Helping HR to Have an Impact on the Bottom Line:

8/9/2019 Helping HR to Have an Impact on the Bottom Line:

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The following article is based on a panel presentation at the May 6, 2005 meetingof the HR Network at the American

Management Association in Manhattan.The network is co-sponsored by The FiveOClock Club and the AMA, and is avenue for HR professionals to meet infor-mally and hear discussions of important issues of the day. The panelists on May 6th

were:! Jim Murray, head of Human Resources Decision Support at Merck

! Tony Politano, author of Chief Performance Officer and a consult-ant on performance measurement with Niteo, an NEC Company

! Jordan Vargas, Vice President of Human Resources for PublishersClearing House

AAwise boss once said, The thing

I worry about the most is myelevator assets. What he meantby this was his employees: When theyleave at night, they get in the elevatorand go home. What if they dont comeback? Hence, one of his major preoc-

cupations was keeping people happyso that they would want to come back.

MM easureasur ing and ring and r eporepor ting isting isnono w often a substantialw often a substantial

parpar t of the HR rt of the HR r oleole ..

Traditionally HR has been viewedas an ally in the effort to care for and

nurture employees. Hence, insuranceand benefits, training, performancereviews, and promotions have all beenconsidered part of the human resourcesfunction. This function has becomeincreasingly complex over the years asthe laws relating to employment, bene-fits, discrimination, and employer liabil-ity have become more complex. Butthere has been a growing realization inrecent years that human resources oughtnot to be as narrowly construed as it has

been. The wise boss who looked uponhis employees as assets was anticipatingthe trend these days to speak of theworkforce as the human capital of anorganization.

This understanding actually points

HR in at least a couple of directions: toward a broader understanding of its rolenamely, that of business part-ner, with a chance to have impact onthe bottom line of an organization.

toward a broader understanding of what a career in HR can mean; savvyHR professionals realize that, if they arefully aware and involvedbeyond themechanics of benefits and salaryreviewsthey can earn a place at thetable and the power, income and pres-tige that go along with that status.

PP rr oo viding metrviding metr ics to seniorics to seniormanagement can earmanagement can ear n HRn HR aaplace at the table and helpplace at the table and help

to make HR a business parto make HR a business par tt --ner in the organizationner in the organization ..

HR: Positioned Well for the FutureIndeed, HR is in an ideal position

to move forward on these fronts precise-ly because its focus for decades has beenon human capital, although with anemphasis on managing the treatment

T H E F I V E O C L O C K N E W S / O C T O B E R 2 0 0 5

Helping HR to Have an Impacton the Bottom Line:

The Role of Metricsby David Madison, Ph.D.,

Director, The National Guild of Five OClock Club Career Coaches

Human resources professionals picked up key ideas to take back to their employers.

David Madison

Beth Ranney, Sponsorship and PartnershipDirector for the American ManagementAssociation, welcoming a packed room.


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and care of employees. The key element

to incorporate in going forward is per-formance measurement at a breadth anddepth not previously considered orattempted. HR already knows a lotabout the people on staff; thoroughanalysis of what they do every daymeasuring that and reporting in themost meaningful way possiblecannow be a substantial part of the HRrole. This added dimension is what gen-erally is meant by HR metrics. TonyPolitano, as a chief performance officer,

stated the case succinctly: You need tohave information to get visibility at theboard and CEO levelsand with thatyou can be recognized as having a sig-nificant impact on the long-term per-formance of the company.

The need for information will callfor a deeper understanding of IT. Likeit or not, Tony pointed out, informa-tion technology is going to be a majorenabler to gain visibility at the boardand CEO level. You will need to under-stand what is happening from a techni-cal perspective, how to interact withyour IT departmentand what thetechnical boundaries are within yourorganization. Building on this kind of understanding, collaboration with ITcan include integrated performancereviews and the automation of work flow, which will allow finance to movebeyond its traditional concept of budg-eting as numbers. The finance peopleare now understanding that they need

to integrate the budgeting of humancapital into the strategic plan, Tonyobserved. Hence, collaborating with ITand finance can improve understandingof the impact of head count, humancapital and training on the long-term

growth of the company.

TTo get visibility at the boaro get visibility at the boar ddand CEO levand CEO lev els, yels, y ou need toou need to

givgiv e theme them inforinfor mation mation ..

The strong emergence of technolo-gy as one of the key players in organiza-tions today can enhance the role of HRin unexpected ways. One of the primaryconcerns about technology is the collec-tion and amassing of too much informa-

tion. One major hospitality companyhad collected vast amounts of dataabout customersbased, for example,on the use of credit cards. Sensitive tothe potential dangers that this fund of information can represent, the companycreated the position of Chief PrivacyOfficer, who reports to the VP of Human Resources. Much more so thanIT or the CFO, HR was regarded as adepartment that could be entrusted tokeep confidences; HR in general is sup-

posed to have protocols in place to keepinformation private.

Root-Cause AnalysisSolid understanding of IT and col-

laboration should result in what Tony

H E L P I N G H RH E L P I N G H R W I T H T H E B O T TW I T H T H E B O T T O M L I N EO M L I N E

4 T H E F I VE O C LO C K N E WS / O C TO B ER 2 0 05

What HWhat H uman Ruman R esouresour cescesEE xxecutivecutiv es Ses S ay Aay A boutbout

FF iviv e OClock Clube OClock ClubOO utplacement!utplacement!

This thing worThis thing wor ksks .. I saw a structured,yet nurturing, environment where

individuals searching for jobs positionedthemselves for success. I saw

accountability in a non-intimidatingenvironment. I was struck by the

support and willingness to encouragethose who had just started the processby the group members who had been

there for a while. Employee Relations Officer,financial services organization

WW oo w! I was immediately strw! I was immediately str uck buck b yythe electrthe electr ic atmospheric atmospher ee and peoplescommitment to following the program.

Job hunters reported on where they werein their searches and what they had

accomplished the previous week.The overall environment fosterssharing and mutual learning. Head of Human Resources,

major law firm

The Five O'Clock Club program is farfarmormor e effective effectiv e than conve than conv entionalentionaloutplacement.outplacement. Excellent materials,effective coaching and nanosecond

responsiveness combine to get peoplefocused on the central tasks of the job

search. Selecting the Five OClock Outplacement Program was one of my

best decisions this year.Sr. Vice President, Human Resources,

manufacturing company

YYou havou hav e made me look like a re made me look like a r ealeal

geniusgenius in recommending The FiveO'Clock Club [to our divisions aroundthe country]!SVP HR,

major publishing firm

SS electing Felecting F iviv e OClocke OClockoutplacement was one of myoutplacement was one of my

best decisions this ybest decisions this y earear ..SVP, H R,

consumer products firmTony Politano, author of Chief Performance

Officer , told the audience to collaborate withIT in measuring and managing performance.

Jim Murray, Head of Human ResourcesDecision Support at Merck, explains the

role of HR metrics at Merck.


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calls performance management. Thisis about understanding metrics and

gaining metric visibility at the boardlevel. He cited an example of root-cause analysis done at a Department of Corrections. When the governor andstate budgeters look at any governmentdepartment, they want to see the num-bers, and if there are budget overruns,they want to know why. The numbersare what they care about. Are theymaking budget or not? We drilleddown to look for the root cause of what was going on. Several factors

came into playincluding havingmore prisoners than had been antici-patedbut the key factor was theguards overtime. And overtime willalmost always wreck the budget.

Your projections there will alwaysbe wrong. You cant get that right, espe-cially if you are in a highly structuredenvironment with unions.

DD etereter miningandminingandmeasurmeasur ingthe ringthe r oot causeoot cause

of a prof a pr oblem can roblem can r esultesultin savingsin savings ..

Overtime is hard to project, forexample, because of understaffing,absenteeism and (in the prison envi-ronment) emergencies, or incidents.How does metrics tie into this? And ata level that a governor can under-stand? It turns out that emergencies

drive up overtime mainly because of the paperwork required to documentthe events. We found that we neededto change the business process toreduce the paperwork from two hoursto fifteen minutes. In this way, careful

measurement and root-cause analysisplayed a role in impacting the bottomline.

HR must shoHR must sho w the vw the v aluealueof intangible assets (people)of intangible assets (people)

on the bottom lineon the bottom line ..

Working Toward Strategic PartnerThis kind of experience under-

scores Mercks Jim Murrays under-

standing of the role of HR in deliver-ing metrics: It is a matter of gettingthe right information to the right peo-ple at the right time in the right wayto make the best decision. The chal-lenge for human resources is that theevaluation of intangible assets wouldinclude all of your peoplewho are in

there somewhere, and we dont knowhow to value that. But the degree towhich this can be done will largelydetermine how well HR can moveinto more a powerful role. I think that the Holy Grail today, he said, isfor HR to achieve the whole conceptof a strategic partner. This concept hasbeen in vogueand it has been real-ized to a degree. But its up to HR tobring the evidence to the table to



Jordan Vargas, VP, Human Resources,Publishers Clearing House, providing insight

on working with boards and CEOs.

Kate Wendleton, as moderator,fielding questions from the audience.

The JThe J ob-Sob-S earear chchBB uddy Suddy S ystemystem

DDo youwishyou

had someone totalk tofairly

often and infor-mallyaboutthe little things?Heres what Im planning to do today inmy search? What are you planning to do?Lets talk tomorrow to make sure wevedone it. You and your job-search buddycould keep each other positive and ontrack, and encourage each other to dowhat you told the small group you weregoing to do: Make that call, send outthose letters, write that follow-up pro-posal, focus on the most importantthings that should be donerather than(for example) spending endless hoursresponding to job postings on the Web.

With your buddy, practice yourTwo-Minute Pitch, get ready for inter-views, bounce ideas off each other. Some

job-search buddies talk every day. Sometalk a few times a week. Most of the con-versation is by phone and e-mail.

Sometimes, people match them-selves up as buddies. Just pick some-

one you get along with in your smallgroup. Sometimes, your coach canmatch you up. However you do it,stay away from negative people whotalk about how bad it is out there.They will drag you down.

The small group changes overtime: people get jobs; new peoplecome in. If you lose one buddy whogot a job, get another buddy.

Your buddy does not have to be inyour field or industry. In fact, being inthe same field or industry could keep

you focused on the industry rather thanon the process . But you do have to getalong! The relationship may last only amonth or two, or go on for years. Somebuddies become friends.

Of course, you should see yourFive OClock Club career coach pri-vately for rsum review, target devel-opment, salary negotiation, and jobinterview follow-up. Its usually bestto get professional coaching advice forthese areas. !


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effort because the stakes are highandbecause the conversation needs to buildand mature with time. When I sayconversation, Jordan notes, it is not

just about one meeting, it is about therelationship that might be destined to

last for a period of years and unlessyou speak the language, you cant havethe conversation.

FForge rorge r elationships withelationships withpeers in other arpeers in other ar eas of theeas of the

companycompany , lear, lear ning thening thebusiness aggrbusiness aggr essivessiv elyely ..

Where Did the CEO Come from?The best way to begin mastery

of the CEOs language, Jordan pointsout, is to know what functionaltrack he or she came up through.Was it marketing or sales, finance oroperations, technology or HR? If theCEO came up through HR, yourelucky. Furthermore, with your eyeon HR metricscareful analysis of the companys human capital andhow 35 hours of labor per week times 500 employees impacts thebottom lineyou know that leader-ship skills can clearly matter enor-mously. Ironically, Jordan observes,Most CEOs are not really schooledin the art of leadership. Some areIhave a run across a fewand theyare a pleasure to work with.

With this need to communicatewith the CEO in mind, HR profes-sionals who are interested in gaininga place at the table should be forginglines of communication and relation-ships with peers in many different

departments, learning aggressivelyabout areas and functions outside of HR. You have to learn the languageof your business, Jordan insists, andbusiness in general. This kind of effort will help to position you wellfor conversations with the CEO.

Tuning into the AgendaAs well as speaking the same

language, it is also important to read

the CEO as accurately as possible interms of agenda and passions. Youmay have an agenda based on bettermetricsperhaps acquisition of another company that could bring invital human assets and expertise

but the CEO doesnt want to rock the boat. I worked with one CEOwho was about 60, Jordan recounts.After working with him for two orthree years I realized what his agendawas. I was talking about acquisitionsand potential targets, and he was justplaying games with me. He didntwant to do that. He did not want towork. He didnt want to jeopardizehis payout in a couple of years.

Even the mechanics of the con-

versation with the CEO have to bemastered. Does she prefer to com-municate verbally, or through emailsand memos? And with very full cal-endarsand perhaps varying levelsof education and intellectualprowesshow do you launch discus-sion of complex topics that could beof vital importance? In one caseJordan decided not to ask the CEOto read an article from the Harvard

Business Review , but instead prepareda one-page summary. This could beenough to provoke questions andmove the conversation forward.

More Resources AvailableThe purpose of the HR

Network panels is to spark curiosityand encourage HR professionals todig furtherand most attendeescome for the insights to be gainedfrom listening to experts in the field.Hence, a good place to learn moreabout metrics is panelist TonyPolitanos book, Chief PerformanceOfficer , whose subtitle is MeasuringWhat Matters, Managing What Can

Be Measured. But the topic of met-rics is commanding wide attention,and the literature is growing rapidly.You can begin harvesting informa-tion by keying in hr metrics or hrmetrics conferences into Google. !

What Is the HR Network,and Why Does It Offer

Breakfast Seminars?The May 6th HR Network Breakfast was

the 13th meeting of this organization foundedin 2003 by The Five OClock Club. The pur-pose of the HR Network is to provide a learn-

ing forum for HR professionalsto help themdo their jobs better and advance in their careers.

This is a way for The Five OClock Clubto give back to our customers and to serve theHR community, which has shown increasingappreciation for our innovative outplacementservices.

It is not our style to spend lavishly andpass costs on to either retail or corporateclients. Thus, we developed an outplacementmodel based on providing coachinginsteadof expensive real estate. Neither do we court

HR executives with boat rides aroundManhattan, golf outings or expense-accountdinners. Instead we work hard to present sixsubstantive HR Network Breakfast Seminarsevery year, so that HR professionals can takeaway information to give them a competitiveadvantage.

And, by the way, we never allow vendors toattend , so that HR officers can focus as well ongetting to know each other.

Past HR Network Breakfast Topics New Trends in Restrictive Covenants: Get

Both Sides of the Story How to Manage Your Compensation in

Difficult Times The Changing Role of Human Resources Sarbanes-Oxley and How It Impacts HR Generational Issues in the Workplace Trends That Affect H R: Offshore Jobs

Outsourcing Employee PowerDiversity Issues Skills Required by HR

The Effect of 9/11 on the New York Market

Worklife Balance: Helping EmployeesManage the Details of Their LivesorNot

Helping Your Company with Its BottomLine: Controlling Healthcare Costs

Legal Issues that Affect HR and How toHandle Them

New Thinking about Diversity and WhatNeeds To Be Done

The Current State of HR Outsourcing The Future of HR Technology !


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