Developing a HR measurement system


Identifying HR Deliverables

There are two HR deliverables in this example. The first is stable, high talent staffing in the R&D function. This deliverable has several dimensions. For one thing, the R&D staff must have the unique competencies as defined by say a Hi Tech firm and must demonstrate those competencies at the highest level. These competencies combine cutting-edge technical knowledge with the specialized product demands defined by the Hi Tech. Thus they are not influenced by in-house professional-development efforts. Moreover, because these competencies are specific to Hi Tech and require several years of firm experience to develop, the company must keep its R&D staffing turnover very low.

The second HR deliverable is optimal staffing levels in the manufacturing unit. Both of these deliverables have clear implications for Hi Tech’s overall performance. One contributes to revenue growth, while the other influences growth.

High-Performance Work System

Once the HR deliverables have been clearly defined, we can begin identify and measure the foundational High-Performance Work System (HPWS) elements that help to generate those deliverables. We term these elements a HPWS to represent the fact that they have been selected specifically with the intent of implementing strategy though HR deliverables. In the case of Hi Tech, this means designing and implementing a validated competency model linked to every element in the HR system, and providing regular performance appraisals to all employees. There are variety of ways that this data can be represented. The most common approach is to present the proportion of achievement on each element, although it is also possible to indicate whether or not each element is either up to standard or below standard with a toggle indicating red (below standard), Yellow (marginal), or green(meets standard).

Identifying HR System Alignment

What HR system elements need to reinforce one another so as to produce the two HR deliverables? In the case of stable, high-talent staffing in R&D, we can assume that the firm has developed a validated competency model. At Hi Tech, selection into these positions must correspond to the existing competency model, and the quality of the hires should be at the highest levels. These alignment goals would strongly influence the particular sourcing decisions needed to produce those results. However, the sourcing decisions do not have to be part of the HR Scorecard. The assumption is that since you are measuring the outcomes of those sourcing decisions and since “what gets measured gets managed� then sourcing decision will be guided by the need to achieve these outcome goals.

Hi Tech also needs to enact the kinds of retention policies that build experience in the R&D unit. Note, though, that understanding that retention policies are a key leading indicator is more important than the actual selection of policies, which are unique to each firm. At Hi Tech, a carefully chosen range of HR activities and policies, from supervisory training to unique benefit packages, might be in order. The key thing is that seemingly irrelevant HR “doables� have a clear strategic rationale.

To achieve optimal staffing in manufacturing, HR must keep its recruiting cycle time short. The appropriate alignment measure can be a fourteen-day recruiting cycle time which would reflect progress toward that objectives.

Identifying HR Efficiency Measures

A Hi Tech firm must be able to identify cost per hire as a strategic efficiency measure. For both deliverables, cost per hire will probably be higher than average. But, the benefits of those hiring processes will also be well above average. The HR Scorecard that Hi Tech develops should highlight these links between important costs and benefits.

Of course, an HR Scorecard for the entire company would include many more entries. More important, the scorecard is presented in such a way that it reinforces the “casual logic� or strategy map of how HR creates value at the Hi tech company.

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