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Measuring Performance in Services

Services are more difficult to measure and monitor than manufacturing processes, but executives can rein in variance and boost productivity if they implement rigorous metrics.

The McKinsey Quarterly, McKinsey & Co.
February 15, 2006

human resources performance and CFO in services

human resources managers are now challenged by. expenses cuts;a need to improve services; a need to reduce workforce costs; delivering human resources services to employees; retaining the talented people; additiional complexities. Do you think that linking measurable workforce data to CFO (as marketing managers already do in best companies) will add competitive value? (P.S. Thank you for your essay and some of the related ones,they were gorgeous!).

Posted by Giovanni Forlino | February 20, 2006 08:07 am

HR - human capital risk managers

In my opinion, the reason HR can't sit at the captain's table is that they are really risk managers -- they are NOT the strategy execution officer they should be. At least 50% of all human productivity is based on employee satisfaction -- research shows us that there is a strong correlation between profit scores and employee satisfaction scores (Motorolla, Taco Bell, American Express, and others have found this correlation -- the most profitable stores, divisions, etc. had the highest employee satisfaction scores). Research also shows us there are 5 variables that need to be highly rated in order to realize the improved productivity and resulting profitability(does the employee understand the goals of the company, do they understand what their specific goals are, do they get on-going feedback on their job from their boss, do they get the support they need -- training, tools, processes, etc., do they get the recognition and rewards that are appropriate for their role). This isn't rocket science. Drilling down with metrics is missing the point -- testing quarterly on the above 5 simple dimensions will be leading indicators to the growth and profit of the company. If you measure productivity on a simple employee/revenue basis, changing the performance of the relationship between boss and employee will add millions to the bottom line. And usually nothing was spent in terms of dollars to achieve it -- behaviors changed. That doesn't cost anything! What amazes me is that you tell this to "smart people" and their eyes glaze over. They want to make it more complicated than it is. FUD -- fear uncertainty and doubt -- the selling strategy that made IBM millions. I guess that is what the illusion of measuring a million things will do for HR -- the more complex they can make things with metrics the more they will be perceived as "genius." Don't let that be the outcome.

Posted by Karla Norwood | February 15, 2006 11:05 am

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