SHRM-SCP-People-HR strategy

SHRM-CP/SCP中的PEOPLE模块的第一章人力战略，人力战略是组织战略的重要组成部分，它确保了人力资源活动与组织的长期目标保持一致，为组织创造持续的价值。

SHRM-PEOPLE

• HR Strategy
  • Strategic Planning and Management
    • Strategy
      • Levels of Strategy
        • Organizational strategy
          • Organizational strategy focuses on the future of the organization as a single unit—a general vision of the future it seeks and its long-term goals.
        • Business unit strategies
          • Business unit strategies address questions of how and where the organization will focus to create value.
        • Operational strategy
          • Operational strategy reflects the way in which organizational and business unit strategies are translated into action at the functional level through functional strategies. Strategic planning and management processes are repeated at each level, and unit and functional leaders must assume the same strategic mindset that the organization’s leaders have adopted.
        • Key content
          • These levels of strategy must be aligned. This means that the HR strategy will be interwoven throughout the organizational and functional strategies. It must be consistent with the organizational strategy and must support other functional strategies. All policies, programs, and processes are selected and evaluated for their strategic impact. HR resources must be spent on strategic activities that add value at all points in the employment management cycle: workforce planning, talent acquisition, engagement and retention, rewards, and development of necessary skills and future leaders. The function must organize itself and acquire necessary strategic competencies, such as the abilities to manage risk and change, to use data to make better decisions, to manage a global and diverse enterprise, and, most importantly, to lead the HR function as part of a larger organization. Strategy must be developed with awareness of an organization’s stakeholders and their unique perceptions of the value the organization delivers and of the organization’s context—the marketplace forces that affect strategic choices.
      • Strategic Planning
        • Strategic planning is the process of setting goals and designing a path toward a competitive position. The strategic plan helps create alignment of efforts and provides a layer of control.
      • Strategic Management
        • Strategic management includes the actions that leaders take to move their organizations toward the goals set in strategic planning and to create value for all stakeholders. It makes incremental adjustments to the plan as needed and to the organization itself. These adjustments often represent the innovative capacity of the organization.
          • Consistent，long-term goals.
            • Fewer resouces will be wasted on activities that are unrelated to the gaols or are ineffective in supporting attainment of the goals.
          • Consistent decision making by leaders.
            • Strategy provideds guide posts throughout the organization, from top to bottom. Each ation and each investment of resources must be assessed in light of the organization's lone term goals.
          • Better competitive and external vision.
            • The process of making decisions and managing risks requires gathering and monitoring informaiton about the external enviroment. This can help in determining strategic choices and can influence organizational preparation for positive and negative outcomes. We should note here that all organizations, including nonprofits, must be aware of their competitive and external environments. Nonprofits must compete for resources from sources whose priorities and capacities may change. They may need to adjust their own operational priorites and focus in response to client needs.
          • Better internal vision.
            • Strategic management provides a better internal vision of what resources the organization can apply to its strategic goals and how they may need to be developed or supplemented.
    • Critical Success Factors for Strategic Planning and Management
      • Organizations that are successful at strategy have mastered certain skills. All of these critical success factors relate directly to the required competencies and responsibilities of HR.
        • Alignment of effort
          • Strategic alignment is necessary to maintain organizational focus on a defined mission and goals. As the strategy is progressively elaborated at other levels within the organization—in business divisions and/or functional areas—each unit must examine its plan against the organization’s. Will HR’s activities help move the organization toward its goal? Are HR activities attentive to the logic behind the original plan and the value of the original goal?
        • Control of drift
          • Strategic drift is a phenomenon in which an organization fails to recognize and respond to changes in its environment that necessitate strategic change. Like a ship bound for the rocks, the organization fails to make necessary course corrections. It beats on against the current of external forces that drive it further and further from its goals. Drift is often caused by an organizational culture that is too deeply rooted in the past, in the ways things have always been done. HR can help develop leaders with vision and courage, and HR leaders can embody these values as well.
        • Focus on core competencies
          • Core competencies are usually unique advantages an organization possesses, abilities that are integral to creating customer value and difficult for competitors to imitate. For example, core competencies can be technical expertise or excellence in design, marketing, or operations. A core competency can also be vision—the ability to see when and how the organization can reinvent itself. Strategic organizations know what they are good at and focus their efforts on where those competencies will have the most effect. Necessary but not core competencies can be outsourced to reliable suppliers.
      • Mistakes to Avoid in Strategic Planning
        • Taking shortcuts: Effective strategy requires extensive research, detailed analysis, and honest evaluation of the organization and its competitive situation. Poorly researched, vague, or overly ambitious strategies are usually not successful and make a poor argument for strategy.
        • Little follow-through： Often, strategic planning is a pro forma exercise that produces a plan that is placed in a desk drawer. This perception may be due to the early association of strategies with annual budgets, among other reasons. Strategic plans should lead to decisions. Because these decisions are risky, require complex execution, or are in conflict with the current organizational culture, leaders may be reluctant to translate intent into action. Strategy requires leadership and good decision makers.
        • Overreliance on the comfortable and familiar： Strategy often requires change and risk taking. Risks must be taken methodically, with due diligence, and transparently, according to agreed standards and guidelines.
        • Insufficient commitment from management： Sometimes the task of setting strategy is handed off to consultants; senior management and the board are not committed to the process or directly involved. It is difficult then to obtain their support for strategic initiatives.
        • Insufficient involvement of the rest of the organization： If the strategy is developed by a small management group, it will be more difficult to convince the entire organization of the wisdom of the decisions and the value of changes, effort, and sacrifices. If the strategy is developed by a small management group, it will be more difficult to convince the entire organization of the wisdom of the decisions and the value of changes, effort, and sacrifices.
        • Inadequate communication： The strategic intent and decisions may not be shared with the entire organization. This negates one of the primary benefits of strategy—that it becomes a guidepost for decision making at all levels and in all parts of the organization.
      • Strategic Planning and Management Process
        • Formulation, during which leaders gather and analyze internal and external information to determine the organization’s current position and capabilities, opportunities, and constraints.
        • Development of strategic goals and tactics that will optimize success given the environment, opportunities, and constraints-the strategic plan.
        • Implementation of tactics-the process of strategic management. This requires clear communication of objectives to teams, coordination and support of their efforts, and control of resources.
        • Evaluation of results, both continually, to make sure that activities maintain strategic focus and are effective, and at designated intervals, to determine the effectiveness of the strategy itself and the need for change or improvement.
        • Strategic planning and management are distinguished by the way an organization’s assets, structure, and policies are focused in an integrated manner to achieve certain goals. The organization’s parts work in harmony rather than independently or in opposition. The organization is continually mindful of results and committed to continuous improvement.
  • Strategy Formulation
    • Systems Thinking
      • Systems thinking recognizes that organizations are composed of interacting and sometimes interdependent parts that together create a dynamic internal environment. Each part is differentiated by the role it plays in the system and its own particular challenges, values, and processes—referred to as the differentiation of units. The internal environment is created by the varying ways that all of these units interplay. The challenge in strategic planning and management is to coordinate these parts to achieve strategic goals. Because the system is dynamic, changes in one part can affect the other parts. It’s easy to conceptualize how changes enacted by leadership can cause a cascade effect across divisions and to the lowest levels of an organization. It is also important to recognize that changes made at lower levels of a division can reverberate through multiple divisions and upward through the organizational structure.
        • • An example of the complexity of these systems is illustrated by the “Beer Game” created by MIT. Players represent a brewery, a wholesaler, a distributor, and a retailer. There are four-week delays between: When the retailer orders beer from the distributor and when it is received. When the distributor orders beer from the wholesaler and when it is received. When the wholesaler orders beer from the brewery and when it is received. The brewery takes two weeks to brew the beer. A short-term demand spike is simulated, which triggers response actions from the players. As the short-term demand empties shelves at the retailer, the retailer typically submits repeated, larger orders to the distributor. This action triggers a similar response between the distributor and the wholesaler and between the wholesaler and the brewery. However, due to the lag in processing and delivery time throughout the chain, by the time the brewery has created and shipped the orders that it has received and those orders have made it through the chain to the retailer, demand has fallen back off, and everyone—brewery, wholesaler, distributor, and retailer—now has far more product on hand than they really need. Each player in the game has acted in a way that they considered logical given the information they had, yet, because they did not consider what their actions would do within the larger system, each ends up in a less-than-ideal situation.
    • Environmental Analysis Tools
      • PESTLE Analysis
        • Assemble a list of possible events or trends that exist now or could materialize within a defined time frame. This could be done through brainstorming meetings, interviews or focus groups with experts in certain areas, or literature reviews.
        • Identify the potential impacts on the organization. These should include positive and negative or immediate and long-range effects. Analysts should also look for possible ripple effects on apparently unconnected processes or parts of the organization.
        • Research the impacts more thoroughly to understand possible causes, their dimensions, and connections with other events or trends. For example, trending information may be obtained from government agencies or industry associations.
        • Assess the importance of the possible impacts based on the strength of the data.
        • CONTENT
      • The SWOT analysis
        • The SWOT analysis is a simple and effective process for assessing an organization’s strategic capabilities in comparison to threats and opportunities identified during environmental scanning. Although we refer to SWOT as an organizational tool in this section, it can also be used to analyze the strengths and weaknesses of parts of an organization (for example, the HR function), products or services, and individual initiatives.
          • Strengths and weaknesses refer to the internal environment, while opportunities and threats come from the external environment. The opportunities represent favorable or advantageous circumstances that could be used to produce a desired effect, while threats are an indication of possible danger, harm, or menace. Strengths and opportunities can be leveraged; weaknesses and threats are problems that must be solved and are often more difficult to control.
            • Information gathered from environmental scanning can be used to complete a SWOT analysis. Meetings can be used to generate items and sort them into the four categories that are commonly illustrated in a four-box matrix (as seen in the image below). Later analysis could focus on weighting strengths and weaknesses relative to specific environmental changes (threats or opportunities). These analyses usually take the form of a ranking sheet: Each scenario (for example, a strategic option) is scored against the four categories, and the scenarios are ranked by composite score. A SWOT analysis can underscore the need for addressing cultural misalignment or skill gaps before committing to a strategy. It is often performed as companies consider entering new markets, expanding globally, or forming a strategic alliance. As with all aspects of strategic planning, a SWOT analysis of a global organization is more complicated. It must consider local variations in performance, competitive situations, exchange rates, labor supply, and various political, cultural, and legal influences in each locale. The image below shows a classic four-quadrant model of an HR function’s SWOT analysis of its current strategic position.
      • The growth-share matrix
        • Larger organizations use matrix tools, like the growth-share matrix, to find where the greatest value in their organizations lies. As shown in the image below, the vertical axis of the growth-share matrix indicates the rate of growth in this area, while the horizontal axis indicates the size of market share. The assumptions are that a growth trend (rather than stasis or decline) predicts greater value and a larger market share indicates a stronger competitive position. A business line that is growing and has a dominant share (a “star”) has high value. A static but dominant business line (a “cash cow”) creates value reliably but shows little opportunity for growth. “Dogs” are consuming resources without offering strong value or future growth. “Question marks” could be winners or losers; their future is unclear.
      • Scenario analysis
        • Scenario analysis helps an organization compare the impact of changes in the environment on the organization’s outputs. This allows planners to identify those environmental factors that have the greatest potential for positive or negative impact and to apply the principles of risk management to strategy formulation. For example, a large law firm might analyze the effect of changes in the pool of newly graduated lawyers on the firm’s operations. What would be the effects if the firm received 25% to 50% fewer applications? How would this affect recruitment costs, salaries, or unfilled positions?
    • Defining Mission, Vision, and Values
      • Before a strategy can be mapped, a destination must be chosen. This destination is an image of how the organization defines its purpose (its mission), the future it hopes to see (its vision), and the principles it agrees will guide its behavior (its values).
      • Mission and vision
      • Organizational values
      • Communicating Mission, Vision, and Values
    • Setting Strategic Goals
      • Strategic Alignment of HR Goals and Objectives
        • Like the development of strategic statements, the process of setting goals must be repeated on a unit or functional level, including the HR functional level. This supports alignment of the functional/unit goals with the organization’s goals. In other words, it creates a line of sight from the organization’s strategic goals to the goals and objectives of the organization’s functions and units.
          • The organization’s high-level strategic goals are used by functions to generate relevant unit- or function-level goals, as shown in the table below.
            • Function and unit goals generate programs and specific initiatives—“the ways we will achieve our goals.” For these more-specific activities, the function defines short-term objectives that are specific and time-based (i.e., have endpoints at which time the activity will be assessed). The image below shows the way in which a value driver tree helps ensure a line of sight from an organization’s strategic goals through functional goals and objectives.
      • Using a Balanced Scorecard to Identify Key Performance Indicators
        • KPIs in the original balanced scorecard (developed by Robert Kaplan and David Norton) are identified under four key areas:
          • Finance: Financial KPIs may vary, but for HR they could include budgeting for recruiting services or controlling overtime expenses. Achieving these goals is of interest to management, employees, and shareholders.
          • Customers: This perspective captures the ability of the organization to provide quality goods and services and satisfy its customers. It might be measured by the number of managers using a self-service system to set up new employees, processing rates for changes in compensation or corrections in benefits, or employee satisfaction with dispute resolution services.
          • Internal business processes: This perspective focuses on the internal business results that lead to financial success and satisfied customers. For HR, key internal processes may be managing talent acquisition and retention, employee development, and providing consultation to other functions.
          • Learning and growth: This perspective looks at actions that will prepare the future organization for success—for example, by strengthening the employer brand to attract talent, making sure that employees have the most current skills, or implementing knowledge management systems.
          • The purpose of a balanced scorecard is to achieve balance in three key areas: Between financial and nonfinancial indicators of success Between internal and external constituents in the organization Between lagging and leading indicators of performance
      • Setting HR Performance Objectives
        • To measure performance, targets must be set for each KPI. Metrics can indicate the desired level of performance; they are measurements against a defined scale or a ratio of one aspect to another. For example, a metric could be the number of employees using an employee assistance program or the amount of money spent on hiring a single employee.
          • The acronym SMARTER is used to describe the seven qualities that characterize effective objectives. The letters have been assigned to different words over the years, but SMARTER is usually seen as describing objectives that are:
      • Benchmarking as a Tool in Setting Objectives
        • Benchmark process
          • Defining KPIs
          • Measuring current performance
          • Identifying appropriate benchmarks and securing their performance data
          • Identifying performance gaps between oneself and the benchmark organization
          • Setting objectives and implementing any necessary support activities
  • Strategy Development
    • Strategic Fit
      • HOW
        • How an organization can create what Michael Porter calls a strategic position, a position in which it enjoys a competitive edge over its rivals— its business strategy.
      • WHERE
        • Where an organization will compete in terms of markets and industries— its corporate strategy. This defines the scope of the organization. Click to flip
      • Based on these strategic choices, functional leaders, including HR, will plan their own strategies, generating ideas for activities that will support the organization’s strategic intent and selecting those with the right cost-benefit and risk profiles.
    • Business Strategy
      • Porter’s Competitive Strategies
        • Cost
          • Firms that pursue a strategy of cost leadership aim at capturing market share within their industry by virtue of lowest price. There are many paths to cost leadership. Charles Schwab built a “no frills” investment firm by using technology—computerized order processing. IKEA accomplishes it through careful product design, transferring some activities to customers, and working closely with its suppliers.
          • Creating economies of scale, by which cost decreases with every increase in output.
          • Sharing knowledge and information so that workers acquire necessary skills and critical tasks are completed more quickly.
          • Redesigning processes to root out actions that do not produce value, that create delays and expense, or that are duplicative.
          • Designing products and services that can be replicated easily.
          • Lowering operating costs (such as investing in energy efficiencies, using cheaper labor, or locating near markets to lower transportation costs).
          • Adjusting capacity to demand quickly (for example, being able to shift work to different production centers or idle production lines).
          • Creating a supportive workforce—effective managers and motivated workers.
        • Differentiation
          • Firms that pursue a strategy of differentiation aim for being able to charge a higher price by offering something different or by offering the same thing in a different way from competitors in their industry or market—or by creating the perception that a product is different through superior marketing. For example, it is possible to buy prescription lenses in expensive frames from many online retailers, but Warby Parker distinguishes itself from those competitors by, for every pair sold, donating a pair of glasses to someone in need. Mercedes-Benz differentiates itself from other luxury car manufacturers by using marketing expertise to access customers, target messages to changing interests and needs, and flex its product line to meet different price points.
        • Focus
          • Focus strategies apply cost leadership or differentiation within narrow industry segments or niches. For example, a financial services company may choose to focus on only high-net-worth individuals. Ryanair applies an aggressive low-cost strategy to the leisure travel segment of the airline industry. Some larger corporations may use focus strategies for their separate business units. HSBC (the Hong Kong and Shanghai Banking Corporation) has a unit that specializes in cross-border banking for expatriates and transnationals.
      • Impact of Business Strategy Choices on HR
        • Since functional strategies must be aligned with the organization’s strategy, an enterprise’s decision to pursue cost leadership or differentiation will have a clear effect on HR strategy. The goal of HR’s functional strategy is to execute the business strategy. HR can influence one of the organization’s primary levers for successful implementation of strategy—employees. Consider the effects of the following three organizational business strategies.
    • Corporate Strategy
      • Growth Strategy Options
      • HR Involvement in Growth Strategies
      • HR Involvement in Divestiture Strategies: A greenfield operation will involve risk analysis, staffing, working with local authorities, and implementing HR policies and procedures in the new operations. If the strategy involves the integration of two potentially different entities, leaders must be identified within the organization who possess the requisite skills, knowledge, and abilities. If the new operation is in a different country, the policies and procedures may have to be adjusted to meet local laws, business practices, and local culture. Even in strategies that require little integration with the organization, such as franchising or contract manufacturing, HR may be involved in the organization’s ethical obligations to audit workplace practices.
        • Growth strategies are often fueled by divestiture—the selective “pruning” of parts of the organization that are underperforming or that are no longer in line with the organization’s strategy. Divestiture offers a number of benefits to the parent company:
          • The perceived value of a subsidiary or its opportunities may be increased. Sometimes the parent company may not have the necessary talent to take the “child company” to its next level of growth.
          • Investment may be recouped through the sale of a high-value subsidiary and the cash used to increase the parent’s value in other ways.
          • The enterprise’s activities may be refocused on new priorities, perhaps as the result of competitive threats and/or opportunities.
          • Risk that might derive from financial positions (such as poor cash flows or high debt load) or strategic outlooks (such as declining market growth or the possibility of a hostile takeover) can be managed.
        • One of the major challenges in divestiture is making sure that the organization retains key talent during and after the process. HR supports employee retention by developing and implementing communication plans for different groups of employees, both those retained and those going to the buyer. The best time to communicate with employees identified for separation is usually as soon as those employees are identified. The objective then is to retain and engage these employees to preserve the value of the deal. Respondents in an Ernst & Young survey indicated that the most effective retention tactics were:
          • Providing enhanced severance protection if employees are laid off soon after the close of the deal.
          • Making managers accountable for employee retention.
          • Benchmarking compensation and benefits.
        • The general steps for divestiture include:
          • Identify the candidate for divestiture The candidate might be a valuable but strategically unaligned business, or it might be a subsidiary competing in a market with low growth potential or competing ineffectively in the market. HR plays a role in this stage by performing due diligence as a seller: identifying potential risks connected with divesting particular candidates—for example, loss of talent, impact on employee career development opportunities or on labor contracts. HR can also participate in a SWOT analysis of the candidate.
          • Identify a target buyer The strongest candidate will be an enterprise that needs the strengths and opportunities the divested subsidiary can provide and that can address potential weaknesses in the workforce. Some parent companies want to be sure that employees will thrive in the new company. HR can provide accurate information about the value of the workforce and can work on behalf of the employees to obtain favorable compensation and development opportunities.
          • Restructure Even before an actual sale or spin-off, the parent company should prepare the subsidiary for its new identity by defining new leadership, board composition, and organizational structure. This will increase the value and potential of the carved-out or spun-off subsidiary. Again, HR plays an important role here. It may help identify and prepare strong leaders for the subsidiary (without harming the talent of the parent company). Leaders may be drawn from other parts of a global organization. HR will also be involved in designing incentive offers for the subsidiary’s new leaders.
          • Execute the deal Transition service agreements are often established to support the new entity. Agreements might cover financial (treasury and tax), legal, IT, business processes, and HR—including such capabilities as HRIS, payroll, and benefits. HR can assemble a balanced transition team, composed of parent and subsidiary employees, to empower departing employees without ceding control over sensitive decisions.
          • Throughout this process, HR can help capture what the organization has learned from its decisions and actions, analyze the experiences, and communicate useful lessons for future divestiture activities.
  • Strategy Implementation and Evaluation
    • Aligning Budgets with Strategies
      • an operational budget that funds ongoing activities
        • Talent acquisition
        • Training and development
        • Compensation the benifits
        • Employee and labor relations
        • Health, safety and security
        • Information technology
        • Planning
        • Philanthropy
        • Many of these expenses are variable and will be affected by the organization’s and HR’s strategies. For example, growth and retraction strategies will affect employee head count and may involve additional expenses for recruiting or outplacement services. A strategy that requires a change in organizational structure or culture will probably require funding for consultants and development activities. Therefore, the first thing HR leaders must do in the process of allocating resources to strategic activities is to compare previous/current activities and budget allocations with what will be needed to support the proposed organizational strategy. Having several years of HR data to establish estimating rules of thumb and trends in expenses will be helpful in defining a new budget. Remember that the resource allocation process should also be taking place throughout all of the functions of the organization, not only within HR.
      • a strategic budget that funds projects that are aligned with the organization’s strategic goals.
        • Resources to support one-time strategic initiatives are requested separately, through project budgets.
    • Communication Strategy
      • Communication outward to the entire team
        • Leaders must communicate a clear sense of the actions individuals must take and the decisions they are empowered to make. A strategy may require reorganization to support this.
      • Communication inward to the learders
        • Communication works best as a loop. Leaders need to know what’s working and what isn’t, but they also need rapid sharing of competitive information from the field. Changes in the external environment may require adjustments to strategy.
      • Leadership support of decisions made by subordinates
        • rather than second guessing.
      • Free flow of information across organizational boundarie
        • which can support collaboration.
      • Enough information to allow team members to connect
        • their work to the strategy. Field managers and employees must be able to connect strategic goals with daily decisions and effort. Knowing the strategic relevance of work is empowering and motivating.
      • Strategy can be communicated in different ways and at different levels— through formal communication to the entire function, department or team meetings, and individual performance management meetings. As stated above, the communication plan should include ongoing opportunities for feedback.
    • Managing Strategic Initiatives
      • Project Stages
        • Planning
        • Executing the Project Plan
        • Closing the Project
      • Specialized Project Management Approaches
        • Lean project management
          • focuses on eliminating waste by: Maintaining a tight focus on the intended value of the project. Empowering the team to make decisions. Analyzing and solving problems rather than working around them. Emphasizing continuous learning.
        • Six Sigma project management
          • derives from quality principles. “Six Sigma” refers to a level of quality so high that very few errors occur. It emphasizes focusing on projects with a quantifiable return of value, encouraging team commitment to quality and involvement in problem solving, measuring results in a manner that allows empirical analysis, and fact-based decision making.
        • Agile project management
          • is used when the assumptions on which a project is based are unclear or may evolve as project work proceeds. The project focuses on iterations of the deliverables—completing one iteration and then using customer input to plan the next iteration.
        • Critical chain project management
          • is used when resources cannot be increased to meet deadlines. For example, an HR department may be able to allocate no more than 10 hours per week of staff time to do project work. Project activities are scheduled accordingly. Buffers are built into the schedule both to account for dependencies (i.e., having to wait for another task to be completed) and to allow some room for variance for the estimated task requirement. Once the buffers are set, however, they are strictly enforced.
        • Kaizen
          • is a systematic approach for business improvement, requiring that all people and processes in an organization work to continuously improve. It is based on five principles: Know your customer. Without knowing the desires of the recipient of a product or service, it is difficult to create value. Let it flow. Continuously attempt to reduce waste to zero, which helps create value. Go to Gemba. Understand what is happening at all levels at an organization, and focus on the places that actions are actually taken that produce value. Empower people. Teams and people must have attainable goals and the systems and tools necessary to achieve those goals. Be transparent. Track goals using tangible data to show progress over time.
        • Design thinking
          • places the customer at the center of the project by understanding the in-depth requirements of the project’s intended end user or beneficiary. It focuses on empathy in order to ensure that the intended stakeholder receives value from the project. The first step in the iterative process involves understanding the needs, followed by gaining an understanding of the problem that is being addressed. Solutions are then designed and tested. Refinements are made based on the results of the testing process, and this is followed by eventual launch of the solution. More feedback is gathered and the solution is adjusted, a process that may include returning to step one to better understand the customer and using that improved understanding to continue to refine the solution.
    • Measuring Strategic Performance
      • A critical part of strategic management—and an increasingly important part of the job of HR leaders—is measuring performance. Measuring performance helps organizations determine whether strategic initiatives have been implemented as planned, whether the initiative is having the intended effect, and whether the investment in the initiative is returning benefits to the organization. Performance objectives therefore combine activity measurement (what is being done) and results measurement (what are the effects of the activity).
        • Performance data is gathered and compared to performance objectives. These objectives should measure:
          • Effectiveness
            • Is the initiative accomplishing the objective? For example, has a new recruiting program resulted in an increase in candidates?
          • Efficiency
            • Is the initiative producing results that exceed the investment in it? This requires finding the most time- and cost-effective processes to achieve the objectives. To continue the previous example, the new recruitment program must return sufficient economic benefits (through improved retention and productivity) to recoup the investment.
          • Impact
            • Is the initiative helping to move the organization toward its strategic goals? Is it making a difference? An initiative can be effective (meet its objectives) without producing an impact. A recruiting program should increase the number of candidates, but it should also increase the ratio of candidates who meet all criteria, who accept positions, and who receive positive first-year evaluations.
          • Key performance indicators
            • help organizations make the right measurements. KPIs are quantifiable measures of performance used to gauge progress toward strategic objectives or agreed standards of performance. For example, KPIs could be the number of manufacturing defects in each completed product or the number of supervisors trained in a quality improvement process. The process of measuring performance can be time-consuming and must itself be effective, efficient, and impactful. In Keeping Score, Mark Graham Brown discusses the critical role of performance measurement in strategic management. He lists some guidelines (shown in the table below) to help managers decide what they should and should not measure.
          • Effective Performance Measurement
    • Evaluating Strategic Results
      • Evaluation of strategic results is essential for several reasons
        • Measuring the outcomes of activities is sound strategic management, since an organization’s limited resources must be directed to those activities that deliver the most strategic impact.
        • Measurement is also a matter of good governance, of demonstrating to stakeholders that managers are doing a good job in using resources.
        • Analyzing results allows organizations to improve their strategies and continually increase their institutional knowledge and skills.
      • During strategy formulation, goals and strategically aligned objectives are set, specific key performance indicators are identified, and appropriate metrics are selected.
        • Tools and processes are created to collect data related to the key performance objectives. Measurement tools may include performance scorecards, score sheets for quantifiable metrics, spreadsheets comparing planned to actual outcomes, observation guides, and narratives. HR team members must be coached to perform their data-gathering responsibilities faithfully and accurately. They should understand not only how to use the measurement tools and processes but also why they are being used—the benefits that evaluation creates.
        • Data is analyzed in an ongoing manner. The immediate purpose is to make sure that data is being collected as planned and is usable. The more strategic purpose of these interim analyses is to determine whether the strategy is being implemented, whether it is being implemented correctly, and whether it is having the anticipated results. Positive results motivate the HR team and engage continued management support. Discrepancies between what was planned and what is unfolding during implementation can trigger analysis of the assumptions behind the strategy, identification of possible causes for the strategy’s poor performance, and corrections or abandonment of the strategy.
    • Communicating Strategic Results
      • The key challenge, as with any communication, is to use information efficiently and effectively to make a point. Data analysis is too often presented as a series of bulleted slides or through pages of spreadsheets. This is a challenge since the sheer quantity of data may overwhelm most audiences, especially senior managers. A better strategy is to approach the task of communicating the results of analyzing data as a narrative that will be supported by data. The data does not drive the report.
        • Let’s say an HR manager wants to deliver an interim progress report on one of HR’s strategic objectives, to increase diversity among managers in the organization’s 12 branch locations. HR has amassed considerable historical data for the organization and individual branches, conducted surveys, examined the effects of different tools, implemented a program, and performed a preliminary evaluation. The table below outlines how the manager might use this data to create a clear narrative for decision makers.
• Talent Acquisition
• Employee Engagement & Retention
• Learning & Development
• Total Rewards