UNIT 02: HRA Frameworks:

HRA Frameworks: Current approaches to measuring HR and reporting

value from HR contributions, Strategic HR Metrics versus
Benchmarking, HR Scorecards & Workforce Scorecards and how they
are different from HR Analytics, HR Maturity Framework: From level 1
to level 5, HR Analytics Frameworks: (a) LAMP framework; (b)
HCM:21 Framework and (c) Talent ship Framework, 5 overarching
components of an effective Analytics framework.
1. Current Approaches to Measuring HR and Reporting
Value from HR Contribution:
Introduction:
HR measures are sometimes talked about in the context of measuring the
contribution of the HR function. An example of such measures might be the staffing
costs of the HR function, recruitment speed, training delivery, management
satisfaction with HR advice and services and so on.
These measures are under the control of members of HR function, however
there are some measures over which the HR function may not have no control,
particularly in an organisation where HR is developed to line managers. For
example: Absence and employee turnover are typical measures in many
organisations.
1.2: Using Scorecards and other Frameworks for
Measurement:
• Considerable attention has been given to the use of scorecards, such as balanced
scorecards (Kaplan and Norton) and later, the HR scorecards (Becker), in linking
people, strategy and performance. These are perhaps the best -known scorecards, but
many different scorecards have been developed over the last decade or so.
• Balanced scorecard translates an organizations vision and strategy into a set of measures
built around four perspectives: Financial, Customer, Internal Business process and
innovation and learning. BSC will not give you strategy , but it will inform you quickly if
the strategy is not working.
• HR Scorecards : Linking people, strategy and performance. The idea was that an
individuals performance improvements would automatically enhance the organizations
performance.
• Such scorecards utilize a range of measures of HR which are viewed as critical to the
success of the business strategy, and which move the process of measurement on from Ad
hoc (necessary) to a strategic and integrated approach.
• Kaplan and Norton widened the perspective on the measurement of business
performance by measuring more than financial performance.
• Their premise is that other factors which leads to financial performance need to be
measured to give a more rounded view of how well the organization is performing.
• This means that measures of business performance are based on measures of
strategy implementation in a range of areas.
• Kaplan and Norton identify three other areas for measurement in addition to
financial measures - customer measures, internal business process measures and
learning and growth measures.
• In each of these areas critical elements need to be identified and then measures
devised to identify current levels and measures progress.
• Some organizations implementing this scorecards have developed the learning
and growth area to include a wider range of HR measures.
• Becker argue that it is important to have a 'measurement system's otherwise, the
HR function cannot show how it adds value and risks being outsourced.
2. HR Metrics:
Human Resource (HR) Metrics are measurements used to determine the value and
effectiveness of HR initiatives, typically including such areas as, turnover, training,
return on human capital, cost of labour, and expenses per employee.
Metrics help compare different data points. For example, if turnover was 5% last
year and is now 7.5%, it has increased by 50%. The former are data points, the latter
is the metrics.
Metric don’t say anything about a cause, they just measures the difference between
the numbers.
Need of HR Metrics:

HR Metrics is needed for following reasons:

1. Technology Makes Fact-Based Decisions Possible
2. Business Process Improvement sets the Trend
3. Globalisation and Mergers Force Managers to shift to Fact-Based Decisions
 HR Metrics Versus HR Analytics :
HR Analytics:
1. Defined as the process of collecting and analysing HR data in order to improve
workforce performance, HR analytics – also known as people analytics, talent
analytics, or workforce analytics – provides organisations with continuous feedback
on how HR initiatives are contributing to their operational goals and strategies.
2.This business intelligence software helps identify patterns and behaviours that
may otherwise stay under an organisation’s radar, focusing on variables to guide
business development decisions.
3. HR analytics provides data-driven insights into what is and isn’t working so that
organisations can make improvements.
4. HR analytics look beyond the numbers to extract crucial information for
organisations to use to their benefit. Without it, companies risk losing sight of the
bigger picture and losing potential business revenue.
5. Questions HR analytics can help answer include:
• What are the patterns in employee turnover?
• What level of performance should I expect from new hires?
• Which employees are likely to leave within the next 6-12 months?
• What salary should be provided for a new job role?
• How much investment is needed to enable employees to be fully
productive?
HR Metrics:
1. HR metrics are specific indicators that allow businesses to measure
performance, efficiency, and the impact of business processes and changes.
2. Metrics are based on measurable, hard data – or numbers – and they tell
you what’s happening since they’re often defined by an objective.
3. HR metrics track activity and report numbers on areas such as:
• Recruitment and onboarding costs
• Training and development
• HR operations
4. While this information is useful, it’s still important to remember that
these metrics give only the basic insights into functional areas.
Benchmarking:
A benchmark is a point of difference by which something can be
measured.
Benchmarking is a process of comparing and measuring one's own
business processes with those of business leaders anywhere in the world
With a view to gaining information and understanding of their methods
and process, and then adopting it in the own organization for improving
performance to a higher level.
Robert C. Camp first coined the term "Benchmarking" in 1980, while
engaged in studying the improvement program at Xerox Corporation,
U.S. A.
According to Camp, "Benchmarking is finding and implementing
best practices in the business ".
Continued,

Example:
• Motorola is one of the companies that successfully implement
benchmark. Motorola have tried to benchmark from Dominos Pizza
and Federal Express in order to improve their delivery process.
Reasons for Benchmarking:
1. Clarity
2. Objectivity
3. Lowering Labour costs
4. Improving Product Quality
5. Immediate Applications
Pitfalls of Benchmarking:
1. Complex
2. Difficult Process
3. Dynamic Concept
4. Cannot Quickly Replace Performance
5. Not a Panacea (solution) for all Quality
6. Time Consuming
 Strategic HR Metrics versus Benchmarking:
Benchmarking Strategic HR Metrics

Emphasises administrative efficiency as performance standard. Emphasises strategic impact as performance standard.

HR function is primarily a cost-centre. HR professional is primarily a strategic partner.

Measures based on dollar equivalents. Measures based on strategic relationships.

Low risk, low return. Higher risk, higher return.

Can rely on current HR competencies. Requires new HR competencies.

Focus on HR activities. Focus on business outcomes relevant to line managers.

Typically can collect data using off-the-shelf software. Often requires customised information technology.

Reconfigures existing data. Requires new measures.

HR owns only HR. HR shares responsibility for human capital performance with line managers.

Requires no understanding of strategy. Irrelevant if not driven by strategy.

Results in HR being managed like a commodity. Results in HR being managed like a unique strategic asset.

HR increasingly marginalised and outsourced to low-cost vendor. HR not easily outsourced because contribution is firm specific and based on
more than cost control.
HR Scorecard:
A strategic HR measurement system called HR Scorecard introduced by Becker,
Huselid and Ulrich represents an important lever that firms can use to design and
deploy a more effective HR strategy.
Most HR scorecards are developed based on the work of Robert Kaplan and David
Norton, who built upon the original “balanced scorecard” theories of Art
Schneiderman.
HR Scorecard measures the HR functions and efficiency in producing employee
behaviours needed to achieve the company's goals.
Goals of HR scorecards:
• Help business to determine value of their HR departments.
• Attempts to provide link between HR Operations and companies business targets.
 HR Scorecard Relationship
HR Activities

Emergent Employee
Behaviours

Strategically Relevant
Organizational outcomes

Organizational
Performance

Active Strategic
Goals
HR Scorecard :
An HR scorecard is defined as a process for assigning financial and
non- financial goals or metrics to the human resource management
related chain of activities required for achieving the company’s strategic
aims and for monitoring results.
HR scorecard aligns HR support with organizational strategy. It
demonstrates HR value contribution in achieving organizational
strategic intent. It helps in strategic alignment of HR functions, by
mapping critical HR supports like performance management systems
and innovation, training and development, etc.
Developing an HR scorecard is not a one time exercise, nor an annual
event. The HR professionals need to be alert and proactive towards the
business changes.
Scorecards are Different from HR Analytics:
Analytics is indeed something that represents Next Generation business practices.
Also the HR scorecard represents how the performance of employees and the HR
Function, as well as the larger organisation, can be optimised and be made more
efficient through data –driven measures of performance and analysis using
advanced forms of forecasting and analysis.
HR Scorecard typically is used to generate ROI or Return On Investment of
Human Resources wherein financial and operational measures are gathered and
reported related to specific employee performance and how well such measures fit
in with the broader organisational imperatives.
Analytics on the other hand, can be used in any organisational function to derive
the Cost-Benefit analysis of various organisational initiatives.
Further, Data and Business Analytic tools can be used to arrive at
prognostications (predictions) about the future using large datasets and trends.
CONTINUED,
HR scorecard measures of employee performance and how specific employees
have justified the costs incurred on them with the derived benefits from their
performance.
Thus, it is indeed the case that specific employees and their performance can be
quantified and reported on the HR scorecard using financial and operational
measures.
Analytics using Big Data and Artificial Intelligence can be used to arrive at
granular methods of data and business analytics. In other words, while the HR
scorecard can be used to generate and report the financial and operational
measures, the data and business analytics can be used in such reporting of
measures by preparing the necessary measures of performance in a highly granular
and sophisticated manner.
Thus, while the HR scorecard is a reporting tool, the Analytics tool is a data
gathering and analysis tool that can be used to discern trends and the Big picture.
These both tools can be used to both report and forecast measures of employee
performance and broader organisational performance.
Practical Applications of HR Scorecard:

Various practical applications of HR Scorecard are as follows:

1) Hiring Effectiveness
2) Turnover
3) Training Outcomes
4) Benefit Costs
The Workforce Scorecard:
Mark Huselid, Brain Becker and Richard Beatty, introduced this measure.
They believed that companies needed business strategy, a strategy for the HR
function, but also a workforce strategy.
The term “Workforce” focuses on the strategic performance of employees.
The workforce scorecard is intended to provide the CEO and executive team
members with timely and strategically relevant measures of workforce performance
and the leading indicators of that performance.
Workforce scorecard is a key value-creating link between the balanced scorecard
and the HR scorecard.
Workforce scorecards are important to any company as they can be used in almost
every department.
Implementing the Workforce Scorecard:
The successful implementation of the workforce scorecard is based, on according to
Huselid, Becker, and Beatty, on three challenges:
1) Perspective Challenge: Do all our managers understand how workforce
capabilities and behaviours drive strategy execution?
2) Metric Challenge: Have we identified the right measures pf workforce success,
leadership, workforce behaviour, workforce competencies, and workforce
culture and mind set?
3) Execution Challenge: Do our managers have the access, capability monitor
progress towards strategy execution?
The steps for practical implementation of the workforce scorecard within an
organisation:
Step 1: The development of a clear statement of the company's business strategies
and the strategic capabilities needed to execute the strategies.
Step 2: Identification of key jobs or “A” Positions as well as “A” Performance that
will be required within these positions to execute the company's strategy
successfully. This could be, jobs in R &D Manufacturing, Marketing, etc.
Step 3: Company's HRM system must elicit the needed competencies and types of
behaviour from the workforce that ultimately drive the company's success.
HR Analytics Framework:
The framework of analytics gives an idea about how analytics way of work is done.
It includes the connections between data inputs and outputs which are different with
other organisations.
The LAMP Framework:
Logic
Competitive advantage, talent points

Process effective HR Analytics Valid questions

knowledge management Metrics and results

Measure quality data

Logic ( What are the Vital Connection):
Without a proper logic, it is impossible to know where to look for insights. The logic
element of any measurement system provides the” story” behind the connections
between the numbers and the effects and outcomes.
In the field of human resources, there are many logical frameworks, including
salary structures, workforce –planning models, and even labour contracts. All are
useful, but they are not sufficient to connect decisions about investments in HR
programmes to strategic outcomes. In contrast, some authors have proposed a
“service –value-profit” framework for the customer –facing process. This
framework calls attention to the connections between HR and management
practices, which in turn, affect employee attitudes, engagement, and turnover which
in turn affects the experience of customers. This in turn customer – buying
behaviour , which in turn affects sales, which in turn affects profits.
Measures (Getting the numbers Right):
The measures part of the LAMP model has received the greatest attention in HR. Much
time and attention is paid to enhancing the quality of HR measures, based on criteria such as
timeliness, completeness, reliability and consistency. These are certainly important
standards, but lacking a context, they can be pursued well beyond their optimum levels or
they can be applied to areas where they have little consequences.
There are many ways to make HR measures more reliable and precise. An exclusive focus
on measurement quality can produce a brighter light shining where the keys are not.
Measures requires investment, which could be directed where it has the greatest return, not
just where improvement is most feasible. Organisations routinely pay greater attention to
some elements of their materials inventory more than others. Indeed, a well –known
principle is the “80-20 rule” that suggests that 80 percent of the important variation in
inventory costs or quality is often driven by 20 percent of the inventory items. Thus,
although organisations indeed track 100 percent of their inventory items, they measure the
vital 20 percent with greater precision, more frequently and with greater accountability for
key decision-making.
Analytics ( Finding Answers in the Data):
Analytics is about drawing the right conclusions from data. It includes statistics and
research design, and it then goes beyond them to include skill in identifying and
articulating key issues, gathering and using appropriate data within and outside the
HR function, setting the appropriate balance between statistical rigour and practical
relevance, and building analytical competencies throughout the organisation.
Analytics transforms HR logic and measures into rigorous, relevant insights.
Analytics often connect the logical framework to the “science related to talent
and organisations, which is an important element of a mature decision science.
Advanced analytics are often the domain of specialists in statistics, psychology,
economics, and other disciplines. To augment their own analytical capability, HR
organisations often draw upon experts in these fields and internal analytical groups
in areas such as marketing and consumer research.
Process (Making Insights Motivating and Actionable):
The final element of the LAMP framework is process. Measurement affects
decisions and behaviours, and those occur within a complex web of social
structures, knowledge frame and organisational cultural norms. Therefore effective
measurement systems must fit within a change-management process that reflects
principles of learning and knowledge transfer. HR measures and the logic that
supports them are part of an influence process.
The initial step in effective measurement is to get managers to accept that HR
analysis is possible and informative. The way to make that happens is not
necessarily to present the most sophisticated analysis. The best approach may be to
present relatively simple measures and analyses that match the mental models that
managers already use.
HR Maturity Framework : From 1 to Level 5

Levels of HR Maturity: Level 5 Change

Optimising management
Continuously improving
Level 4 Capability practices
Predictable management
Measured and empowered
Level 3 Competency
practices
Defined management
Competency- based
Level 2 People practices
Managed management

Level 1 Inconsistent Repeatable

Initial management practices

People Capability Maturity Model

Level 1 (Initial – Inconsistent Management):

At this basic level, organisations characterised by ad hoc and inconsistent work

processes and the work personnel resort to cutting corners in a rush to meet
deadlines resulting in poor quality, delays and cost blowout. ‘A fundamental premise
of the process maturity framework is that a practice cannot be improved if it cannot
be repeated’.
Due to the immaturity of the organisation, people struggle to repeat successful
work practices and meet delivery deadlines as goalposts keep changing. In this
environment, people routinely deflect responsibility and become emotionally
drained and detached. Managers either ignore or are ill- equipped to deal with HR
issues leading to high employee turnover and low morale.
Level 2 ( Managed – People Management):

In order to escape from inconsistent and unproductive work practices, organisations

must establish a stable work environment. ‘The primary objective of a Level 2
environment is to enable people to repeat practices they have used successfully. To
enable this repeatability , management get control of commitments and baselines’.
The top management needs to show firm commitment to learning and
development activities in order to continuously improve the knowledge , skills
motivation and performance of its workforce. By providing continuous performance
feedback, they need to ensure that team members have the necessity skills and
resources to carry out their work and keep their knowledge up-to-date.
Level 3 ( Defined- Competency Management):

At this level, organisations are able to identify competency-based best practices that
most suit the organisational environment and incorporate them as everyday work
practices. “ These practices are documented and integrated into a common process
in which the entire organisation is then trained;, leading to a professional culture.
The workforce capabilities should clearly align with business objectives leading to a
distinct competitive advantage.
At this level, an organisation- wide framework of a strategic workforce plan
and workforce competencies established. “When the organisation achieves maturity
Level 3, the conditions required for empowerment- competent people, effective
process, and a participatory environment – are established’.
Level 4 ( Predictable – Capability Management):
Once the work processes are established and institutionalised, the organisations
acquire the necessary capability to predict and effectively manage its future
performance. Where deviation occur, ; the cause needs to be determined and
corrective action taken if necessary when the organisation can characterise the
performance of its processes quantitatively, it has profound knowledge that can be
used to improve them’.
‘The quantitative management capabilities implemented at Maturity Level
4 provide management with better input for strategic decisions, while encouraging
delegation of operational details to people close to the processes’.
Level 5 ( Optimising – Change Management):

At this highest level of maturity, the work processes and practices undergo
continuous environment to effectively meet the challenges of constantly changing
environment. ‘Managing technological and process change become standard
organisational processes and process of improvement throughout the organisation
becomes perpetual’. People are empowered to engage continuous improvement.
At this level, change management becomes integral and routine part of
organisational life. ‘At maturity Level 5, individuals are encouraged to make
continuous improvements to their personal work processes by analysing their work
and making necessary process enhancements. The organisation also need to ensure
that best practices are shared and implemented across the entire organisational
network rather than being isolated to just some parts.
HCM: 21 Framework:
The Human Capital Management framework for the twenty –first century (HCM - 21) consists of
following four phases:
1) Scanning: All the external market forces and internal organisational factors are listed in terms of
how they might affect the organisations human, and relational capital. Additionally , the
interdependencies and interactions across these three forms of capital are recognised and
accounted for. This is the Critical, often ignored, point.
2) Planning: Workforce planning is reconstituted as capability development. The industrial era, gap-
analysis, structure-focused model is replaced with an agile system focused on building
sustainable human capability rather than finding positions; in fact many of those older positions
will be restructured or eliminated.
3) Producing: Human resources services are studied as processes with inputs, throughputs, and
outputs. Statistical analysis is applied to uncover the most cost-effective combination of inputs
and throughputs to drive desired outputs.
4) Predicting: A three-point measurement system is designed to include strategic, operational, and
leading indicators. The causal and correlational aspects of the three points are used to tell a
comprehensive story.
Talentship Framework:
Finance Marketing Talentship

Lifetime Sustainable
Profits Profits strategic
success
Customer
Margin Impact
Value
Target Organisation
Sales (Segments) and Talent
Asset Effectiveness
Response
Productivity
Mix Programmes
Assets and practices
(Four P’s)
Leverage Spend Efficiency

Equity Investments Investments

Finance, Marketing and Talentship Framework

5 Overarching Components of an Effective Analysis
Framework:
1) Tools
2) Patterns
3) Model Forms
4) Techniques and Skills
5) Categorisation
THANK YOU