APPLYING HR STANDARDS & METRICS

TO PROMOTE SOUND HR GOVERNANCE,

RISK, COMPLIANCE

13th Africa Corporate Governance Conference

Marius Meyer, CEO: SABPP

24 November 2014

@SABPP1

Welcome to South Africa

Where can you get the slides?

OPTION 1: FAST WAY

• www.slideshare.net/SABPP

• Twitter: @SABPP1

• Blog: hrtoday.me

OPTION 2: SLOW WAY

• Via email tomorrow

Agenda

• Clarifying the need for national and international

HR Standards

• Identify HR metrics to measure bottom-line impact

of HR

• Managing people risks in business

• Creating an ethical organisation culture

• Conclusion

Maslow’s needs in 2014

Critical questions

1. How many of you would like to eat in a

restaurant without standards?

2. Or stay in a hotel without standards?

3. Or send your child to a school (or pre-

school) without standards?

4. Or get operated in a hospital without any

standards?

5. Or fly back home on an airline without

standards?

Then when it comes to HR …

Why do we continue to

manage people and govern

the most precious part of our

organisations (i.e. people)

without standards?

Top facts about HR

• Human Capital is the biggest concern for

CEOs (PwC).

• Only 18% of CEOs feel confident that they

have the right people in place to execute

strategy (CEB).

• Human Capital is the biggest risk in

business (HCI Africa).

• Skills crisis is the top obstacle to economic

growth.

• Strikes cost SA R197 million per day.

More facts about HR

• SA losing R12 billion a year due to absenteeism.

• Only 5% of employees understand business

strategy.

• World-wide only 13% of employees actively

engaged.

• Companied with engaged employees outperform

others by 202% (Dale Carnegie).

• Companies with good HR Practices outperform

others by treating HR as critical business function,

these companies are 105% more profitable.

• Average ROI on wellness programmes: 300%.

Operational Management Consistency in the

Management of People

One of the toughest things to be is consistent

Example of inconsistency –

paternity leave

• South Africa – 3 days

• Ghana – 5 days

• Cameroon – 10 days

• Kenya – 14 days

• Australia – 14 days

• Sweden – 60 days

• UK – 12 months (parents sharing)

Why a national HR Standard?

• We need to improve the quality of HR

practice.

• Inconsistencies – practices, sites, business

units, companies, industries.

• Too many bad examples of things going

wrong – Marikana, Medupi.

• Raising the bar for the HR profession and

business impact.

• Optimising human capital in business.

468 HR Leaders developing

HR Standards for South Africa

HR Standards Facilitators

Kate Dikgale-Freeman Michael Robbins Linda Chipunza

BUSINESS STRATEGY – HR BUSINESS ALIGNMENT

❶ StrategicHRM

❷ TalentManagement

❸ HR RiskManagement

HR ARCHITECTURE

HR VALUE & DELIVERY PLATFORM

❹Work-force

planning

❺

Learning

❻Perfor-mance

❼

Reward

❽Well-ness

❾ERM

❿OD

⓫ HR Service Delivery

⓬HR Technology

(HRIS)

Prepare

Imple-ment

Review Improve⓭ HR MEASUREMENTHR Audit: Standards & Metrics

H R

C O

M P

E T E N C

I E SSABPP HRM SYSTEM STANDARDS MODEL

Global approaches to standards

• Production and safety lead – ISO standards

• Professional standards – accounting

• Top global companies – their own standards

• Canada – HR Standards & Metrics

• USA – HR Metrics (SHRM)

• ISO HR project started

• South African National HR Standards

International interest

❶ STRATEGIC HR

MANAGEMENT STANDARDDEFINITION

Strategic HR Management is a systematic

approach to developing and implementing

long-term HRM strategies, policies and plans

that enable the organisation to achieve its

objectives.

SABPP (2013)

STRATEGIC HRM PROCESS

Framework of HR policies & programmes

Environmental scan (PESTL)

HR structure, service model and capability

development

People strategy

HR strategic agenda

Organisation’s strategic intent

HR strategic agenda

HR business

plan

People strategy

Allocate roles & responsibilities

(line/HR/support functions)

MONITOR & EVALUATE

Strategic HR: It is all about alignment

HR RISK MANAGEMENT

DEFINITION

HR Risk Management is a systematic

approach of identifying and addressing people

factors (uncertainties and opportunities) that

can either have a positive or negative effect

on the realisation of the objectives of an

organisation.

SABPP (2013)

❸

Risk / Readiness Profile

H R R I S K S – 8 African countries

• Safety - accidents

• Skills shortages/gaps

• Incompetence

• Employee disengagement

• Strikes & poor employment relationships

• Fraud/corruption

• Stress

• Staff turnover

• Low staff satisfaction –impact on customer satisfaction

• Cyber security

• Conflict/disputes

• Diversity problems

• Sexual harassment

• Expatriate issues

• Non-compliance

181 babies died in state hospitals last year.

Human errors, faulty equipment & cover-up by senior medical staff were key factors.

Infection-control nurse retired, and her post not filled.

Critical shortage of nurses & clinical engineers who are responsible for maintaining ventilators.

Senior doctors presented inaccurate stats to their bosses to cover up poor management practices.

Doctors failed to alert DoH to the crisis, even though a few nurses had raised the alarm to management.

Public sector case study

STAFF COMPLAINTS:

Shortage of nurses, leading to overworked staff being vulnerable to human error.

High baby-to-nurse ratio – babies not getting adequate care and attention.

Specialist doctors consult junior doctors on the phone without personally accessing high-risk cases.

Inadequate training for medical staff.

30 May 2010

If you don’t manage HR risks

HR risks – people risk, governance

and compliance

HR RISK MANAGEMENT PROCESS

Assessment of risk tolerance for each risk

Identify and evaluate impact of

HR risks

HR practices, programmes, metrics to

manage risks

HR Risk Map

HR Risk Register

Organisation’s risk management

structures and processes

HR Risk Register

HR Risk Management

Plan

HR Risk Map

MONITOR & EVALUATE

⓭ HR MEASUREMENT

DEFINITION

HR measurement is a continuous process of

gathering, analysing, interpreting and

presenting quantitative and qualitative data to

measure and align the impact of HR practices

on organisational objectives, including

facilitating internal and external auditing of HR

policies, processes, practices and outcomes.

SABPP (2013)

HR MEASUREMENT SYSTEM

MONITOR &

EVALUATE

What are the drivers behind those issues?

What issues do we need to manage

(risks/opportunities)?

What are the outcomes specified

in the SLA?

How can we measure those in a Balanced

Score Card?

METRICS

METRICS FOR PEOPLE MANAGEMENT IN THE ORGANISATION

METRICS FOR HR EFFECTIVENESS/

EFFICIENCY

How can we measure those

drivers?

Management system & resources to collect

and report

Financial and operational reporting

systems in organisation

HR manager’s response to

metrics?

Key Human Capital Metrics• Revenue per employee (Revenue/FTE)

• Profit per FTE (Revenue-Operating cost/FTE)

• Human Capital ROI (benefits-costs/costs)

• Leadership quality index

• Employee engagement score

• Employee satisfaction score

• Organisation climate score

• Employer of choice index

• Human capital risk index (less than 10% risk)

• HR customer satisfaction score

The need for consistency and quality

POSITIONING GRC IN

COMPANIES

GOVER-NANCE

RISKCOM-

PLIANCE

LEADERSHIP

MANAGEMENT

CU

LTUR

E

CO

NTR

OLS

Triple bottom-line: 3 P’s

PEOPLE(Social)

PLANET(Environment)

PROFITS(Financial

performance)

S U S T A I N A B I L I T Y

“Good human resource management is imperative for good governance”

Mervin King

HR governance defined:

is the act of leading, directing & controlling the HR function to promote sound corporate governance in pursuit of the overall business goal of economic, social & environmental sustainability

Workplace behaviour

OOPs !! What if ? the pilots had not read the Instruction book

What if ? The ground staff didn't think that

house keeping was an important issue

Who insured it and will they pay ??

RISK Reporting

GUIDELINES FOR HR GRC

• Transform HR management to HR governance by taking

full responsibility for GRC in the HR space, but with a

clear link to overall GRC and business strategy

• Identify all stakeholders and engage with them

• Design and implement a robust HR risk management

plan

• Develop HR standards – good HR practices

• Infuse HR governance in your organisation

• Evaluate the impact of HR on the bottom-line

RATING SCALE TO ASSESS HR

PROBLEMATIC MEDIOCRE EXCELLENT

High Risk Medium Risk Low/no Risk

HR practice is non-existent, has a low uptake or is applied poorly. Little, no or poor results are evident. Requires urgent attention to move to medium risk over short or medium term.

Some pockets of excellence, but they are isolated, and applied inconsistently in certain parts of company. Some occasional positive results comparable to typical average HR standards. Should be addressed before it becomes problematic.

HR leading practice is well infused, aligned and integra-ted across the company and applied consistently with clear results. Comparable to world-class standards. Should be maintained, reinforced or used as a model for other companies.

SUSTAINABLE PERFORMANCE

“Whether a company sustains exceptional performance depends first and foremost on whether it continues to

have the right people in power.”

Ethics Management Process …

Develop or revise code of ethics & processes

Build an ethical culture

Integrate ethical

standards

Assess ethics risk and

opportunities

Report & Disclose

Reference: Ethics SA www.ethicssa.org

National HR Governance Strategy Alignment

HR Professional Standards:• HRMS (13)• HRMSAS (13)• HRPPS (30+)

HR Products/Services:• CPD• Mentoring• Professional registration• Research• HR Academy – QCTO• Curriculum standards

HR Metrics:• National HR Scorecard• HR Service Standards

HR Auditing:• Internal Audit• External Audit

King IV:HR Governance

ISO: HR

IntegratedReporting

HR Competencies

Conclusion

HR standards are needed to improve the

consistency and quality of HR management.

Consider the SABPP approach, process and

methodology, but develop your own HR

standards for your country.

Best wishes with your HR governance work.

For more information, contact us on executiveoffice@sabpp.co.za

Let us build well governed HR functions

professional@sabpp.co.za (Professional Registration)

xolani@sabpp.co.za (Professional Services)

kenneth@sabpp.co.za (Stakeholder Relations)

penny@sabpp.co.za (Research)

naren@sabpp.co.za (Learning & Quality)

marius@sabpp.co.za (Strategy inputs)

voice@sabpp.co.za (Social media)

Website : www.sabpp.co.za Blog: hrtoday.me

New office: 8 Sherborne Str, Parktown, South Africa

Tel: +27 11 482-8595 Fax: +27 11 482-4830

Cel: 082 859 3593 (Marius Meyer)