that demonstrate how people and the HR function add value to the organization. This might include arriving at the value of the human assets and total people expenses for the company. Examples Compensation and benefits per employee. HR expenses per employee. Turnover cost. Profit per employee. Cost of injuries

2.2 Strategic Perspective.

It is the results of strategic initiatives managed by the HR group. The strategic perspective focuses on the measurement of the effectiveness of major strategy-linked people goals. Examples HR budget / actual. HR annual resource plan. Change management capability of the organization Skills/ competency level

2.3.Operational Perspective
the operational tasks at which HR must excel. This piece of the Balanced Scorecard provides answers to queries about the effectiveness and efficiency in running HR processes that are vital to the organization. Examples include measuring HR processes in terms of cost, quality and cycle time such as time to fill vacancies. Examples Training cost per employee Training hours per employee Average employee tenure in the company Lost time due to injuries Time taken to fill vacancies Cost per recruitment promotions Absenteeism by job category Accident costs Accident safety ratings

2.4.Customer Perspective

This focuses on the effectiveness of HR from the internal customer viewpoint. Are the customers of HR satisfied with their service; are service level agreements met; do the customers think they can get better service elsewhere? Conducting an HR customer survey might typically arrive at this. Examples Employee perception of the HRM Employee perception of the company , as an employer Customer/market perception of the company, as an employer.

Benefits of HR scorecard

1. Focusing on leading indicators

The scorecard links HR decisions and systems to HR deliverables which are, in turn, the performance drivers for fulfilling the organizations strategy implementation and performance goal attainment.

2. Encouraging Customers of HR to become more self-sufficient Internal customers can be taught to utilize measures to solve problems effectively with less help from HR in a more pro-active manner.

Benefits of HR scorecard
3. Providing Focus for HR and OD staff The HR Scorecard represents a way of displaying the HR measures in such a way that it enables a quick understanding of where you are in the journey toward your HR outcomes and in helping to achieve the organizations goals.

4. Identifying the differences between HR doables and HR deliverables The HR Scorecard clearly identifies the HR deliverables that directly influence the organizations strategic implementation/objectives.

Benefits of HR scorecard

5. Demonstrating HRs contribution to strategy implementation 6. Helping HR managers focus on and manage their strategic responsibilities The scorecard encourages HR managers to identify how their decisions and actions affect the successful implementation of the organizations strategy. The HR scorecard helps HR professionals to think systematically about HR strategy. 7. Encouraging HR flexibility and change By maintaining its focus on the organizations strategy implementation, the HR Scorecard highlights the importance of HRs flexibility and adaptability which constantly undergoes change in response to the environment and other strategic challenges.

The Metrics of Recruiting

1)

Sourcing

These are any costs that you incur to source for candidates, which may include print ads, online job posting boards, and/or resume banks. Be sure you divide the cost of these sources by the number of positions you are filling, using that source to have a true cost for a specific hire.

2)

Screening

How much time and expense does your administrative staff expend to open, respond, and route resumes to the hiring team? The best way to do this is to figure out an average cost per resume and track how many resumes you receive for each job to be able to calculate the administrative cost per job. How much time does your hiring team / recruiter spend screening through resumes? This may also be an average cost per resume received for the job. If your organization conducts preliminary phone interviews, how many were conducted and how much time was spent by the recruiter to prepare, conduct, summarize and communicate the results of those interviews? Do you have an automated applicant tracking program?

3)

Interviewing

Did your hiring team or the interviewee incur any travel expenses that were reimbursed by the company? How much time was spent scheduling interviews? How many staff members were involved in the interviews? How long per interview? How many interviews? What is the average cost of the interviewers time?

4)

Hiring

How much time and what was the cost for follow-up with candidates during negotiations and to notify those that were not hired? What was the cost of referral fees from a recruiting agency or an employee referral? What costs will the company be paying for the new hire to relocate? Some costs may include moving company, airplane tickets, hotel accommodations, temp housing, house hunting visits, assistance with sell/buy, or spouse/dependent assistance. What was the cost for background investigations and/or reference checks? Drug screens?

other measures

1) How long did it take to fill the position from start to hire date? What could you have done to reduce the time to hire and not have impacted the quality of the hire? 2) What was the impact on productivity while the position was left vacant? This is a very difficult calculation to conduct especially depending on the position. However, it does have an impact on the hiring manager and the organization as a whole. If it cant be quantified, at least keep it in mind. 3) How satisfied was the hiring manager / organization with the hire? This assessment can be done following the hiring but should be repeated again 3 6 months after the employee has been on the job to get a real sense of how successful the hire was.