Balanced Scorecard

Benchmarking in HR/ HR Balanced Scorecard /SEM

SAP AG

HCM EMEA

- public -

© SAP AG 2002, The HR Balanced Scorecard, Dr. Martina Schuh, Page 2

Agenda

Benchmarking

Balanced Scorecard


Agenda

Benchmarking

Balanced Scorecard


Benchmarking – Definition

Benchmarking is the comparisonof similar processes across organizations, companies and industries to identify best practices and develop improvement plans and actions

(Score Research)

[ Learn from the best by enterprise comparison!!! ]

[ Learn from each other by enterprise comparison!!! ]


Integration with Benchmark Provider: Data Flow

HR Benchmarks

Benchmarks from Provider

BenchmarkProvider

BusinessContent

SEM Measure Catalog (HR Measures)

Payroll

Administration

Time Management

0100010101101100101011010010101010100011101010010110110101011001010101

XML

0100010101101100101011010010101010100011101010010110110101011001010101

XML

Developments BW Rel. 3.0

HR InfoCube for external Benchmarking


Measures: Data Flow

EmployeeSurvey

Extractor

Measure Builder

Measure definition

HR Benchmarks

SAP SEM

MEASURES are defined from a purely business point of view in SAP SEM using the Measure Builder

The definition contains the possible data sources, for example BW queries, that could be used to determine the value of a measure

For each measure in a scorecard, VALUES like Actual, Plan, and Benchmark can be used for evaluations

For each value, a specific source of data in BW has to be chosen from the possible sources specified in the measure definition

HR Database

InfoCubes

Queries

mySAP HR

SAP BW

Balanced Scorecard

Objective/Measure Actual Plan B.markDevelop key skills

Strategic skills available 17 26 25,5Employee retention 73 70 68

Improve corporate cultureEmployee satisfaction 9,1 8,5 9,0


Business Content in the Measure Catalog

The Measure BuilderTool for maintaining the Measure CatalogDelivered with a predefined SAP Measure Catalog

The Measure CatalogMeasure management from a business point of viewContains predefined measures, which can easily be activated (92 predefined HR Measures)Provides standard measures

Customer MeasuresActivated from predefined measuresMapped from predefined or provider measures Customer-defined

0HR_HRMC_0001

Human Resources

Customer Measure Catalog

C_HR_002 - FTE

SAP SEM Measure Builder

SAP Measure Catalog

0HR_HRMC_0001

Human Resources

Activated from


mySAP HR Benchmarks (Delivered with BW 3.0A)

Basic MeasuresTotal Full-Time Equivalents, Total HR Full-Time Equivalents, Total Employee Initiated Terminations, Total Headcount, Total External Recruits, Total Terminations, Total Internal Recruits, Total Work Days, Total Training Hours, Total Payroll FTEs, Total HR Terminations, Total HR Headcount, Total Training FTEs

Personnel PlanningFull Time/Part Time Staff Ratio, Average Length of Service, Average Age of Employees, Net Entry Rate, Turnover Rate, Involuntary Turnover Rate, Voluntary Turnover Rate, HR Separation Ratio


mySAP HR Benchmarks (Delivered with BW 3.0A)

RecruitmentExternal Recruitment Ratio, Net Recruitment Ratio, Internal Recruitment Ratio, Recruitment Source Ratio

TrainingTraining Hours per FTE, Training Staffing Factor

Personnel ManagementHR Staffing Factor, Payroll Staffing Factor

Time ManagementAbsence Rate per Employee (Non-Exempt)


Fundamental Advantages

Measure DefinitionsUnified definition for all participants - “compare apples with apples”

Process AnalysisIdentify process gaps and weaknesses

Optimize processes according to best practices

Make improvements in HR management practices measurable

IntegrationCompletely automated Benchmarking process

Strategic Alignment of Human ResourcesEvaluate own performance and market position and plan future targets

Develop an improvement and strategy-oriented culture within the HR function

Focus on national and international competitive performance as employer

Make the HR function’s contribution to the organization’s success directly measurable

Position the HR function as a business partner of the Board


Conclusion: Different Level of Software

Do the right things!

Analytical ApplicationsStrategies SAP SEM

Data WarehouseInformation SAP BW

Enterprise Resource PlanningTransaction SAP R/3

Do the things right!


Agenda

Benchmarking

Balanced Scorecard


Balanced Scorecard - Introduction

“The Balanced Scorecard is a framework to translate an organization’s strategyinto terms that can be understood, communicated, and acted upon.

It is therefore not a Management Control System, but a Strategic Management System.”

David P. Norton, SAP White Paper on Balanced Scorecard, 1999


The HR Analytics Lifecycle

PlanBalanced ScorecardKPIsHR Benchmarking

ExecuteOperational Planningand SimulationPerformance Management

MeasureTurnover AnalysisKPIs

Corporate VisionGoals and Strategies


Balanced Scorecard: The Business Perspective

The Corporate Challenges:

Implementing Business Strategy

Strategy execution throughout the enterprise: Translate Strategy into action

Understand the enterprise strategy

Derive and implement an HR strategy

Ensure that HR activities are in the interest of the whole enterprise

Make results measurable

Demonstrate the HR contribution to added value


Value Proposition: The HR Perspective

Understand the enterprise strategy

Derive and implement an HR strategy

Ensure that HR activities are in the interest of the whole enterprise

Make results measurable

Demonstrate the HR contribution to added value

Improve HR positioning


Background

The Corporate Challenge:

“Less than 10% of strategies effectively formulated are effectively executed”

FortuneThe “Burning Issue” in

Business Today

Implementing Business Strategy


Four Barriers to Strategy Implementation

Only 5% of the workforce understand the strategy

60% of organizations do not link budgets to strategy

The Vision Barrier

Only 25% of managers have incentives linked to strategy

85% of executive teams spend less than one hour per month discussing

strategy

9 of 10 companies fail to execute

strategy

The Management BarrierThe People Barrier

The Resource Barrier

80% of HR organizations lack a strategic planning process by which to align their spending programs with enterprise strategy.

Aberdeen .... concludes that 20% or less of HCM effort is spent on strategic activities.

Sources: The Balanced Scorecard Collaborative 1999/2001, Aberdeen Research 2001


Visions, Strategies, and Operative Goals

New Training Program Actual PlanParticipations xxx xxxQualifications xxx xxx

VisionsMission Statement

OverallStrategy

Strategy I Strategy II Strategy III

Initiatives and Key Figures for Each Strategic Goal

Formulate Enterprise Goals

What are our core competencies?

What market position are we striving for?

What products do we want to offer?

Identify Critical Success Factors

--> Formulation of strategic goals

--> Grouping into strategies

Which Paths Lead to Success?

--> Formulate initiatives

--> Assign key figures

--> Set target values

--> Assign resources

--> Name people responsible


Strategic Alignment of the Enterprise

VisionsEnterprise Goals

Departmental and

Team Goals

Departmental and

Team Goals

Area Goals

Enterprise Strategy


HR Benchmarking: The Big Picture

Balanced Scorecard

Measure Catalog (HR Key Figures)

0100010101101100101011010010101010100011101010010110110101011001010101

Benchmark Provider

XML

SAP SEM

SAP BW

SAP R/3SAP R/3 FileFile LegacyLegacySAP R/2SAP R/2


HR Balanced Scorecard – Perspectives


Balanced Scorecard - Key Elements

DevelopKey Skills Objective

Per

spec

tive

s

Key Performance Indicators

Set Up New Training Program

Duration 1/1999 to 6/2000

Owner Anne Miller

Budget $ 300 000

Set Up New Training Program

Duration 1/1999 to 6/2000

Owner Anne Miller

Budget $ 300 000

Initiative

Objective/Measure Actual Plan B.markDevelop key skills

Strategic skills available 17 26 25,5Employee retention 73 70 68

Improve corporate cultureEmployee satisfaction 9,1 8,5 9,0


HR Balanced Scorecard: Cause-Effect Chain


HR Balanced Scorecard: Analysis


HR Balanced Scorecard: Graph


Analyst Quotes on HR Analytics

“By YE03, 60% of G2000 organizations will include workforce analytics...”

Meta 2002

“SAP, with its workforce analytics - though not packaged as a separate offering - goes beyond other vendors in supporting guided root-cause analysis and one-way integration from headcount planning to enterprise budgeting”

Meta 2002

“Traditional administrative functions are no longer the key drivers of HR aplication sales and companies are becoming more and more interested in the strategic nature of HR”

Gartner 2002


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Balanced Scorecard