how to measure your credit union human resources (webinar slides) | human capital
DESCRIPTION
In order to ensure that you are effectively managing and deploying your staff, you need to identify meaningful measures and a clear framework for evaluating success. In this recorded webinar, learn how to successfully evaluate your credit union staff. You will also learn to understand formulas and benchmarks to help evaluate your people management. This recorded webinar is hosted by our expert presenters, co-founders of Human Capital Solutions Group, Loretta Dodgen and Malinda Lowery, with a combined experience of over 40 years in managing human capital. For more info: www.nafcu.org/hcsgroupTRANSCRIPT
Presented by: Loretta P. Dodgen, Ed. D. Malinda B. Lowery, Ed. D.
June 7, 2012
1
To familiarize participants with key Human Capital Metrics and their application
To outline the decision framework for selecting the Human Capital Metrics for your credit union
To provide baseline industry performance targets
To learn from the leaders
2
Human Capital drives the strategic vision and goals of the organization
Is 60% of the operating expense and consumes 40% of the revenue
More than 85% of organizations report that they track HR data and use that data to measure performance and profitability
If you can measure it, you can understand it. If you understand it, you can improve it.
3
There is a movement from Human Resources metrics to Human Capital metrics.
Pressure for financial performance drives need to maximize the impact of human capital and align human resource processes with the overall business strategy.
Human Capital practices are a lead indicator of good financial performance (Towers Perrin).
4
Does your credit union use: a. Human Resources metrics (tactical)
b. Human Capital metrics (strategic)
c. Both Human Resources and Human Capital metrics
d. Neither
5
Goal is not to have metrics but to obtain information that will help make better decisions.
Effective measurement requires effective tools, technology, and process.
Target a manageable number of key metrics.
Data is just data. The questions give the meaning and context for interpretation.
6
Without a standard or benchmark, the metrics are meaningless no matter what is measured.
Have consistent and immediate access to internal measures
Access good advice/data
7
Human Resource Metrics- looks inward toward what the HR department is doing (Tactical) • Turnover Rate • Average time to fill
positions • FTE to HR Staff • Members to FTE • Benefits as % of
Compensation increase
8
Human Capital Metrics- looks outward to the total credit union (Strategic) • Operating Income/employee • Compensation Costs/employee • Human Capital Efficiency Ratio • Human Capital ROI • Total Realized Value
9
Human Capital ROI
Revenue – (Operating Expenses – Compensation + Benefits Costs)/ Compensation and Benefits Costs or
Net Income/ Compensation and Benefits Costs (.65 target)
Represents pre-tax profit for amounts invested in employee pay and benefits after removal of capital expenses
10
Profit/Employee (Revenue – Operating Expenses)/ Number of FTE’s Illustrates the degree of leverage of Human Capital; provides a benchmark for overall expense analysis relative to targets or budgets
11
HR Expense Factor Total HR Expenses/ Total Operating Expenses Illustrates the degree of leverage of Human Capital; provides a benchmark for overall expense analysis relative to targets or budgets
12
Human Capital Value Added Revenue – (Operating Expenses-Compensation + Benefits Costs)/ FTE’s Shows the value of employee knowledge, skills and performance and how Human Capital adds value to the organization
13
Compensation Efficiency Ratio
Operating Income per Employee/ Salaries and Benefits per Employee
Target ratio of 2.5 for high performing credit unions shows how efficient the investment is being managed.
14
What is your leading challenge in the use and application of Human Resources and Human Capital metrics?
a. Selection of metrics to use
b. Collection and interpretation of data
c. Setting performance targets and benchmarks
d. Consistent use and implementation
e. Management engagement
15
Selecting Metrics
Include both Human Resources and Human Capital metrics
Differentiate Performance Appraisal and Performance Management
Link to the credit union’s overall strategy, objectives, and core values
16
Establishing Benchmarks/Performance Targets
Internal and External view
“It depends.”
Peers
High performers
17
32 credit unions
Asset sizes from $222.9 M to $46.9 B
Members from 26,400 to 3.9M
All geographic regions
Multiple sources and factors: financial performance, services and products, growth ratios ◦ www.findthebest.com
◦ NCUA
◦ Raddon Group
◦ Filene Institute
18
Performance Factors/Ratios
2009 Average 2010 Average 2011 Average Gains
Assets $1,870,713,615 $3,299,862,460 $3,580,557,923 91%
ROAA Pre-stabilization 0.56 0.70 0.88 57%
Operating Income $93,648,158 $124,360,750 $144,360,569 54%
Op Income/Employee $157,144 $193,210 $214,473 37%
Net Income Pre-stabilization
$24,562,524 $36,265,738 $43,791,027 78%
FTE 596 644 673 13%
Members 271,737 282,674 297,590 10%
Members to FTE 379 380 383 1%
Salaries and Benefits $40,623,491 $42,617,285 $47,735,683 18%
Salaries and Benefits/Employee
$61,139 $61,172 $63,496 4%
Comp Efficiency Ratio 2.23 2.62 2.74 20%
ROI in Human Capital 53% 61% 74% 41%
19
Strategic alignment with vision, goals, core values
Human Capital included in development of strategic goals
Target and track human capital metrics
Consistent and transparent feedback and all employee celebration of progress toward goals
20
Clear “brand”
Support risk, empower, and engage
Fair and competitive compensation
Clear linkage between achievement and rewards and recognition
Accountability to the team
Training and employee development to grow talent and bench strength
21
22
For additional Information Contact: Loretta P. Dodgen, Ed. D. [email protected] Malinda B. Lowery, Ed. D. [email protected] www.nafcu.org/HCSGroup 2815 Coliseum Centre Drive Suite 220 Charlotte, NC 28217 704-716-3451 Visit us at the NAFCU Annual Conference in Nashville, TN
Booth #3