From your friends at the U.S. Department o= f the Interior

Your MWA Board Members:

President

Noel Hannon

Directors at Large

Paul Belliveau, SPHR

Joanne Bintliff-Ritchie

Membership

Marsha Anderson

Marketing/Communications

Jonathan Hunt

Advisory Board

Kevin Carlson, PhD

Rob Eidson

Volunteer Extraordinaire<= /span>

David Link

Heaven and Hell

An HR manager was knocked down by a bus and died. Her soul arrived at the Pearly Gates, where St Peter welcomed her.

"We've never had an HR manager make it this= far before, and we're not really sure what to do with you," he said. &qu= ot;We've been instructed to give you one day in Hell and one in Heaven, and let you choose where you'd like to stay for all eternity."=

"I think I'd prefer Heaven," said the woman.

"Sorry, we have rules," replied St Pet= er, and he put the HR manager on to the downward escalator.=

As the doors opened in Hell, she stepped out on = to a beautiful golf course. In the distance was a country club, around h= er were many friends, all happy and cheering for her. They ran up and kissed= her and talked about old times. They played a perfect round of golf and = ate steak and lobster. The HR manager met the Devil (who was actually ra= ther nice) and she had a wonderful night telling jokes and dancing.=

But before she knew it, it was time to leave. Everyone shook her hand and waved goodbye as she stepped on to the elevat= or, which took her back to the Pearly Gates.

St Peter was waiting for her. "Now it's tim= e to spend a day in Heaven," he said.

So the HR manager spent the next 24 hours loungi= ng around on clouds, playing the harp and singing - which was almost as enjoyable as her day in Hell.

At the day's end, St Peter returned and said: "You've spent a day in Hell and a day in Heaven. You must now choose."

The woman thought for a second and replied: "Well, Heaven is certainly lovely, but I actually had a better time = in Hell. So I choose Hell."

But on her return, she found herself standing in= a desolate wasteland covered in garbage and filth. Her friends were dressed= in rags, picking up rubbish and putting it in old sacks. The Devil approached and = put his arm around her.

"I don't understand," stuttered the HR manager. "Yesterday, there was a golf course and a country club. We = ate lobster, and danced, and had a wonderful, happy time. Now there is just a dirty wasteland of garbage, and all my friends look miserable."=

= The Devil smiled and said: "Yesterday we were recruiting you. Today, you're staff."

Why Measure in Human Resources?

1. Benchmarking: For better or for worse, HR ne= eds to know where it stands in terms of its own historical record as well as = how it compares externally to its peers. For example, an HR specialist cannot define him or herself without proper measurement. If management claims HR= is taking too long to recruit key nursing positions, HR’s defense will= be severely limited without a “time to fill” metric demonstrating that its record is above the mean. Better data fosters increased credibil= ity within any organization since “metrics are a tangible way of demonstrating the value of HR to non-HR people.”¹

2. When Competing for Limited Resour= ces within an Organization: All departments within an organization must work together in order to be successful; however, managers often face difficult decisions when it comes to allocating available resources. For example, HR may propose the construction of a new training center to bett= er educate and retain new hires while technology insists that a more robust network will save the hospital a considerable amount of money in a short = time period. In this situation, intuition and anecdotal evidence, though possi= bly compelling, are less so without the corresponding metrics. In order to ma= ke the case to management and be heard, HR metrics are critical. Even when management supports HR funding requests, capital not allocated based upon= a disciplined application of financial measures is in jeopardy of being revoked. Particularly when crisis looms, HR practices approved without= metrics are most likely the first to be trimmed.²

3. To Become an Integrated Strategist: Ultimately, the future of HR will depend on its ability to become accountable for delivering results that are integrated with the overall business strategy. The key word is integrated for if HR is to survive as an integral = part of business, the industry must develop strategies and design systems R= 12; directly linked to the strategic direction of the business — that a= llow the organization to realize the value of its people.³=

People are an organization’s greatest asset, providing the intellectual capital that drives differentiation and value-added services. Put more simply, an organization’s success largely depends on human application to transform inert buildings and equipment into value.⁴ Given the nature of HR as the “pe= ople department,” the field is in a position to rise above its current administrative existence and make better use of its resources. While the operational basics (i.e. benefits administration, entry level hiring, bas= ic skills training, etc.) are a necessity not to be overlooked, HR ought to focus on creating winning strategies so that “intellectual capital grows, stays and is accessible.”⁵ These factors should be the measures of success, and the return on investment (ROT) of human capi= tal is the means to that end.

______= ___________________________________________________________________________= ______

Below is a sam= ple scorecard, or matrix, that integrates various ROI metrics in order to gai= n a comprehensive view of an organizations ability to utilize its human capit= al. This scorecard focuses on recent or current events; so future planning is= not included – albeit, once finished, the scorecard should serve as a g= uide for planning. The scorecard comprises four quadrants of the human capital supply chain within an organization.

Human Capital Scorecard Examples⁶=

Acquire

Time to Hire
Accession Rate
New Hires per Recruiting FTE
Vacancy Rate

Maintain

Avg. Pay per FTE
Avg. Benefits per FTE
Benefits as a % of Payroll
Total Injuries per 1,000 Employees

Develop

Training as % of Operating Cost
Leadership/Professional Development Initiatives
Skills Attained and Used within 6 months

Retain

Turnover Rate
Avg. Retention of New Hires
Avg. Length of Service for Those Terminated

Succession of New Hires<= /o:p>

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* = Fun with Metrics *

Last month our metric was “Development Program Penetration rate”. This month we’ll look at a whole bunch of metrics compiled for our…

“Metrics Glossary”

Organization Costs	Calculation=	Definition<= /span>
Payroll Costs	FY Payroll Costs ÷ FTE or HC	Average payroll cost per employee.
Benefits Costs	FT Benefits Costs ÷ FTE or HC	Average benefits cost per employee.
Total Operating Costs	FY Op. Costs ÷ FTE or HC	Average operating cost per employee.
Payroll as % of Op. Costs	[PT Payroll Costs ÷ FY Op. Costs] x 100	Payroll as a percentage of the total operating cost.
Benefits as % of Op. Costs	[FY Benefits Costs ÷ FY Op. Costs] x 100	Benefits as a percentage of the total operating cost.
Human Resource Structure
HR Expense as % of Op. Costs =	[FY HR Costs ÷ FY Op. Costs] x 100	Human Resources as a percentage of the total operating cost.
HR Expense per Employee	FY HR Costs ÷ FTE or HC	Cost of Human Resources per employee.
HR Expense per HR Staff	FY HR Costs ÷ Core HR Staff FTE or HC	Cost of Human Resources per Human Resource Staff.
# Employees per HR Staff	FTE or HC ÷ Core HR Staff FTE or HC	Number of employees allocated to each member of the HR Staff.
Risk Mgmt. & Worker’s Com= p
Cases with Days Away	# Cases ÷ [FTE or HC ÷ 1,000]	Number of cases with days away per 1,000 employees.
Other Recordable Cases	# Rec. Cases ÷ [FTE or HC ÷ 1,000]	Other recordable cases per 1,000 employees.
Total # Days Away	# Days Away ÷ [FTE or HC ÷ 1,000]	Total number of days away per 1,000 employees.
Total Injuries	# Injuries ÷ [FTE or HC ÷ 1,000]	Number of injuries per 1,000 employees.
Avg. Fixed Contract	Fixed Contract ÷ FTE or HC	Avg. Fixed Contract per employee.
Acquisition & Recruiting <= /o:p>
Accession Rate	[# of New Hires ÷ FTE or HC] x 100	Number of replacement hires and hires for new positions as a percentage of the workforce.
Time to Hire (days)	I# of Days Elapsed to Fill Position] ÷ # Positions Filled	Number of days to acquire new hires.
New Hires per Recruiting ETE =	[# of New Hires ÷ Recruiting FTEs]	Number of new hires per dedicated recruiting FTE.
Cost per Hire	[Internal + External Recruiting Costs] ÷ # New Hires	Costs involved per new hire.
Vacancy Rate	[# of Open Positions ÷ FTE or HC or Per Diem] x 100	Number of open positions as a percentage of the workforce. <= /p>
Retention & Turnover=
Turnover Rate	[# of Voluntary or Involuntary Separations ÷ FTE or HC or Per Diem] x 100	Rate in which employees voluntarily and involuntarily leave an organization.=
Retention of New Hires	Percent of employees hired in the last 1 2 months still employed in the time pe= riods indicated (e.g. 0-30 days, 31-60 days, etc.). For example, if all new h= ires made it past 30 days, the 0-30 day’s column would reflect 100%.
Length of Service for those Terminated	Percent of employees — hired between 4/01/07 and 4/01/08 — terminat= ed in the time periods indicated (e.g. 0-90 days, 91-180 days, etc.). Sum = of time periods should equal 100%.

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Endnotes

¹Grossman, Robert J. “Measuring Up: HR Pro= ves Its Worth,” HR Magazine, (January 2000), p.31.

²Murphy, Thomas E. and Sourushe Zandvakili. “Data and Metrics-Driven Approach to Human Resources Practices: Usi= ng Customers, Employees, and Financial Metrics,” Human Resource Management, vol. 39, no. 1, (Spring 2000), p.94.<= /span>

³Wintermantel, Richard E. and Karen L. Mattimore. “In the Changing World of Human Resources: Matching Measures to Mission,” Human Resource Management, vol. 36, no. 3, (Fall 1997), p. 340.

⁴Fitz-enz, Jac. The ROI of Human Capital: Mea= suring the Economic Value of Employee Performance. New York: AMACOM, 2000, p= .26.

⁵Wintermantel, 338-9.

⁶Based on Fitz-enz, 109.

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