MECANISMOS DE PROTECCIÓN PERSONAL EN LA SUCESIÓN

3. MECANISMOS SUCESORIOS DE PROTECCIÓN

3.3. MECANISMOS DE PROTECCIÓN PERSONAL EN LA SUCESIÓN

Although academics debate the processes by which HRM may be linked with organizational outcomes, HR professionals are being regularly called upon by senior colleagues to provide management information relating to the contribution made by HR activities (Mooney, 2001). As Ulrich and Brockbank (2005b) note, being able to provide these kind of data is a core require-ment for HR managers keen to to establish their credibility. However, the demands on HR man-agers today in terms of information are becoming ever more complex. Large organizations may require data such as return on investment (ROI), Balanced Scorecard evaluations of the HR de-partment and HR activities, or benchmarking of HR policies and practices against other organi-zations (Marchington and Wilkinson, 2008). As Holbeche (2001: 51) notes: ‘for many Human Resource practitioners, it’s an act of faith that people management is a key factor in determining profi tability. Whether that view is shared by management team colleagues is a different matter.’

8.4.1 HR data

One of the fi rst issues is to determine what should be measured. Standard HR areas that are often measured by organizations tend to fall into the categories shown in Table 8.3.

A study in the US (Gates, 2004) found that the single most common HR metric used was turnover, used by 96% of organizations participating in his survey, followed by average com-pensation, 82%, average workforce age, 77%, diversity, 76%, comcom-pensation, 76%, seniority, 75%, and accident rate, 74%. However, there are a vast number of possible HR metrics, for example, Ulrich (1997b) identifi es 52, and it is therefore diffi cult to know which might be the most important. A survey carried out in 2007 on behalf of the CIPD involving 787 organizations

Source

Adapted from Improving Employee Performance in 3 Simple Steps: A Restaurant Case Study, posted by Greg McGuire, Halogen Software Talent Management and Employee Performance blog, 16 March 2011. http://www.

halogensoftware.com/blog/improving-employee-performance-in-3-simple-steps-a-restaurant-case-study/.

Activity

What do the theories of SHRM outlined above tell us about why Nick’s approach has been successful?

Critical Refl ection

Researchers have highlighted the diffi culties of seeking conclusive evidence that HRM is linked to performance. For instance, if an organization is performing well, then any number of other factors, aside from the way in which people are managed, could be infl uential. Equally, causality could be reversed, in other words, it may be the case that high levels of organizational performance could enable a company to put in place sophisticated approaches to managing people. How do you think that researchers could go about addressing these complex issues?

examined which outcome measures were most commonly used. Out of a range of 40 possible measures, none was used by more than 60% of respondents, refl ecting the lack of consensus over what to evaluate.

Mooney (2001) suggests that factors for measurement can be evaluated on the basis of how easy or diffi cult the data are to obtain and their degree of relevance to business perform-ance (see Fig. 8.1).

Although it would appear that data that are relatively easy to obtain and highly relevant (upper right-hand quadrant) will be the most helpful for the HR department, some caution must be exercised. A CIPD report (2009b) concluded that there is no one defi nitive way of measuring HR outcomes that will be relevant in all contexts, but rather that it is the process of measuring that is itself of greatest value as this will generate discussion about HR’s contribu-tion. However, for the HR professional it is important to be able to gather data that are ‘rele-vant’. Mooney (2001) suggests that ‘relevant’ data are those that are most closely linked with

High relevance Easy to obtain Low relevance

Easy to obtain

High relevance Difficult to obtain Low relevance

Difficult to obtain

Figure 8.1 Mooney’s HR data collection matrix.

Table 8.3 Domains of HR measurement

Employee attitudes For instance, measuring levels of engagement through a staff survey, as well as satisfaction with the HR department and activities

Employee performance These would include measures such as individual productivity and performance, for example, through annual appraisals and team performance

Employee behaviours For instance, turnover and absenteeism Health and safety

measures

Including accident rates

Workforce profi le and costs

E.g. competencies, talent, proportion of employees at particular grades, total workforce, salary costs, diversity statistics, talent pool

ROI in HR department E.g. ratio of HR staff to employees, operational cost of the HR department Cost and effi cacy of HR

activities

Such as number of applications per vacancy, training costs per employee, training satisfaction, speed of response to applicants

Customer outcomes Such as customer satisfaction

Sources: Ulrich, 1997b; Holbeche, 2001; Mooney, 2001; Ulrich and Brockbank, 2005b; Boudreau and Ramstad, 2007; CIPD, 2007; Crail, 2007; Marchington and Wilkinson, 2008.

SHRM AND PERFORMANCE 153 overall business performance, such as labour turnover, performance reviews, training and

development, adherence to budgets, health and safety, compliance with legislation and HR policy, and line manager satisfaction with HR performance.

Marchington and Wilkinson (2008) show how service-level agreements (SLAs) are becoming an increasingly common approach to evaluating HR’s contribution. SLAs comprise a series of statements about the level of service that the HR function is expected to provide for the organi-zation, for example, preparing job offer letters within 1 day or providing advice on disciplinary matters within 2 days. Shell is one fi rm that uses this approach (Sparrow et al, 2004: 165). Whilst SLAs can be useful in providing a clear statement of what is expected of the HR function, unless they are closely aligned with organizational goals, they may fail to serve a useful function.

Whilst many organizations collect internal measures of various kinds, benchmarking against comparator organizations is increasingly common. A study carried out by the CIPD in 2006 found that there are over 1,000 indices that have been used in benchmarking exercises.

However, Marchington and Wilkinson (2008) point out that contextual variations can have a considerable impact on results; what is relevant in one sector may not be in another, and aggregate-level data can mask substantial differences. Employers therefore need to be sure that the benchmark organizations are relevant.

Two possible approaches that can be used by organizations to evaluate their HR contribu-tions are reviewed below.

8.4.2 Boudreau and Ramstad’s (2007) LAMP model

Boudreau and Ramstad (2007) show that, despite the advances in HR measurement, often these measures do not yield substantive, strategic change. The reason for this, they argue, is that ‘many HR measures originate from a desire to justify the investments in HR processes or programs. Typically, HR seeks measurement not to improve decisions, but to increase the respect for (and potentially the investment in) the HR function and its services and activities’

(p. 190). They compare this with the measures used by accounting departments, which focus on outcomes rather than on justifying the department’s activities. Instead, they argue, HR’s role should be on providing measures that senior managers can use to guide future decisions about the management and deployment of staff. They propose a four-component measure-ment system with the acronym LAMP: logic, analytics, measures, and process:

● Logic: the chosen measurement system should focus on the factors that are logically most relevant to performance. Starbucks measured the performance of its baristas in such a way as to capture issues of trust and discretion as these would impact most on customer service.

● Analytics: effective data analysis is important in order to interpret the data correctly. A simple correlation between two factors, such as staff satisfaction and customer satisfaction, does not necessarily signify a causal relationship. Customers could be more satisfi ed due to location, or more highly satisfi ed customers could lead to more satisfi ed staff. The more data that HR managers have at their disposal, the more important analysis becomes.

● Measures: should be of high quality and focus on what matters. Traditional HR measurements can be supplemented by linking to metrics collected in other areas of the organization, such as information systems and R&D. Over time, they recommend

that organizations should shift their focus from measures focused on effi ciency towards effectiveness and, fi nally, towards impact. For instance, employee turnover can vary in its signifi cance depending on who is leaving and the context. In fi rms competing on the basis of quality, if turnover is high among well-qualifi ed, highly trained and experienced employees, this will leave important talent gaps where the recruitment of suitably qualifi ed replacements will take time. In fi rms competing on the basis of speed but not quality, then rapid recruitment of lower-skilled workers is important. The issues will need to be tackled differently, and so nuanced, context-specifi c measures are required.

● Process: measuring HR outcomes should be part of an overarching strategic change management process, and a key element of this is educating line managers to accept that HR measures are an important component of the change process.

(Boudreau and Ramstad, 2007: 187–206)

Global retailer Limited Brands adopted the LAMP approach to strengthen the link between business performance and HR processes. This involved an analysis of the critical success fac-tors required for improving the overall performance of its shops, within which HR issues, such as staff deployment and core competencies, were integrated. Next, appropriate measures were developed, including the tracking of in-store customer and employee movements. One learning point that emerged was that customers were more likely to purchase an item if they entered the changing rooms; this was used to develop employee training and deployment programmes (Boudreau and Ramstad, 2007: 206-213).

8.4.3 The HR Balanced Scorecard

The Balanced Scorecard was developed in the 1990s by Bob Kaplan and David Norton as a methodology for linking strategic objectives with a range of performance outcomes from four perspectives (Kaplan and Norton, 1998):

● Customers

● Organizational learning and growth

● Internal business processes

● Financial performance

The concern was to move away from simplistic performance evaluations based purely on fi nancial outcomes, and instead to consider performance from a more holistic perspective in terms of their contribution to the overarching aims of the organization. The Balanced Score-card has been widely adopted internationally by organizations as diverse as Tesco, Kenya Red Cross, Veolia, AT&T, and BMW (http://www.balancedscorecard.org).

Key Concept

The Balanced Scorecard was developed by Kaplan and Norton (1998) as a tool to help managers fi nd holistic ways of measuring organizational performance.

SHRM AND PERFORMANCE 155 The approach was extended into the HR domain by Becker et al (2001), who show the

im-portance of the management of intangible assets to organizational performance outcomes.

Their HR Scorecard rests on two core questions:

● How should strategy be implemented in the fi rm? How does the fi rm generate value?

● What performance measures capture this?

The answers to these two questions generate the insights needed to start to develop an HR measurement process that accounts for both leading indicators, i.e. those with a future-focus such as R&D cycle time, and lagging indicators, such as fi nancial metrics, that focus on the past, for each of the four areas of the Balanced Scorecard. Becker et al (2001) identify four domains where decisions should be made:

● HR deliverables or outcomes, in order to identify how the HR system generates value in the fi rm.

● The high-performance work system elements that generate the deliverables, providing examples of what the deliverables should be for each system element.

● The elements of the HR system that need to align with one another to achieve the deliverables, which focus on the alignment of the HR system with strategy implementation.

● HR effi ciency measures, differentiating between core (i.e. signifi cant HR expenditure that makes no direct contribution to strategy implementation) and strategic metrics (i.e. those designed to produce the HR deliverables).

Becker and colleagues (2001: 75–76) argue that the benefi ts of the HR Scorecard include:

● It reinforces the distinction between HR doables and HR deliverables

● It enables you to control costs and create value

● It measures leading indicators (as opposed to lagging indicators)

● It assesses HR’s contribution to strategy implementation and the bottom line

● It lets HR processionals effectively manage their strategic responsibilities

● It encourages fl exibility and change.

One organization that has adopted the HR Balanced Scorecard is US-based car accessories manufacturer ABPS. ABPS has used commercially available HR Balanced Scorecard software to help it track progress in such areas as training, recruitment, culture, performance manage-ment, and HR expenditure in the wake of a complex merger. (See http://www.strategy2act.

com/case_studies/proved_ways_to_measure_and_improve_performance_in_hr.html.)

8.4.4 Issues in HR measurement

Whilst approaches to measuring HR’s contribution have become ever more sophisticated, it is important to bear in mind the constraints and complexities that this entails:

● Seeking to quantify HR’s contribution places the emphasis on areas that can easily be measured, rather than what is necessarily most important.

● Service-level agreements can lead to an overemphasis on meeting the needs of other departments, and downplay longer-term HR strategic objectives.

● Relevant data may not be easy to obtain. Boudreau and Ramstad (2007) cite the example of turnover measures the greatest value is knowing why people are leaving and where they are going, which are rarely measured.

● The link between HR interventions and organizational performance is complex and multilayered; the collection of HR metrics risks oversimplifying the process and creating a misleading impression.

● Simply measuring outcomes does not lead to change or improvement.

● The relevance of different measures varies between industries and organizations. What is relevant in one context may be less so in another. Benchmarking may therefore not be as useful as managers believe.

● To be useful, HR measures need to focus on people outputs rather than HR processes.

Conclusion

In this chapter we have examined the issue of whether or not SHRM impacts on performance.

Opinion on this subject is divided. Some commentators have argued that there is now ample evidence to suggest that effective HR practices will yield signifi cant performance outcomes at both the individual and organizational levels. However, most have urged a degree of caution in asserting that there is a clear and causal link between the two, citing problems in terms of the way in which HRM and performance are specifi ed and measured, the methodologies used in research studies, variations between sectors, and uncertainties surrounding the relevant theoretical framework. Yet, intuitively it makes sense that if people are managed effectively, their contribution will be greater, although there is as yet not enough evidence on exactly what ‘effective’ means in this context. Both HR managers and line managers have a role to play, and more research is needed on how line management and HR interact with one another to create a positive organizational performance climate.

Despite the reservations, it is clearly important for HR managers to be able to show how their strategies and policies yield benefi cial outcomes for their organizations, or it will be diffi cult to argue for investment in the department. Several measures have been suggested and two more holistic methodologies for examining HR’s contribution have been discussed.

Summary

● A great deal of research has been conducted to fi nd out how HRM impacts on organizational performance.

● A large number of studies have concluded that there is a link between the two.

● Commentators have also argued that we need to be cautious in asserting that this link exists.

● There is lack of agreement over the best way to measure HR and over the theory that explains how the link might work.

● Various performance outcomes have been considered at the individual, unit, and organizational levels, but evidence is mixed.

● More research is needed that examines the HR–performance link using more sophisticated methodologies and in different settings.

SHRM AND PERFORMANCE 157

● HR practitioners are, however, under pressure to measure the activities of the department and the outcomes of their policies and practices.

● There are a number of methodologies that practitioners can use, including the HR Balanced Scorecard.

Review questions

1. Outline and evaluate some of the theoretical frameworks that have been used to explain the HRM–

performance link.

2. Critically evaluate the research evidence on the HRM–performance link.

3. If you were to undertake research on how HRM impacts on performance, how would you go about this and why?

4. For an organization known to you, explain some of the HR metrics that could be used to evaluate HR’s contribution.

5. How can HR professionals balance the short term vs the long term when considering the outcomes of HR interventions?

End-of-chapter case study Department for Work and Pensions (DWP): people strategy in the public sector

(Based on an interview with Joyce Henderson, People Insight Consultant)

The DWP is the UK’s largest public service delivery department, employing over 100,000 people across the UK. The DWP is responsible for welfare and pension policy and exists to:

● Contribute towards fair, safe, and fulfi lling lives, free from poverty

● Reduce welfare dependence and increase competitiveness

● Provide greater choice and personalization and higher quality service for customers.

The recession has raised signifi cant challenges for the DWP, both in terms of its service delivery role, supporting people in returning to work and managing the benefi ts system, and in terms of the internal management and organization of the department. Costs had already been cut by

£1.5 million between 2005 and 2008, and the department is now required to cut costs in a far more radical way as part of the government’s programme to drive down the cost of delivering public services.

The DWP’s business strategy is to transform the quality of customer service, drive up effi ciency, and use each as a key means of achieving the other. Senior leaders believe that people management, building a positive work environment, and improving the skills of senior leaders are fundamental to achieving these, and so the HR department has a vital role to play during these challenging times.

To help the organization ensure it can deliver on its business objectives, the HR team has developed a people strategy based on four values:

● Respecting people

● Looking outwards

● Achieving the best

● Making a difference

The people strategy sets out how the DWP will support people in achieving the department’s objectives and was developed by taking into account factors in the internal and external

environment. Externally, critical factors included the prevailing economic climate and pressures on