HR Norge – ‘HR Analyser’ – 4th June 2014

‘Analysing HR’s value’

Paul Kearns

ChairIHRM

www.hrmaturity.com

“… everyone rushes out to do everything and produces a huge amount of information that isn’t very useful. We stopped doing a lot of data reporting because it was meaningless. We were creating reports that no one read.”

“The temptation can be to develop a swathe of reports based on information that is easily accessible, but this sort of information can be of limited value and the volume of it can overwhelm and turn off business users.”

“HR for HR’s purpose as opposed to business purpose. ….HR is about supporting the organisation to be better, and the purpose of the organisation is inevitably to hit business metrics.”

http://www.hrmagazine.co.uk/hr/features/1144056/hr-add-value-analytics

HR’s value is determined by the level of organizational maturity

What is HR’s Value?

Value is the provision of a product or service that satisfies a human (societal) need: from cans of beans to treatments for disease.

Added Value means : -

• Providing more of these products/services (more beans, more treatments) per $

• Reducing the cost of these product/services• Achieving a higher price (more revenue) for them• Improving their quality (nicer beans, more effective

treatment)©Paul Kearns 2014

SOCIETALVALUE

Professional Standards

Better

‘Scientific’ Analysis

Evidence-Based

Measures & Indicators

A Professional Measurement Framework

©Paul Kearns 2014

“Some years ago a senior executive in charge of talent management ….called me to request my help as she set about, at the request of her CEO, to design a program for the bank’s “high potential” people.

‘Why did she need a program?’ I asked. Was there evidence that the bank was losing more talented people than in the past, or more than its competitors - in other words, was there any evidence of a problem?

That’s the state of play in human resources today - mindless imitation of what others are doing, little to no systematic evaluation of the effectiveness of management practices and programs, infrequent data-driven diagnoses of the problems HR is expected to address - in short, little of the professionalism now almost taken for granted in medicine, to take just one example.” Foreword by Professor Jeffrey Pfeffer

Evidence-Based HR/Management

International ‘HR standards’ – SHRM/ANSI/ISO TC260

or ‘Investor metrics?’

Measure HR activities?

Norway is one of 23 participating countries

UK - CIPD/BSI – Attempting to set human capital standards

Ask questions

Do background research

Construct hypothesis

Test with experiment

Analyse results:draw conclusion

Report results

Think!Try again

Hypothesis is trueHypothesis is false

or partially true

HR must adopt aScientific Method

• Why measure? (Management of standards, compliance, value and added value)

• What to measure? (Regulations, minimum standards, added value)

• How to measure?

• Who should measure?

• What to report?

Intelligent Measurement – simple rules

Measurement - principles and language

It’s not so much about ….. But more about …

Data Evidence

Information Decision-making

Analytics Analysis

Correlation Causation

Metrics Measures

Numbers Indicators/contraindicators

Historical Predictive

Performance Value

©Paul Kearns 2014

• Why measure cost? – should it go up or down?• What to measure ? (1) – should it be the quality

of the person we hire?• What to measure? (2) – or should it be how they

are performing?• What to measure? (3) – or maybe how well they

are integrated and managed?• How to measure? – do we measure past

performance or predict future performance?• What to report? – the value of human capital

Is ANSI ‘Cost per hire’ (47 pages) a good ‘metric’?

Stage 2Good ProfessionalPractice

Stage 3Effective Management

Stage 4Human Capital becomes integral to business operations

Stage 5Transition: operationalto strategic focus

Stage 1PersonnelAdministration

Board & Executives resistant to measuring human capital

value

Stage 6Organisation becomes a whole system

Stage 0No ConsciousPeopleManagement

©Paul Kearns/IHRM

STRATEGICREACTIVE

HR Maturity Analysis

http://www.hrmaturity.com/a-simple-introduction-to-the-maturity-scale/

Six Stages of mature HR measurement – ‘Hiring’

• Stage 0 – Vacancies filled• Stage 1 – Cost per hire/Time to hire• Stage 2 – Suitability & Quality of hires • Stage 3 – Performance of hires in position/team• Stage 4 – Level of integration into processes/structure• Stage 5 – How hires are developing/progressing• Stage 6 – Whether hires are reinforcing whole system?

So where is HR analysis today?

“Incorporating ESG and human capital into company analysis and

valuation”

www.omratings.com

Stage 6 = AAA