Infosys’ blog on industry solutions, trends, business process transformation and global implementation in Oracle.

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HR Strategies and KPI

1) Employee Engagement

 

                As we have seen in the previous post, employee engagement, often neglected as a key strategy needs to be focused upon to ensure that the overall motivation of employees stays a high and the organization can march forward towards achieving its strategic goal by improving on this aspect. The key growth strategy that the HR organization's should strive for to improve employee engagement is to involve the employees  right from the business strategy roadmap to process designs that help in achieving the overall growth goals. Treating employees not just as a critical asset but as a critical stakeholder will be the paradigm shift for some traditional companies and this will reap huge benefits. The workforce development initiatives that help to up skill and be competitive in the emerging markets will be a win-win situation for both employee and organization. The cost of hire from market vs rotation of other unit internal resources, the lead time for a hire to be productive vs lead time for cross skilling of internal resource should be measured as the key KPI. The employee engagement rate versus the turnover rate would be the leading (i.e, focused on future state and inputs) and lagging (i.e, generated from past data or output) KPI that can help improve on retention of human capital talent and this can immensely help on talent management costs and workforce deployment costs. Apart from cutting costs that improve the profit of the organization, it is a must to generate some revenue as well, through employee engagement. One such revenue generating initiative that a HR organization can float around  is to encourage innovations and freedom for employees to generate revenue out of their innovative ideas that can then be sold to customers or to markets or to use internally to enhance productivity. The return on such ideas should  be tracked to measure the profits generated. It is must that to improve value-add to the business, a good HR manager should focus more on retaining the top performers rather than blindly measuring a metric that may  result in the retention of the not so good talent and skill sets. This is the key transformation that the HR manager should focus on by assessing the business impact and derive benefits out of the KPI measured.

 

                Infosys suggests that the HR organizations should measure the employee engagement rate as the primary KPI followed by KPI generated out of employee innovation ideas. The lagging KPI of turnover rate is something that can show, how with the result of implementation of employee engagement in different strategic initiatives has started to pay off and improve the overall profit or ROI on the innovative ideas that the organization has started off.

2) Workforce Planning

 

                Any training or development and skill sourcing plan for human capital should be forecasted periodically and assessed with the overall business impact it will bring on the table. There should be frequent connects between various business functions of delivery, HR, Finance, Sales and IT(technology) to optimize on resource utilization, budget control , supply demand  gap assessment and collaboration to add more value to the business. Any KPI that is measured should be focused on the end result or business value-add. the traditional tracking of average hours of training spent by a full time employee or training cost per employee would not be strategically useful and the organizations should focus more on KPIs like the performance improvement % resulted post the employee development programs, % time reduction achieved, return problems rate, Industry certifications achieved etc.

                There is a clear need for any organization to improve the way of workforce planning and as a strategy, the primary focus should be to develop key strategic skills that are on high demand or forecasted to be readily available. The KPI that should be used to measure this strategy should be the %utilization in the key skill developed post such development programs and resultant revenue increase to measure its effectiveness and the strategic decision to continue or drop the investment on particular development program. Infosys suggests that the next key strategy should be to analyze the past data of tickets or work logs and identify the key problem area that needs focus and trigger the necessary development program. The KPI to measure the benefits of such initiatives should be to measure the reduction in return problems rate and %time reduction achieved that can be used for more productive activities that increase the overall return and profit.

 

3) Digital Transformation Initiatives

 

                Being abreast with technology and innovation is the key differentiator for the success of organizations and in line with this, it is a must to utilize the technological capability of digital transformation to its best. The proliferation of off the shelf deployable set of the Internet of Things (IoT) will drive widespread adoption of IoT devices, platforms and related technology by competitors and it is the early adopters who stand the chance to win the game. Strategies that invest in innovations in digital transformation and automation of manual processes that brings work closer to home is a must to deliver more with less cost. The HR organizations should work with the top management to strategize the value adds that help in improving profits for the business. The paradigm shift of measuring output versus effort spent inside the office or work location ,measuring the quantum of value add per effort spent and measuring the productivity improvement versus utilization are some of the key parameters that need to be monitored. The return on investment and profit generated out of each digital transformation initiative is a key while keeping an eye on bringing close the break-even point.

 

                The suggested priority for the strategy to focus on should be to focus on value adds or effectiveness of the efforts spent rather than measuring the physical presence or overall efforts spent. The aim should be to improvise the effectiveness of efforts spent and identify and remove redundant and repetitive efforts that add less value or increase wastage and resultant costs. The key KPI that can help to measure the benefits of the output productivity increase will help the HR organizations to decide on its future strategy planning.

 

 

4) Data Driven Analytics Initiatives

 

                Many organizations find the cost of investment on big data analytics or a BI analytic tool to be an entry barrier to start on data driven analytics journey. The huge benefits reaped by the early adopters and improved analytics functionality delivered in the ready to deploy BI tools are surely motivators for any HR organization to choose wise investments in the right analytic tool.  A strategy to optimize the use of BI tools that are on service oriented architecture is the key to the success of data driven architecture. Continuous innovation to identify the right KPI to track and identify quality of data collected are key to ensure and reap benefits out of data driven strategy. Many organizations already have chief analytics officer (CAO) or chief data officer (CDO) on rolls and HR organizations should collaborate with the CAO office to align and design the HR policies that will reap benefit for the business. Key performance indicators that add value and measure profit from such initiatives are %productivity improvement out of redundant process steps identified, %quality improvement out of automated data loads etc.

 

                The key strategy for the HR organization should to be analyze the historic data and to come up with the key redundant process steps that can be optimized or eliminated totally and measure the key KPI of resultant productivity improvement that adds to the profit of the organization. The next step would be to identify automation for the time consuming manual tasks with automated data uploads and measure their returns that adds to the overall profit.

 

5) HR operations and logistics Initiatives

               

                Traditionally, the concept of HR shared services model is being deployed in many organizations and are now in the verge of being forced to establish their value add and sell a business case to justify the value adds out of cost involved. This has made many HR organizations to transform their HR operations to split into an HR center of excellence that reports outside of HR organization and is many a times clubbed with Finance administration. Even this model is wading out of its cost advantage as there is a pressing need to automate manual tasks and come up with innovative data load automations with minimal workflow for approval mechanism. While it is imperative that there should be a centralized operations team, it is equally important to reduce the cost and identify revenue generation opportunities like outsourcing of some functions like payroll generation, benefits administration or crowd sourcing   background check activities with clearly defined delivery partner responsibilities and adoption of digitization. The key KPI to evaluate the profit generated should be the cost involved versus the % of savings post investment. The break-even generally would take more time but will surely be a value add in long run.

 

                The major concentration for traditional organizations were strategically to improve on HR operations cost and it is now the least priority as this parameter won't add significantly to the overall profit of the organization as HR operations team doesn't constitute even 5% of total human resource strength. However, it is still important to improve on the overall profitability of the HR operations team and try to find out new avenues to sell the capability internally within other departments so that overall value is achieved in line with organization's growth strategy. The first strategic step should be to identify innovative approach and solutions like outsourcing of cost oriented functions like payroll and identify the overall cost of such initiative and then start to evaluate the % savings periodically to assess and improve on the strategy.

 

 

 

References:

 

1) http://www.gallup.com/poll/180404/gallup-daily-employee-engagement.aspx

2)  http://www.gartner.com/newsroom/id/3287617

3) https://www.gartner.com/imagesrv/cio/pdf/cio_agenda_insights_2016.pdf

4) http://images.forbes.com/forbesinsights/StudyPDFs/Insights-CIOTransformationSurvey.pdf

5) Gartner: 100 Data and Analytics Predictions Through 2020 dt: 24 March 2016 | ID: G00301430 Analyst(s): Douglas Laney, Ankush Jain

6) Gartner: IT Score for BI and Analytics dt: 08 July 2016 | ID: G00304066

Analyst(s): Cindi Howson, Alan D. Duncan

 

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