SHRM Atlanta presentation by Gary Wheeler, The Virtual HR Director about how HR can contribute to your bottom line.

1. Making HR A
Profit Contributor
Gary Wheeler, SPHR, GPHR, CCP, CBP

2. Objectives
• Understand how HR may contribute to the growth and
profitability of the company
• Four areas to improve productivity
• Five steps to grow business
• Guideline for HR scorecard measures
• Note: HR model from Dave Ulrich
• Process to grow business from ActionCoach Business Coaching concepts

3. What Makes HR Strategic?
• Why are we talking about it?
• What does non-strategic v. strategic look like?
• Why do we have to prove ourselves
• What is a strategic business partner?

4. Evolution of HR
• Pre-Profession
• Accounting Department
• People Administration
• Industrial Relations
• Union-Management Relations
• 1948 American Society for Personnel Administrators (ASPA)
• Berea, Ohio
• Approximately 1968 Meeting with DOL
• Professional organization
• Code of Ethics
• Research Arm
• Body of Knowledge
• Certifying Body

5. Evolution of HR cont.
• 1960’s and 1970’s
• The need to interpret & manage civil rights compliance
• Trend – move unsuccessful operators to Personnel
• Good with people
• 1970’s and 1980’s
• The need to interpret & manage OSHA
• We become the internal corporate cop
• Legal – compliance revolution
• 1989 Society for Human Resource Management
• 1990 Michael Losey, SPHR, CAE, President & CEO
• Strategic Business Partner
• Certification

6. HR Reputation
• Has too many rules
• Always busy
• Get in the way of firing bad employees
• Compliance Cop that tells CEO you screwed up
• Tells us to be more sensitive
• They screwed up my paycheck
• They will not give me my benefits
• Involved in discipline
• The people that fire you
• The DEPARTMENT of NO!

7. The Language of Strategic
•MONEY
• CEO
• CFO
• CMO

8. Shareholder Expectations
• Reputation management
• Customer loyalty
• Employee retention
• Shareholder returns

9. Organizational Capabilities
• Productivity costs
• Speed
• Service
• Mergers, acquisitions, alliances
• Innovation
• Collaboration /synergy
• Branding
• Quality

10. Dave Ulrich Model

11. Strategic Contribution
• Culture management
• Fast change
• Strategic decision making
• Market-driven connectivity

12. Personal Credibility
• Effective relationships
• Achieving results
• Personal communication

13. HR Delivery
• Staffing
• Development
• Organization structure
• HR measurement
• Legal compliance
• Performance management

14. Business Knowledge
• Value chain knowledge
• Value proposition knowledge
• Labor knowledge

15. HR Technology
• HR technology

16. HR Strategic Contributor
• Four Areas to Improve Productivity
• People
• Technology
• Processes and systems
• Accountability
• Five Steps to Grow Business
• Lead generation
• Conversion rates
• Transactions
• Average dollar sale
• Margins

17. Improve Productivity
People Technology Processes & Accountability
Systems
Skills Training Online Tracking Time Dashboard
Management
Career Employee Integrate Inventory
Development Portal System Technology Control
Quality Online Training Ishikawa Weekly Review
Orientation Process Meetings
Cross Training Knowledge Project KPI’s/SMART
Management Manager Goals
System
Conflict Web Based Six-Sigma/Lean Certification
Resolution Delivery Process

18. Investment Cost
• Initiatives, programs and projects cost money
Training development cost
Materials cost
Cost of facilitation
+ Loss of productivity
= Total Project Cost or Investment Cost

19. Return on Investment (ROI)
Gain from Investment - Cost of investment
ROI = _______________________________________
Cost of Investment
78,000 - 20,000
290% = ________________
20,000

20. How To Increase Profitability
Number of Leads
x
Conversion Rate
=
No. of Customers
x
No. of Transactions
x
Avg. $$$ Sale
=
Revenues
x
Margin
=
Profits

21. Our Business - Better Buy, Inc.
Number of Leads 36,000
x x
Conversion Rate 42%
= =
No. of Customers 15,120
x x
No. of Transactions 1
x x
Avg. $$$ Sale $775
= =
Revenues $11,718,000
x x
Margin 45%
= =
Profits $5,273,000

22. Leadership Team Strategy Mtg.
Number of Leads 36,000 Goal 15% Increase
x x x
Conversion Rate 42% Goal 15% Increase
= = =
No. of Customers 15,120 More Customers
x x x
No. of Transactions 1 w/Coupon 12% Increase
x x x
Ave. $$$ Sale $775 Extended Warranty Package 10%
= = =
Revenues 11,718,000 More Revenue
x x x
Margin 45% Goal 10% Increase
= = =
Profits $5,273,000 More Profit

23. HR Initiatives
15% - HR & Marketing Develop Training for Team
x
15% - HR & Sales Develop New Sales Training Program
=
Customers
x
12% - HR & Call Ctr. Develop Training on Customer Care
x
Operations Implements an Extended Warranty Product
=
Revenues
x
10% HR & Ops Enlarge and Enrich Jobs of Current Employees
=
Profits

24. Better Buy, Inc.
Number of Leads 36,000 Tele-market Team Training
x x x
Conversion Rate 42% Sales Team Training Program
= = =
No. of Customers 15,120 More Customers
x x x
No. of Transactions 1 Customer Service Training
x x x
Ave. $$$ Sale $775 Add Extended Warranty Product
= = =
Revenues 11,718,000 More Revenue
x x x
Margin 45% Job Enlargement/Enrichment
= = =
Profits $5,273,000 More Profit

25. Better Buy, Inc.
Number of Leads 36,000 41,400
x x x
Conversion Rate 42% 48.3%
= = =
No. of Customers 15,120 19,996
x x x
No. of Transactions 1 1.12
x x x
Ave. $$$ Sale $775 $852.50
= = =
Revenues $11,718,000 $19,092,180
x x x
Margin 45% 50%
= = =
Profits $5,273,000 $9,546,090

26. Let’s See it Again
Number of Leads 36,000 41,400
x x x
Conversion Rate 42% 48.3%
= = =
No. of Customers 15,120 19,996
x x x
No. of Transactions 1 1.12
x x x
Ave. $$$ Sale $775 $852.50
= = =
Revenues $11,718,000 $19,092,180
x x x
Margin 45% 50%
= = =
Profits $5,273,000 $9,546,090

27. Where Does HR Strategy Begin?
• Company
• Organization Vision
• Organization Mission
• Organization Metrics
• Organization Strategic Imperatives
• Human Resources
• HR Vision
• HR Mission
• HR Metrics
• HR Strategic Imperatives
• Critical - HR measures must drive bottom line results

28. HR Metrics
• Organization metrics
• HR metrics aligned to improve organization goals
• HR metrics may be line management metrics
• Measure outcomes not activities
• Measures should equate to dollars

29. Balanced Score Card
Financial Customer
People Internal Business
Processes

30. Balanced Score Card Examples
• Financial
• Cost of hires
• Cost of turnover
• Employee injury reserve costs
• Employee injury OSHA Recordable rate
• Earnings before interest tax and amortization (EBITA)
• People
• Company employee attitude survey results
• Benefit cost per employee
• Intellectual capital cost per unit produced
• Employee turnover rate
• Lost time days

31. Balanced Score Card Examples cont.
• Customer
• Customer Satisfaction Index (CSI)
• Customer complaints
• Employee complaints
• Sales
• Internal Business Processes
• Training Initiative ROI
• Employee development initiative
• Management development initiative
• Job enlargement initiative
• Job enrichment initiative
• Ethics & compliance initiatives

32. HR Strategy
An image of the desired
future / inspirational &
aspirational Vision
A clear and
compelling goal Mission
Needs/wants to Goals
achieve
The plan by which the goals
and mission will be achieved Strategies
Tactical / operational plans Initiatives
to implement the strategy
© Copyright Human Resource Business
Partner Consultant 2005

33. Initiatives, Programs, Projects
• Strategic Imperative
• Initiatives
• Programs
• Projects

34. Example 1
• Employee Health and Safety Frequency (imperative)
• Employee Engagement (initiative)
• New safety training program (program)
• Safety awareness campaign (project)
• Health and Safety Committees (program)
• Safety Awareness Day (project)

35. Example 2
• Employee Attitude Survey Results (imperative)
• Employee communication (initiative)
• Online newsletter (project – process)
• Employee portal (project – process)
• Management employee relations training (project)
• Annual one-on-one communication (program)
• Town Hall Meetings (project – process)

36. STRATEGIC HUMAN CAPITAL PROCESS
Phase I Phase II Phase III Phase IV Phase V Phase VI
Review Organizational OD principles, Performance
Align HR vision,
Human Capital Capabilities, process Management Communicate, implement
mission, values,
philosophy Talent, structure improvement, Plans training and evaluation
strategy
competencies
GOALS
Assess people and People needs,
Conduct SWOT HR aligned Org chart, Team agreement, learning
capacity to opportunities,
to business Competencies Organization, measure
meet organization training,
strategy & goals roles and results
goals performance
HR metrics responsibilities
plans
PROCESSES
-SWOT -HR vision -Education
•-Org chart •Performance review Communicate,
•Total Comp •HR mission •Knowledge •Career development
•Job descriptions Implement, manage
•Length of service •Org Values •Skills •Succession planning
•Competency models track results
•Turnover •HR Strategic •Abilities •Replacement
•Pay structures
•Evaluation process Imperatives •Experiences planning
•Minimum •Design training
•Leadership styles •HR Metrics •Reporting
requirements
•Promo philosophy relationships programs
•Required training
•Education philosophy
•Litigation
RESULTS
Understand HR vision, mission, Understand Structure,
Strategy and metrics HR development ROI, learning
People Strategy current competency
Aligned to business organization
capabilities models,
Job descriptions
pay training Plan
Copyright © 2010. The Virtual HR Director. All rights reserved. 36

37. Questions?

38. Thank You!
Gary Wheeler
The Virtual HR Director, LLC
gary@thevirtualhrdirector.com
http://www.thevirtualhrdirector.com