Using HR Measurement to Improve Performance

1. Using HR Measurement to Improve Performance Presented by Ruth Wright Associate Director, Leadership and Human Resources Research OMHRA Spring Workshop April 6, 2011

2. Overview • Aligning HR and organization strategy • Organizational and HR Priorities • External and internal threats and opportunities • Strategic workforce planning • Measuring HR Value • Talent Management as an organizing framework • Level of insight

3. Overview continued • Some trends and measures • HR organizational metrics • Acquiring talent • Developing people • Leading and managing • Engaging the workforce • Rewards

4. Human Resources Trends & Metrics

5. Profile of Respondents • Sample size: 167 • Private Sector: 58% • Highly Unionized • Average age: 42 • Over age 45: 45% • Survey closed Jan. 09

6. Aligning HR and Organizational Strategy

7. Why the Pressure to Measure? • Organizations are paying more attention to performance management • Firm expenditures on people rising • there is more pressure to account for results • HR needs evidence to support strategy-related recommendations and investments

8. Where Should HR Focus its Measurement Efforts? • What really matters? • An efficient HR organization • affects about 1% of organizational costs • Well-designed HR interventions • are we pulling the right levers? • Leveraging people to achieve organizational goals • how can we enhance human capability to drive results?

9. Measuring What Matters Consider Four Strategy Types Source: Ed Lawler 111, Talent Bureaucratic - Top-down hierarchical structure Low Cost - Low wages, focus on cost and control High involvement - Knowledge intensive, participative, flat structure - High commitment to employee development and careers Global • Interesting work, hire best talent - Low commitment to development and careers

10. Strategic Workforce Planning

11. Strategic Workforce Planning • A process that connects HR strategy and practices to business strategy to ensure the company has the right people in the right place at the right time and at the right cost. www.conferenceboard.ca

12. Where Does Your Company Face Human Capital Risks? • Loss of key personnel • Aging workforce, downsizing, low engagement, inhospitable cultures • Skills shortages • Internal and external talent supply • rapid technological change and business transformation • Intransigent unions, change adverse cultures • Underinvestment in building workforce capacity • Succession issues • Underdeveloped leadership pipeline • Age compression at senior management and executive levels Human Capital Risk Leads to Business Risk

13. How significant is each of the following types of HC risk to your company’s business performance? Mary Young, The Conference Board Inc.

14. Thinking About Human Capital Risk

15. Today… Unemployment hovers below 8% Labour force growth healthy Persistent skills shortages In 3-5 years… LF growth shrinks, unemployment below 6% Retirements outpace growth Extreme skills shortages Threats on the Horizon

16. Unemployment Rate vs. Natural Rate (percent), 1981-2015 Unemployment Rate Natural rate Sources: The Conference Board of Canada; Statistics Canada.

17. LabourForce Growth(average annual growth) Source: The Conference Board of Canada

18. Challenges Recruiting Quality Candidates

19. Canadian Workforce is Aging • Average age of government sample is 43 • 44 in education and health • Nearly half are over age 45 • 12% of education and health sample eligible to retire, 6% of government sample • Less than 2% expected to go?? • Are demographers wrong?

20. Mixed Performance in Developing Diverse Talent • Half of sample track new hires • One quarter track promotions • One fifth track the applicant pool • 13% track learning and development • 4% track grievances/complaints • Only women were represented in executive ranks (20%) • Less than half the sample reported on representation of Aboriginal peoples, people with disabilities and visible minorities

21. Today… Growth in some areas, contraction in others Persistent skills shortages Pressure on costs In 3-5 years… Retirements escalate? Extreme skills shortages? Structural changes? Threats in the Municipal Context?

22. Organizational and HR Priorities

23. Top Human Capital Challenges(public sector) • Aging workforce • Attracting and recruiting employees • Leadership capacity • Retaining employees • Skills shortages

24. Strategic Human Resource Priorities (public sector) • Succession management • Management/leadership development • Strategic workforce planning • Knowledge transfer and management • Employee engagement • Career planning and pathing

25. Most Critical HR Priorities forGlobal Executives • Managing talent • Talent pools, effective staffing of leadership positions • Improving leadership development • Corporate capabilities have declined • Strategic workforce planning • Current capabilities rated as low • Employee engagement • Concern about aftermath of recession • Improving employer branding Source: Boston Consulting Group. Creating People Advantage 2010, September 2010

26. ValuingTalent

27. TalentManagement as an Organizing Framework What is Talent Management? …a comprehensive and dynamic process of building the talent pool through the development of aligned and integrated processes, practices and shared accountabilities by leaders around the human resource fundamentals of attraction, selection, development and retention of talent. Source: The Conference Board of Canada

28. Talent Management... • Begins with defining the “business”…no matter whether that is serving the public or manufacturing automobiles • Then creating and aligning the organization’s strategic human resource plan and all people-related practices to the strategic direction of the business

29. Organizational Effects of Talent Management TALENT MANAGEMENT STRATEGIES & PROCESSES • Business Strategy & Plan • People Strategies • Talent Management Components / Processes BETTER TALENT • Human resource • Talent Management ORGANIZATIONAL SUCCESS e.g., high retention of top performers • Acquire • Develop • Lead and manage • Engage • Reward e.g., high innovation

30. Talent Management Framework • Talent Management Processes: • Acquire • Engage • Reward • Lead and Manage • Develop Engage Acquire Reward PEOPLE ASSETS Lead & Manage Develop

31. “What is the level and quality of HR practices produced from the resources (time and money) spent?” Efficiency “What is the relationship between our HR practices and the quality of our people?” These metrics should chart changes in employees’ ability, opportunity, motivation, and performance. Effectiveness “What is the relationship between the changes in the quality of the employees and our competitive success?” Impact Categories of People Measures Source: John Boudreau and Pete Ramstad, HC BRidge™

32. Changes from 2005 Survey • Use of measures more sophisticated • Using broader range of metrics • More focus on segmenting talent • Higher “N’s” • More robust leadership/talent pipeline • Emergence of new HR function • Strategic workforce planning, measurement and analytics

33. Metrics’ Maturity Over Time • Efficiency level measures are a natural starting point • Most HR organizations can track demographics and cost-related variables • Measurement efforts progress and mature over time • Not for the faint of heart • Commitment required • May not make sense in some contexts

34. Summary • Public sector faces paradox of constraint and innovation • Private sector learned from mistakes of previous recessions—can public sector? • Breathing room now but labour market will tighten. Skills shortages never went away. • Focus on building workforce of tomorrow • Capabilities • Culture

35. Contact Me Ruth Wright Associate Director, Leadership and Human Resources Research The Conference Board of Canada, 255 Smyth Road, Ottawa, ON K1H 8M7 Tel. (613) 526-3090 x369 Fax (613) 526-5359  wright@conferenceboard.ca www.conferenceboard.ca