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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
© SAP AG 2002, The HR Balanced Scorecard, Dr. Martina Schuh, Page 3
Agenda
Benchmarking
Balanced Scorecard
© SAP AG 2002, The HR Balanced Scorecard, Dr. Martina Schuh, Page 4
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!!! ]
© SAP AG 2002, The HR Balanced Scorecard, Dr. Martina Schuh, Page 5
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
© SAP AG 2002, The HR Balanced Scorecard, Dr. Martina Schuh, Page 6
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
© SAP AG 2002, The HR Balanced Scorecard, Dr. Martina Schuh, Page 7
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
© SAP AG 2002, The HR Balanced Scorecard, Dr. Martina Schuh, Page 8
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
© SAP AG 2002, The HR Balanced Scorecard, Dr. Martina Schuh, Page 9
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)
© SAP AG 2002, The HR Balanced Scorecard, Dr. Martina Schuh, Page 10
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
© SAP AG 2002, The HR Balanced Scorecard, Dr. Martina Schuh, Page 11
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!
© SAP AG 2002, The HR Balanced Scorecard, Dr. Martina Schuh, Page 12
Agenda
Benchmarking
Balanced Scorecard
© SAP AG 2002, The HR Balanced Scorecard, Dr. Martina Schuh, Page 13
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
© SAP AG 2002, The HR Balanced Scorecard, Dr. Martina Schuh, Page 14
The HR Analytics Lifecycle
PlanBalanced ScorecardKPIsHR Benchmarking
ExecuteOperational Planningand SimulationPerformance Management
MeasureTurnover AnalysisKPIs
Corporate VisionGoals and Strategies
© SAP AG 2002, The HR Balanced Scorecard, Dr. Martina Schuh, Page 15
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
© SAP AG 2002, The HR Balanced Scorecard, Dr. Martina Schuh, Page 16
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
© SAP AG 2002, The HR Balanced Scorecard, Dr. Martina Schuh, Page 17
Background
The Corporate Challenge:
“Less than 10% of strategies effectively formulated are effectively executed”
FortuneThe “Burning Issue” in
Business Today
Implementing Business Strategy
© SAP AG 2002, The HR Balanced Scorecard, Dr. Martina Schuh, Page 18
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
© SAP AG 2002, The HR Balanced Scorecard, Dr. Martina Schuh, Page 19
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
© SAP AG 2002, The HR Balanced Scorecard, Dr. Martina Schuh, Page 20
Strategic Alignment of the Enterprise
VisionsEnterprise Goals
Departmental and
Team Goals
Departmental and
Team Goals
Area Goals
Enterprise Strategy
© SAP AG 2002, The HR Balanced Scorecard, Dr. Martina Schuh, Page 21
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
© SAP AG 2002, The HR Balanced Scorecard, Dr. Martina Schuh, Page 22
HR Balanced Scorecard – Perspectives
© SAP AG 2002, The HR Balanced Scorecard, Dr. Martina Schuh, Page 23
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
© SAP AG 2002, The HR Balanced Scorecard, Dr. Martina Schuh, Page 24
HR Balanced Scorecard: Cause-Effect Chain
© SAP AG 2002, The HR Balanced Scorecard, Dr. Martina Schuh, Page 25
HR Balanced Scorecard: Analysis
© SAP AG 2002, The HR Balanced Scorecard, Dr. Martina Schuh, Page 26
HR Balanced Scorecard: Graph
© SAP AG 2002, The HR Balanced Scorecard, Dr. Martina Schuh, Page 27
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
© SAP AG 2002, The HR Balanced Scorecard, Dr. Martina Schuh, Page 28
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© SAP AG 2002, The HR Balanced Scorecard, Dr. Martina Schuh, Page 29
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