TM - November 2007 - (Page 29)

There is no question sound HR practices can make or break an organization’s success. Open up today’s newspaper, and there is a good chance you will find a story that speaks to human capital management (HCM) having a tangible impact on shareholder value: • The CEO of an electronics retailer credits much of the company’s recent gain in market share to investments in training its salespeople to be consultative. He also credits a compensation model that rewards its front-line associates, not only for sales but the service qualities customers find most important when shopping. • The head of a major airline blames record-high flight cancellations not on weather or equipment problems but on an insufficient number of qualified pilots available to fly its commercial jets. • An elite basketball coach complains that although his team was the most talented, it just did not have the right combination of role players or the collective attitude to make it past the second round of the playoffs. This cost the organization $12 million in lost ticket sales and TV revenue. • Workforce information is scattered. HR decisions often are made in functional silos, which leads to fragmented hiring, training, performance management and compensation processes. Arguments against measurement are less significant these days. Macroeconomic trends such as globalization, tight labor markets and an aging workforce are causing many organizations to more closely scrutinize the performance of their biggest investment: the employees whose pay and benefits represent 60 percent to 70 percent of their expenses. They want to know how individuals and teams deliver on corporate objectives, and they want a greater understanding of the value of HR services such as recruiting, training and performance management. Figure 1: A Business-Centric Approach to HR Measures Identify financial and operational measures that matter to the business. Source: Knowledge Infusion Determine relevant workforce drivers. Develop metrics to drive business performance. Relationships between workforce measures and other key performance indicators such as revenue and profitability always have been there. So, why have organizations only just begun to establish, monitor and manage workforce measures? There have been and continue to be challenges to systematically applying popular measurement disciplines such as the balanced score card to people management: • HR is not traditionally regarded as a source for hard measures. Quantifying the return on all people investments (recruiting, compensation, developing capabilities and directing behavior) is not an easy undertaking. • HR traditionally has been disconnected from the business. HR departments do not understand the business challenges of the very organizations they support — they only can guess what workforce metrics need to be managed. The emergence of mature, enabling technologies offers HR leaders an opportunity to invest in HCM analytics solutions designed to yield the insights needed to make informed decisions about their people. The following six key practices can contribute to a successful HCM analytics solution rollout. T arget Business Issues in Need of Attention HR must understand its internal clients’ business plans and the operational, financial and customerfacing goals they are expected to achieve. Then they can produce lines of sight between those goals and workforce-related metrics (see Figure 1). Economic trends require HR executives to come to the boardroom and offer their opinions on how to better manage the workforce. Visionaries are not waiting for the invitation — they are using metrics talent management magazine www.TalentMgt.com 29 November 2007 http://www.TalentMgt.com

Table of Contents Feed for the Digital Edition of TM - November 2007

Talent Management - November 2007 Editor's Letter Contents Letters to the Editor Human Performance Leading Edge Learning Connections Viewpoint Finding Candidates with the Right Fit Turning HR Data Into Business Intelligence Compensation Technology: Drive Higher Performance, Gain Competitive Advantage The Art and Science of Influence Training the Ethical Workforce Making the Best Managers Application: Pre-Hire Testing Drives Down Employee Turnover at Advnace Auto Parts Dashboard: The Role of Learning Business Process Outsourcing Insight: Nationwide Insurance: On Employees' Side Advertiser's Index Editorial Resources Full Potential

TM - November 2007

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