HUMAN CAPITAL DEFINITIONS AND KEY MEASURES

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1 HUMAN CAPITAL DEFINITIONS AND KEY MEASURES Version THE FRAMEWORK FOR PROCESS IMPROVEMENT Experience shows that benchmarking s potential to drive dramatic improvement lies squarely in making out-of-the-box comparisons and searching for insights not typically found within intra-industry paradigms. To enable this type of benefi cial benchmarking, the APQC Process Classifi cation Framework SM (PCF) serves as a highlevel, industry-neutral enterprise model that allows organizations to see their activities from a cross-industry process viewpoint. The PCF enables organizations to understand their inner workings from a horizontal process perspective, rather than a vertical functional viewpoint. The PCF does not list all processes within a specifi c organization, and every process listed in the framework is not present in every organization. Originally created in 1992 by APQC and a group of members, the framework has experienced more than twenty years of creative use by thousands of organizations worldwide. The PCF is supported by APQC s Open Standards Benchmarking research. It is continuously enhanced as APQC s Open Standards Benchmarking team further develops defi nitions, processes, and measures. Please visit APQC s Web site periodically for updates. The PCF is available for organizations of all industries and sizes at no charge by visiting Develop Vision and Strategy 6.0 Develop and Manage Human Capital OPERATING PROCESSES >>> > > 2.0 Develop and Manage Products and Services >>> 3.0 Market and Sell Products and Services >>> 4.0 Deliver Products and Services >>> MANAGEMENT AND SUPPORT SERVICES 6.0 Develop and Manage Human Capital 7.0 Manage Information Technology 8.0 Manage Financial Resources 9.0 Acquire, Construct, and Manage Assets 10.0 Manage Enterprise Risk, Compliance, and Resiliency 11.0 Manage External Relationships 5.0 Manage Customer Service HISTORY The Process Classifi cation Framework was originally envisioned as a taxonomy of business processes. The initial design involved more than 80 organizations from the United States and worldwide. Since its inception, the PCF has been updated several times to refl ect changes in the way organizations do business Develop and Manage Business Capabilities In response to feedback from users of the PCF, APQC regularly engages practitioners, consultants, and academics to develop defi nitions based on real-world experience with the processes. That collaborative effort resulted in this document: a listing of processes with defi nitions and selected key performance indicators from APQC s Open Standards Benchmarking repository. The defi nitions contained in this document are to be considered in conjunction with the PCF. The content in this document will be updated according to research performed by APQC and subsequent updates to the PCF. This document was created using PCF version Version October 2012

2 6.0 Develop and Manage Human Capital Definitions and Key Measures TABLE OF CONTENTS 6.1 Develop and manage human resources (HR) planning, policies, and strategies 3 Key Performance Indicators Develop human resources strategy Develop and implement human resources plans Monitor and update plans Recruit, source, and select employees 4 Key Performance Indicators Create and develop employee requisitions Recruit/Source candidates Screen and select candidates Manage pre-placement verifi cation Manage new hire/re-hire Track candidates Develop and counsel employees 5 Key Performance Indicators Manage employee orientation and deployment Manage employee performance Manage employee relations Manage employee development Develop and train employees Reward and retain employees 6 Key Performance Indicators Develop and manage reward, recognition, and motivation programs Manage and administer benefi ts Manage employee assistance and retention Administer payroll Redeploy and retire employees 7 Key Performance Indicators Manage promotion and demotion process Manage separation Manage retirement Manage leave of absence Develop and implement employee outplacement Manage deployment of personnel Relocate employees and manage assignments Manage expatriates Manage employee information 8 Key Performance Indicators Manage reporting processes Manage employee inquiry process Manage and maintain employee data Manage human resource information systems (HRIS) Develop and manage employee metrics Develop and manage time and attendance systems Manage employee communication 9 RIGHTS AND PERMISSIONS 2012 APQC. ALL RIGHTS RESERVED. APQC encourages the wide distribution, discussion, and use of the PCF and PCF defi nition documents for classifying and defi ning processes. APQC grants permission for use and adaptation of the PCF for internal use. For external use, APQC grants permission for publication, distribution, and use, provided that proper copyright acknowledgment is made to APQC. No modifi cations to the look or content should be made in external venues. Please use the following text when reusing the PCF in external print or electronic content. The PCF was developed by APQC and member companies as an open standard to facilitate improvement through process management and benchmarking regardless of industry, size, or geography. The PCF organizes operating and management processes into a number of enterpriselevel categories, including categories, process groups, and over 1,000 processes and associated activities. The PCF and its associated measures and benchmarking surveys are available for download and completion at no charge at ABOUT APQC APQC is a member-based nonprofi t and one of the world s leading proponents of knowledge management, benchmarking, and best practices business research. Working with more than 750 organizations worldwide in all industries, APQC provides organizations with the information they need to work smarter, faster, and with confi dence. Visit or call and learn how to Make Best Practices Your Practices SM. 2 Permission granted to photocopy for personal use APQC. ALL RIGHTS RESERVED.

3 6.1 Develop and manage human resources (HR) planning, policies, and strategies (10409) The process group Develop and manage human resources (HR) planning, policies, and strategies includes developing and implementing HR plans and monitoring and updating HR plans at regular intervals. Total cost of Develop and manage HR planning, policies, and strategies per: Number of employees per Develop and manage HR planning, policies, and strategies FTE Number of FTEs for Develop and manage HR planning, policies, and strategies per $1 billion revenue Percentage of senior management/executives, middle management/specialist, and operational workers/offi ce staff for which a formal succession planning process is in place Develop human resources strategy (10415) The Develop human resources strategy process includes identifying strategic HR needs, defining HR and business function roles and accountabilities, determining HR costs, establishing HR measures, and communicating HR strategy Develop and implement human resources plans (10416) The Develop and implement human resources plans process includes work force, compensation, succession, and employee benefits planning. It also involves developing an employee diversity plan; developing/administering HR programs and policies; and developing strategies for HR systems, tools, and technologies Monitor and update plans (10417) Monitor and update plans is the process of measuring the outcomes of HR activities and the contributions of HR to business strategy. It involves communicating/updating HR plans to stakeholders, determining the value added from the HR function, and reviewing and revising HR plans. Version October

4 6.2 Recruit, source, and select employees (10410) The process group Recruit, source, and select employees includes creating and developing employee requisitions, recruiting and sourcing candidates, screening and selecting candidates, managing pre-placement verification, managing new hires/re-hires, and tracking candidates. Total cost of Recruit, source, and select employees per: new hire Number of employees per Recruit, source, and select employees FTE Number of new hires per Recruit, source, and select employees FTE Number of FTEs for Recruit, source, and select employees per $1 billion revenue Cycle time in days from: identifying the need to hire a new employee to approval of the job requisition approval of job requisition to acceptance of job offer job offer acceptance until new hire begins in the agreed position Job offer acceptance rate Percentage of: new hires that originated from employee referrals new hires retained after 12 months Create and develop employee requisitions (10439) The Create and develop employee requisitions process includes aligning the work force plan to business unit strategies/resource needs, developing and opening job requisitions, preparing job descriptions, posting job requisitions, managing internal/external job posting websites, changing/updating requisitions, notifying hiring managers, and managing requisition dates Recruit/Source candidate (10440) The Recruit/Source candidates process involves selecting recruiting methods, performing recruiting activities, holding/ participating in recruiting events, and managing recruitment vendors Screen and select candidates (10441) The Screen and select candidates process includes identifying and deploying candidate selection tools; interviewing and testing applicants; and selecting/rejecting candidates Manage pre-placement verifi cation (10442) The Manage pre-placement verification process involves conducting background checks, performing pre-employment screenings, and recommending (or not recommending) a candidate Manage new hire/re-hire (10443) The Manage new hire/re-hire process includes drawing up and making a job offer, negotiating an offer, and hiring a candidate. 4 Permission granted to photocopy for personal use APQC. ALL RIGHTS RESERVED.

5 ( 6.2 Recruit, source, and select employees continued ) Track candidates (10444) The Track candidates process involves creating an applicant record; managing/tracking applicant data; and archiving and retaining records of non-hires. 6.3 Develop and counsel employees (10411) The Develop and counsel employees process group consists of managing employee orientation and deployment, managing employee performance, managing employee relations, and managing and implementing employee training and development. Total cost per $1,000 revenue for processes: Develop and counsel employees Develop and counsel-learning only 1 Develop and counsel-performance and employee relations 2 Total cost per employee for processes: Develop and counsel employees Develop and counsel-learning only Develop and counsel-performance and employee relations Number of FTEs per $1 billion revenue for processes: Develop and counsel employees Develop and counsel-learning only Develop and counsel-performance and employee relations Current number of employees FTE for processes: Develop and counsel employees Develop and counsel-learning only Develop and counsel-performance and employee relations Percentage of: staff that received a formal performance review management employees that attended management development programs CEO and senior leadership time spent on leadership development Average number of learning days per employee Learning budget per employee (head count) Cycle time in days for the formal performance review process Manage employee orientation and deployment (10469) The Manage employee orientation and deployment process involves creating/maintaining employee on-boarding programs, introducing new hires to their managers and to the work place, and evaluating the effectiveness of employee on-boarding programs Manage employee performance (10470) The Manage employee performance process consists of defi ning performance objectives; reviewing, appraising, and managing employee performance; and evaluating and reviewing the performance management program. 1 Learning only refers to processes Manage employee development and Develop and train employees. 2 Performance and employee relations refers to processes Manage employee orientation and deployment, Manage employee performance, and Manage employee relations. Version October

6 ( 6.3 Develop and counsel employees continued ) Manage employee relations (10471) The Manage employee relations process involves managing employee health, employee safety, labor relations, the collective bargaining process, and labor management partnerships Manage employee development (10472) The Manage employee development process includes developing competency management plans, defi ning employee development guidelines, developing employee career plans, and managing employee skills development Develop and train employees (10473) The Develop and train employees process includes aligning employee and organization development needs; aligning learning programs with competencies; establishing training needs by analysis of required and available skills; and developing, conducting, and managing employees and/or management training programs. 6.4 Reward and retain employees (10412) The Reward and retain employees process group consists of developing and managing reward, recognition, and motivation programs; managing employee assistance and retention; managing and administering benefits; and administering payroll. Total cost of Reward and retain employees per: Number of employees per Reward and retain employees FTE Number of FTEs for Reward and retain employees per $1 billion revenue Percentage of salary that is performance-related pay Average number of vacation days per year per employee Number of days absence per employee per year including maternity and paternity leave Number of days absence per employee per year excluding maternity and paternity leave Develop and manage reward, recognition, and motivation programs (10494) The Develop and manage reward, recognition, and motivation programs process consists of developing a salary/compensation structure and plan; developing a benefits and reward plan; performing competitive analyses of benefits and rewards; identifying compensation requirements based on compensation, benefits, and HR policies; administering compensation and rewards to employees; and rewarding and motivating employees Manage and administer benefi ts (10495) The Manage and administer benefi ts process includes delivering the employee benefits program, administering benefits enrollment, processing claims, and performing benefits reconciliation. 6 Permission granted to photocopy for personal use APQC. ALL RIGHTS RESERVED.

7 ( 6.4 Reward and retain employees continued ) Manage employee assistance and retention (10496) The Manage employee assistance and retention process consists of delivering programs to support work/life balance for employees; developing family support systems; reviewing retention and motivation indicators; and reviewing compensation plans Administer payroll (10497) The Administer payroll process includes maintaining and administering the employee earnings and deduction information that is used to prepare payroll. These activities may or may not be part of the HR or payroll function. The activities of processing and distributing payments are not included in Administer payroll and instead are covered under process group 8.5 Process payroll, specifically in process Manage pay. 6.5 Redeploy and retire employees (10413) The Redeploy and retire employees process group includes managing promotions and demotions; managing separations, retirements, and leaves of absence; developing and implementing employee outplacement services; managing deployment of personnel; relocating employees and managing assignments; and managing expatriates and employee relocations. Total cost of Redeploy and retire employees per: number FTE Number of employees per Redeploy and retire employees FTE Number of FTEs for Redeploy and retire employees per $1 billion revenue Number of internal hires per Redeploy and retire employees FTE Percentage of vacancies filled by internal candidates Percentage of staff voluntarily terminated and involuntary terminated Cycle time in days for: processing an employee s retirement confi rming approval-non-approval of employee leave of absence request completing an internal transfer Manage promotion and demotion process (10512) The Manage promotion and demotion process includes the administration and execution of employee promotion and demotion. It also includes the processing of employee records and payroll and benefi ts transactions Manage separation (10513) The Manage separation process includes the administration and execution of employee separations. It includes the creation and generation of fi nal payments, turnover reports, and vendor notifi cation. This process also includes communications with former employees regarding benefi ts options. Version October

8 ( 6.5 Redploy and retire employees continued ) Manage retirement (10514) The Manage retirement process includes management of the organization s retirement systems, tools, and processes Manage leave of absence (10515) The Manage leaves of absence process includes managing and administering the leave of absence policy for employees who are taking leaves in excess of their annual allowance Develop and implement employee outplacement (10516) The Develop and implement employee outplacement process involves creating and providing career transition information and advice to employees whose roles have been eliminated Manage deployment of personnel (10517) The Manage deployment of personnel process includes managing the movement of employees to different roles within an organization Relocate employees and manage assignments (10518) The Relocate employees and manage assignments process includes managing/maintaining the organization s systems, tools, and processes for relocating employees and managing relocations and assignments Manage expatriates (10520) The Manage expatriates process includes activities associated with both the expatriation and repatriation of employees within the organization. 6.6 Manage employee information (10414) The Manage employee information process group consists of managing HR reporting capabilities; managing employee inquiry processes; managing and maintaining employee data; managing human resource information systems; developing and managing employee metrics; developing and managing time and attendance; and managing employee communications. Total cost of Manage employee information per: Number of employees per Manage employee information FTE Number of FTEs for Manage employee information per $1 billion revenue Number of non-routine Manage employee information inquiries per employee Number of routine Manage employee information inquiries per employee Overhead cost of Manage employee information per employee Cycle time in days required to resolve an employee grievance 8 Permission granted to photocopy for personal use APQC. ALL RIGHTS RESERVED.

9 ( 6.6 Manage employee information continued ) Manage reporting processes (10522) The Manage reporting processes consists of providing key HR data and reporting capabilities for varying levels of management Manage employee inquiry process (10523) The Manage employee inquiry process involves receiving, responding to, and recording information on employee inquiries Manage and maintain employee data (10524) The Manage and maintain employee data process includes making revisions to personal data such as changing beneficiary designations or employee status Manage human resource information systems (HRIS) (10525) The Manage human resource information systems (HRIS) process involves managing the day-to-day running of human resource information systems Develop and manage employee metrics (10526) The Develop and manage employee metrics process consists of collecting and managing work force data that are used to report on human capital program outcomes, workforce trends, demographics, and performance Develop and manage time and attendance systems (10527) The Develop and manage time and attendance systems process includes collecting, editing, approving, and entering data related to hours worked and paid time off. This process does not include the actual processing of time and attendance data Manage employee communication (10528) The Manage employee communication process consists of developing employee communication plans; managing employee suggestions and grievances; and publishing employee communications. 123 North Post Oak Lane, Third Floor Houston, Texas phone fax pcf_feedback@apqc.org Version October

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