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1、Human Resources ManagementWhat Metrics Should You Be Using to Rate Your Effectiveness?,Bob KellerVice President,Compensation&BenefitsNorwood Promotional Products,Inc.2006 Indiana State Human Resources ConferenceAugust 29,2006,2,Agenda,A seat at the tableMetrics will help get you there Key HR Metrics
2、How to Use Metrics Effectively Top Ten Recommended Metrics,3,1.A seat at the table,Long term HR objectiveThe objective of every HR professionalHow do you accomplish this?,4,Answer,Through speaking the language of businessFinancial LanguageQuantitativeQualitative,to support your pointsBusiness Proces
3、s LanguageUnique to your business and industry,5,HR is usually quality focused,We often speak in quality termsCant measure in dollar termsOr difficult to quantify,6,My premise:,Until you speak in financial and business process terms you will never have an equal seat at the table HR will only be cons
4、idered tactical and administrativeYou wont have senior managements true respectBe strategic!,7,2.Metrics will help you get there,What are your strategic objectives?ProductivityCost managementCustomer satisfactionEmployee Satisfaction Others Develop metrics/measures that quantify goals and sell their
5、 accomplishmentsThis is beyond your department budget,8,3.What are the Key HR Metrics?Principles:,No cookie cutter approachAnalyze your company key driversAnalyze your business and industryGet to know your sr.executives needs and focusSet your priorities,agenda to match business needsCosts/savings a
6、re kingLess(metrics)is morePerformance improvement on all key organizational drivers,9,Metric Categories to Explore,CompensationBenefitsEmployment Turnover/AbsenteeismTraining and Organization DevelopmentWorkers CompensationEmployee Attitude SurveysLabor Contracts HR Department costsRevenues per FTE
7、,10,1.Compensation,What is your Average Hourly Rate(AHR)?Total company,individual plantsWhat is your average annual Salary?Exempts,non-exemptsWhat is your annual payroll?Average annual base pay per employee?Merit pay increase percentHourly,non-exempt,salaried,executiveIncentive compensation programs
8、,11,Why Important,Comparison to product&people competitorsComparison within your industry&communityComparisons between plantsGlobal competitor costsCost management,12,Example-Implications,Your plant/company AHR:$15Community AHR$14Key people competitor AHR$16Key products competitor AHR$13.50Global pr
9、oduct competitor AHR$3.00What potential impact will your situation have on the business?,13,2.Benefits,Medical Plan Cost Company paid portion per employeeTotal cost per employee Total employee population Other Plans:Dental,STD,LTD,Pension,etc.Government mandated benefitsTotal plans costPer employeeA
10、s a percent of company-wide average base pay,14,Why Important,Second largest company expenditure Comparison to product&people competitors CompetitivenessAttract and retain employeesCosts the company can/cannot afford,15,Example 1 Cost trend success,Percentage Change in Costs 2002-6Cost decrease to c
11、ompany-11%Cost increase to employees+30%Cost increase total Company&ees+25%National medical cost increase+68%Company costStarting cost$13.5 millionCurrent cost$11.9 millionAnnual cost savings$1.6 million,16,Example 2 Vs.National Average,Medical Plan cost per employee$6,114National Average(Manufactur
12、ing)$7,279Annual savings(Company 2,500 ees)$3 millionCompany annual savings at 75%cost$2.25 million,17,Example Single Page Cost Summary,18,3.Employment,Cost per hireInternal staffing departmentRequisition management,internet,agencies,open houses,campus Applicant tracking system,reportsIT overhead,te
13、lecom,other overhead burdensReference checkingExecutive search Responsiveness/EfficiencyResponse time Time-to-fillHire ratios Hit Ratio offers accepted vs.offers madeQualitativeAfter one year working for the companyAfter five yearsShould be part of annual Talent Assessment Review Process(Session“C”)
14、,19,Why Important,Significant company-wide expenseInternal function vs.agencies or outsourcing CostInternal customer satisfactionEfficiencyEffectivenessInternal talent developmentCost effectiveness,20,Example Employment Costs,21,4.Turnover/Absenteeism,Annual turnover ratesVoluntary,involuntaryCoding
15、(reasons)Complete financial cost of turnoverCost to train,recruit,declining productivity of incumbent,unfilled position overtime or contract labor,unemployment compensation,new hire training and learning curve of new hireAbsenteeism percentage rateSimilar additional cost to the businessDo the math w
16、ith your management to get buy-in,22,Why Important,Obvious costs of replacementTurnover-permanent employeesAbsenteeism temporary,overtime or lost productionHuge hidden costs for both,23,Example Turnover Costs,24,5.Training&Organization Development,Training(vs.educating)expendituresCost per unit of t
17、raining deliveredChange in behavior and performanceImpact financial results or outcomes(ROI)OD&Succession PlanningInternal candidates filling openingsEmployee Attitude ratings Viable individual development plans,25,Why Important,Training,OD perceived as difficult to quantifyTraining one of the first
18、 budget items to be eliminated during downturnsMust be very specific to defendSell the expected financial impact,then measure,26,Examples,Sales training increased revenues per sales repHourly workers increased efficiency Managers improved leadership,higher employee satisfaction,less turnover,increas
19、ed efficiency Generic savings:Decrease in turnover,recruitment,new hire training and learning curve factors,27,6.Workers Compensation,Cost per employee Total company-wide costs Savings won in contested casesReduced reserves through investigationOSHA DART*ratesImportance of trends*Days away from work
20、,on restriction or job transfer,28,Why Important,Multi-million dollar annual expenseSecond largest HR expenditure categoryLost cost reduction opportunity if sites dont focus on it,29,Example Workers Compensation,30,7.Employee Attitude Surveys,Employee satisfaction versusNational/industry/vendors med
21、iansWorld class(75th percentile)companiesPrior yearsSorted byCompany locationDepartments in each location,31,Why Important,Employee satisfaction correlates to customer satisfactionCustomer satisfaction correlates to salesAdditional financial correlations to turnover and absenteeism,32,8.Labor Contra
22、cts,Increase/decrease in hourly AHR Cost savings/cost avoidance achievedCompensationBenefitsManufacturing efficiency,33,9.HR Department Costs,Total HR costs per FTETrue HR costs,not non-HR costs thrown into HR budgetAnnual admin.cost of each outsourced HR programHR Costs as%of total Manpower Expense
23、Number of employees per HR headAnnual admin.cost of each outsourced HR programBenchmark to national/industry/similarly sized companiesHR Costs:include/exclude mandated government benefits,34,Why Important,Knowing your costs and how you compare gives you opportunity for“continuous improvement”Communi
24、cates the value of HR compared to competition and the external world in an objective and“financial”manner,35,Example Total HR Costs:,36,10.Revenues per FTE,Revenues per FTE of your companyHistorical trendVersus other companies in your industryVersus customer satisfaction trends,37,Why Important,Esta
25、blishes HR as a strategic partnerHelps control staffing levelsEven in prosperous timesAppropriate organization design(flatter)Eliminates need for many layoffsEfficient companies are more profitable companies,38,Example Revenues per FTE,39,SummaryTop Ten HR Metric Categories,CompensationBenefitsEmplo
26、yment Turnover/AbsenteeismTraining and Organization Development Workers CompensationEmployee Attitude SurveysLabor Contracts HR Dept costsRevenues per FTE,40,SummaryTop Ten Recommended HR Metrics,CompensationAverage hourly rate(AHR);average annual salaryBenefitsCompany paid portion of medical plan c
27、osts;of all benefit plan costs EmploymentCost per hire;response timeTurnover/AbsenteeismComplete cost of turnover per hourly/salaried employeeComplete cost of absenteeism per hourly/salaried employeeTraining and Organization DevelopmentPositive financial impact per delivered training unit Workers Co
28、mpensationWorkers Compensation costsEmployee Attitude SurveysEmployee satisfaction versus median and 75th percentile companiesLabor Contracts Change in average hourly rate(AHR),other cost savings/avoidanceHR Dept costsHR expense as%of total Manpower expense(do the same for other functions as well)Re
29、venues per FTERevenues per FTE,41,SummaryTop Ten Recommended HR Metrics,CompensationAverage hourly rate(AHR);average annual salaryBenefitsCompany paid portion of medical plan costs;of all benefit plan costs EmploymentCost per hire;response timeTurnover/AbsenteeismComplete cost of turnover per hourly
30、/salaried employeeComplete cost of absenteeism per hourly/salaried employeeTraining and Organization DevelopmentPositive financial impact per delivered training unit,42,SummaryTop Ten Recommended HR Metrics,6.Workers CompensationWorkers Compensation costs7.Employee Attitude SurveysEmployee satisfact
31、ion versus median and 75th percentile companies8.Labor Contracts Change in average hourly rate(AHR),other cost savings/avoidance9.HR Dept costsHR expense as%of total Manpower expense(do the same for other functions as well)10.Revenues per FTERevenues per FTE,43,Top Ten Recommended HR MetricsPrioriti
32、zed,Revenues per FTERevenues per FTEHR Dept costsHR expense as%of total Manpower expense(do the same for other functions as well)EmploymentCost per hire;response timeCompensationAverage hourly rate(AHR);average annual salaryBenefitsCompany paid portion of medical plan costs;of all benefit plan costs
33、 Workers CompensationWorkers Compensation costsTraining and Organization DevelopmentPositive financial impact per delivered training unit%of internal applicants filling promotional opportunities Turnover/AbsenteeismComplete cost of turnover per hourly/salaried employeeComplete cost of absenteeism pe
34、r hourly/salaried employeeEmployee Attitude SurveysEmployee satisfaction versus median and 75th percentile companiesLabor Contracts Change in average hourly rate(AHR),other cost savings/avoidance,44,SummaryHow to Successfully Use Them,1.Choose the metrics most important to your company-Select a few
35、to start-The 20%that drives the 80%(most)value-Make sure your numbers are accurate2.Use them as your HR metrics in Quarterly Business Meetings with Senior Management3.Compare to appropriate benchmarks both internally and externally4.Use Continuous Improvement,45,Suggested ReadingHR Metrics,How to Me
36、asure Human Resources ManagementJac Fitz-enz,Saratoga Institute,McGraw HillBenchmarking,The Search for Industry Best Practices that Lead to Superior PerformanceRobert C.Camp,Xerox,Quality PressSHRM Customized Human Capital Benchmarking Service,46,Suggested ReadingFinance,The McGraw-Hill 36-Hour Cour
37、se for Non-Financial ManagersRobert A.Cooke,McGraw Hill Understanding Balance SheetsGeorge T.Friedlob,WileyFinance for Strategic Decision-MakingM.P.Narayanan,Jossey-Bass,47,Suggested Self Development Course to Attend,Financial Management for Non-Finance ManagersAny Universitys School of Business,48,
38、Norwood Promotional Products,Inc.,Premier supplier of customized products and business solutions Headquartered in IndianapolisPens,mugs,KooziesTM,caps,magnets,canvass bags,marble&crystal awards,personalized calendars,etc.Purchase through distributorsAsk for our products by name“Positive Norwood Experience”,
