The Strategic HR Opportunity | My Assignment Tutor

Reyes Fitness Centers, Inc.:The Strategic HR OpportunityBy John Sherlock, Ph.D.STRaTegIC HR ManageMenTStudent WorkbookProject teamProject leader: John Sherlock, Ph.D.Project contributor: Nancy A. Woolever, SPHRExternal contributor: Sharon H. LeonardEditor: Courtney J. Cornelius, copy editorDesign: Kellyn Lombardi, graphic designerProduction: Bonnie Claggett, production/traffc specialist© 2008 Society for Human Resource Management. John Sherlock, Ph.D.Note to HR faculty and instructors: SHRM cases and modules are intended for use in HR classrooms atuniversities. Teaching notes are included with each. While our current intent is to make the materials availablewithout charge, we reserve the right to impose charges should we deem it necessary to support the program.However, currently, these resources are available free of charge to all. Please duplicate only the number of copiesneeded, one for each student in the class.For more information, please contact:SHRM Academic Initiatives1800 Duke Street, Alexandria, VA 22314, USAPhone: (800) 283-7476 Fax: (703) 535-6432Web: www.shrm.org/hreducation08-0669-Student© 2008 Society for Human Resource Management. John Sherlock, Ph.D. 1Reyes Fitness Centers, Inc.:The Strategic HR OpportunityoverviewThis case describes a growing mid-size U.S. company in the Southeast in theftness club industry. The recently hired HR director is given the opportunityby the organization’s CEO to propose HR initiatives to help the business meetits strategic goals. The case gives HR students the opportunity to deepen theirunderstanding of strategic HR management. The case is divided into Parts A& B to allow flexibility of covering the case either one part at a time or in itsentirety, depending on the content and schedule of a course.Learning objectivesStudents completing this exercise and class discussion of the case will be able to:1. Demonstrate basic business acumen in terms of organizational fnance,strategy planning and execution.2. Understand the philosophy behind developing an HR scorecard and its linkto strategic human resource management.3. Understand the process used to develop an HR scorecard.4. Align HR deliverables with organizational strategy.5. “Sell” the HR scorecard concept(s) internally.textBecker, B.E., Huselid, M.A., & Ulrich, D. (2001). The HR scorecard: Linkingpeople, strategy, and performance. Boston: Harvard Business School Press.2 © 2008 Society for Human Resource Management. John Sherlock, Ph.D.Part aintroductionLori Patrick’s conversation earlier that day with Mike Lowe, the company’sCEO, kept running through Lori’s head during her 45-minute rush-hourcommute home. “What a great opportunity Mike’s given me,” she thought.“The CEO of this organization believes in the value of HR and asked me totell him how HR can help the company meet its strategic goals. When I wasstudying for my master’s in HR, we kept reading and talking about how HRneeds to position itself as a strategic business partner; but I didn’t think Iwould get the opportunity so soon in my career.” Lori had been the directorof Human Resources with Reyes Fitness Centers, Inc. (RFC) for only a coupleof months. She had been attracted to the position in part because it offered herfrst opportunity to oversee all of HR, and because of her interview with MikeLowe. Lowe was fairly new to the company (just less than two years) and washighly regarded by the founder and chairman, John Reyes, and the rest of theboard of directors as a strategic thinker and someone with proven ability toinspire and motivate staff. Lori knew from the interview with Lowe that whenhe said employees were the key to RFC’s future, he meant it.rFc backgroundReyes Fitness Centers, Inc. was launched in May of 1999 by John Reyes with$150,000 of his own funding and some investment capital from three collegefriends from the University of North Carolina, Chapel Hill, where they werebusiness majors attending the university in the mid-1990s. The frst centerwas located in Raleigh, NC, and was an immediate success. The center offereda full range of workout equipment, exercise classes, personal trainers, anoutdoor pool, on-site daycare, and even a small restaurant. Additional privateinvestment was secured and RFC expanded rapidly from 1999 to 2007, openingapproximately three new centers a year throughout the Southeast. By the end of2007, RFC operated 28 ftness centers, grossing $51 million in revenues and $1million in net income. Figure 1.0 below provides the fnancial performance ofRFC and its comparison to competitors.© 2008 Society for Human Resource Management. John Sherlock, Ph.D. 3Figure 1.0 – 2007 rFc and regional competitor Financial Performance(numbers rounded) rFco’malley’sFitnesscenterconstantFitnessmusclemaniaHardbodygymsday spaGross revenue$51M$25M$120M$45M$35M$164MTotal expenses(includingtaxes, interest,depreciation)$50M$24.75M$119M$43.5M$34M$163MNet income$1M$250K$1M$1.5M$1M$1MEmployees9004501,1008257502,100Financialperformancetrends 2004-2007Flatannual netincome.Flat annualnet income.Decreasedannual netincomedue toexpansion.5% annualgrowth innetincome.5% annualgrowth innet income.Decreasedannual netincomedue toacquisitions. discussion Questions:1) From the table above, what are three observations about RFC’s fnancialperformance relative to their competition?2) Explain how net income is determined for each of the companies in the table.By 2005, John Reyes had general managers overseeing each center and hadgradually removed himself from day-to-day oversight of the company. Hehad become interested in other business ventures and, as a result, his boardencouraged hiring a CEO and other senior management team members tooversee the growing enterprise. He hired 48-year-old Mike Lowe as thenew CEO of RFC in late 2005, and Reyes assumed the role of chairman.This CEO position was the second in Lowe’s career. He had more than 20years’ experience in the ftness equipment industry; before coming to RFChe had been the CEO of a smaller ftness center company in California thathad been acquired. Lowe’s transition as CEO had gone quite well in Reyes’,the board’s and in Lowe’s view. Lowe had been somewhat concerned aboutbeing micromanaged by Reyes, but he was given complete autonomy overthe operations of the company and was expected to involve the board only instrategic leadership issues.4 © 2008 Society for Human Resource Management. John Sherlock, Ph.D.tHe Fitness center industryWhile the ftness center industry grew dramatically in the mid to late 1990s(more than 20 percent annually), overall industry growth had slowedconsiderably, as most towns now had two to three ftness centers withinclose proximity.As shown in Figure 1.0, RFC is considered a medium-sized ftness centerenterprise. While some competitors (Day Spa and Constant Fitness inparticular) continue to focus on large-scale, either through acquisitions ofsmaller ftness clubs or by opening new ftness centers, many others (includingRFC) have reduced the number of new clubs being opened.There is as much emphasis on health and recreation as ever in the U.S. Industryreports suggest that the outlook for ftness centers in general is quite positive,although some consolidation may occur because certain markets have beensaturated with too many clubs to remain proftable. However, the market in theSoutheast (where RFC operates) is still growing and market saturation is notanticipated for at least fve years.Fitness centers hire a variety of professional and support staff. Some focus onpersonal training and employ a large number of certifed professional trainerswho work with members during club hours (typically 5-6am until 10pm,although the more body-building oriented gyms have recently started offering24-hour service). In addition to housekeeping and front desk staff, ftnesscenters employ customer service representatives who can assist existing memberswith questions and also act as sales representatives, giving tours of the facility toprospective members.rFc strategyDuring Lowe’s tenure, RFC opened just one new ftness center (just outsideof Atlanta, GA). This modest club expansion is consistent with the threeyear fnancial strategy the RFC board has agreed on, where the focus is ongrowing the proftability of existing clubs by increasing member enrollment andretention. The company is privately held by a small group of investors and theboard wants it to stay that way. The board has discussed positioning itself foracquisition by one of the larger ftness club chains at some point in the future. Itis agreed that improving the bottom-line (i.e., net income) performance of RFCwill only help in this regard.Within Porter’s classic framework of various business strategies, RFC’s strategymost closely aligns with Porter’s “focus” strategy, where a company focuseson serving the needs of a particular market segment to achieve a competitiveadvantage. RFC has positioned itself as a place where the whole family canenjoy ftness and social activities. RFC has deliberately chosen not to compete© 2008 Society for Human Resource Management. John Sherlock, Ph.D. 5with gyms that cater to body builders with large free weight workout areas,24-hour access, onsite training supplement sales, and “no-frills” amenities.RFC’s strategy is to attract families by offering a wide variety of ftness offeringsincluding cardio equipment; free weights and circuit training weight machines;personal training; and exercise classes (such as Pilates, yoga, stationary cycling,etc.). Most RFC ftness centers have a snack bar where nutritional smoothiesand other healthy snacks can be purchased. All RFC centers offer extensivelocker room facilities and on-site daycare. Newer RFC ftness centers have smallindoor basketball courts and TV lounges to appeal to the 10- to 16-year-oldage group.From his frst day on the job, Lowe has stressed to the staff that he wants themto be strategic in how they approach their daily, weekly, and annual activitiesand projects. By that he means that they should consider how their jobscontribute to RFC being able to provide a ftness club experience to couples andfamilies that is superior to any of the competition. He has worked diligentlywith his senior management team and the board to understand how RFCcreates value for its customers, employees and investors. The business modelfor how ftness centers make money is fairly straightforward: proftable frmsgrow by recurring monthly member revenue (via new member recruitment andexisting member renewal) while maintaining relatively stable fxed costs andlow variable costs. Lowe has worked to identify both fnancial and nonfnancialvariables that drive RFC performance. By locating RFC ftness centers in uppermiddle-class locations and focusing marketing efforts on couples and families,RFC has been successful recruiting new members. Research data shows thatmembers typically do not have issues with the RFC monthly dues. Memberfeedback indicates that having a friendly place for the whole family to stay ft is adriver of member value.rFc strategic cHaLLengesAs with most start-ups, the early strategy for RFC focused on growingrevenue. They did this by opening several clubs each year and offering newclub promotions to attract members. RFC experienced rapid revenue growth(more than 20 percent annually) through 2004. However, several of the RFCcenters are not reaching their proft goals. Mike Lowe tried to address this byimplementing operational effciencies when he frst came on board at RFC,but he soon realized that the proft challenges were driven in large part by acustomer retention problem. While a certain amount of turnover is expected inthe industry (due to competing clubs, families moving out of the area, etc.), thebest industry data RFC can fnd relating to member retention shows that theirmember retention is approximately 20 percent lower than industry average.An analysis of member records shows that members often join during a specialpromotion (where the initiation fee is waived) but then rarely use the center6 © 2008 Society for Human Resource Management. John Sherlock, Ph.D.and fail to renew. A telephone survey of members (lapsed and current) revealsthat “non-use” was one of the reasons for members not renewing or statingthey were unlikely to renew. An analysis of member-visit frequency shows thatmore than 50 percent of members in 2006 hadn’t even visited their RFC ftnesscenter two times per week. The hypothesis is that members who aren’t goingto their RFC ftness center frequently are far less likely to see suffcient value torenew. Another concern is member feedback that RFC staff members do notprovide very good or excellent customer service. Lowe, senior management, andthe board have had extensive discussions about the member retention problem.While part of Lowe’s strategy to increase profts is to enroll more members inexisting ftness centers, those profts will be short-lived if members stay only oneyear. Data also shows that membership cost, quality of offerings, amenities, etc.,are all rated highly.Lori thinks about these strategic issues and how HR might affect them.“There’s no question that problems with customer service and memberretention come down to people issues. It is affected by the type of people webring on board, how they’re trained and how their performance is managedand rewarded.”rFc organizationaL structureThe organizational chart for RFC is shown below in Figure 2.0.Figure 2.0: rFc organizational chart – managementrFc board mikeCEChaiLoweOrmanohnsonjonathan HenleyVice President of FitnessCenter OperationsLori PatrickDirector of HRalex g Pamela jVice President of FinancearciaVice President of Salesand Marketingjohn reyes © 2008 Society for Human Resource Management. John Sherlock, Ph.D. 7Figure 3.0: organizational chart – Human resources managementHuman resource departmentHow Lori and tHe Hr team are regarded by otHers at rFcjonathan Henley, vice President of Fitness center operations:“I feel that Lori is trying to do a good job here and appreciate that she’s seekingto add strategic value. Each member of her team has been with RFC for morethan fve years, which will help. Although Lori reports to me for performancemanagement purposes, her position is designed for her to work directly withthe CEO on people strategy issues. She does a great job keeping me informedof the things she’s working on.”alex garcia, vice President of sales and marketing:“HR is a tough job because employees are never satisfed. You can never paythem enough and employee loyalty doesn’t exist anymore. Lori and her folksdo the best they can in administering the HR policies in a fair manner.”Pamela johnson, vice President of Finance:“I think Lori will do a very good job leading HR at RFC. She has a master’s inthe feld and has been a quick study learning what RFC is all about. I think thechallenge as we pursue improving proftability at RFC is to look at all of ourcosts—and HR’s budget may be affected.” Lori PDirectoCenter Oatrickr of HRperations susan LongRecruiting Coordinatorannette smithMgr. of Training &Developmenteric robertMgr. of Compensationand Beneftsjonathan HenleyVice President of Fitness 8 © 2008 Society for Human Resource Management. John Sherlock, Ph.D.tHe strategic Hr oPPortunityAs Lori pulls into her driveway that night, she remembers how her conversationwith Mike Lowe ended. Lowe asked her about the HR department’s initiativesfor the coming two years. He specifcally said that he expects the department’splan to be clearly linked to the organization’s strategic goals and to demonstratehow accomplishment of those goals will be measured. Lowe was willing toconsider additional money for HR initiatives as long as a probable return oninvestment could be shown. He requested that the goals be presented to himand his senior management team in 45 days. “What an opportunity,” Lorithinks as she walks into her house. She decides that creating an HR scorecard(as described in the book, The HR Scorecard) is the best way to present HR’sgoals, because the scorecard development process will require her team toidentify how HR’s goals contribute to the organization’s goals.discussion Questions:1) Identify and prioritize a set of tasks for Lori. Provide a rationale for yourprioritization. Link your responses to the key concepts in The HR Scorecard.2) Based on your understanding of RFC and its business strategy, how can HRadd strategic value to RFC?3) What challenges do you anticipate Lori will encounter as she develops theHR scorecard for RFC?© 2008 Society for Human Resource Management. John Sherlock, Ph.D. 9Part BbackgroundPart B of this case is a continuation of the strategic HR opportunity at RFC.The case resumes with Lori Patrick, the HR director, back at the offce the dayafter being directed by Mike Lowe to develop a set of strategic HR initiatives tohelp RFC achieve its strategic objectives.Lori convenes a staFF meeting“I appreciate you all taking time away from your other work to meet with metoday. Mike Lowe has presented our team with a very exciting opportunity. Hehas asked us to develop over the next 45 days a set of strategic HR initiativesthat will help RFC achieve its strategic objectives.” Lori asks for generalreactions, and staff members express excitement about the opportunity. Theyrealize that a key to making RFC successful involves people issues, but expressanxiety about developing specifc strategic objectives. “Won’t this make ourjobs more vulnerable if we don’t meet our objectives?” one member asked. Loriresponded, “CEOs everywhere are asking their departments to demonstratehow they add value to the bottom line. We should develop objectives we thinkare challenging but have a good likelihood of being met. If we do that and workhard to achieve them, I think we can count on Mike giving us his full supporteven if we don’t meet every single one.” Another team member said that shewas a member of SHRM and that there were member resources available to helpdevelop strategic HR objectives. Lori enthused, “Great. We’ll defnitely wantto tap all the resources like this that we can. At lunch today, I’m picking up acopy of The HR Scorecard for each of you. The book’s thesis is that HR can addstrategic value to an organization and offers a process that we can use to developa scorecard to identify, manage and measure strategic HR initiatives that willdrive or enable successful implementation of an organization’s strategy.”10 © 2008 Society for Human Resource Management. John Sherlock, Ph.D.Lori continued, “We have measured HR activities in our department for a longtime, such as cost per hire, time to fll a position, number of employees trained,etc. But to add strategic value, we must shift our focus to measure outcomes,not activities. Further, those outcomes must add essential value to RFC’s abilityto execute its strategy and meet it objectives. Please read as much of this bookover the next three days as possible. Our frst planning meeting will be thisThursday at 9 a.m. I’m well aware that 45 days is not much time. I want tomeet with each one of you over the next couple of days and talk about how youcan to contribute and how we will manage things so that other responsibilitiesdon’t suffer.”discussion Questions:1) If you were one of the employees in Lori’s meeting, what questions andconcerns would you have?2) What other messages do you think are important for Lori to relay toher staff?Hr’s strategic roLe and scorecard deveLoPmentThe HR Scorecard outlines a seven-step process to implement HR’s strategic rolein an organization.the Hr scorecard seven-step Process1. Clearly defne the business strategy.2. Build a business case for HR as a strategic asset.3. Create a strategy map.4. Identify HR deliverables within the strategy map.5. Align the HR architecture with HR deliverables.6. Design the strategic measurement system (HR scorecard).7. Implement management by measurement.Lori uses this process because she knows that what she is trying to achievegoes beyond presenting an HR scorecard but is, in fact, the beginning ofrepositioning HR into a strategic role at RFC.Lori read The HR Scorecard in graduate school and is familiar with the sevensteps. She contacts some school and SHRM colleagues about the project andreceives some good suggestions and examples from other industries. Hercolleagues stress the importance of meeting with stakeholders to learn their© 2008 Society for Human Resource Management. John Sherlock, Ph.D. 11perceptions of the organization’s strategy and how HR can best drive orenable execution of that strategy. Lori arranges meetings with all of the seniormanagement, including CEO Mike Lowe.She starts by meeting with her formal supervisor, Jonathan Henley, vicepresident of ftness center operations. Lowe had briefed Henley on what he hasrequested of Lori; Henley offers to help Lori in any way he can, but notes thatHR is far more her expertise than his. Henley spends considerable time travelingto ftness centers and working with club managers to ensure the facilities stayclean and safe, and that the equipment is in working order. Henley suggests thatLori discuss her strategic HR initiatives with Pam Johnson, vice president offnance, because her department’s support is critical to Lori’s success. Lori takesthat advice and meets with Johnson and her staff several times over the 45 days.Her meeting with Alex Garcia, the vice president of sales and marketing, goesreally well. Garcia’s focus is to have his team bring in new members throughadvertising and special promotions. The incentive compensation program for hissales representatives has been an excellent motivation tool. There have been onlya few months in the last 36 when monthly sales goals were not reached.Lori learns from senior management that there is general agreement thatRFC’s strategy has shifted from revenue growth through club expansion toproft building through member retention and cost management. While costmanagement is important, RFC is not opposed to spending money if thedollars are an investment in something that will have a positive return (morethan break-even) and is clearly linked to RFC strategy. In regard to memberretention, it seems to Lori that while everyone knows member retention isimportant, no one is clear about their specifc role in retaining members.Lori and her HR team members hold a series of focus groups to collectqualitative data on what the staff knows about RFC’s strategy and their rolein it. The comments gathered indicate that staff members are generally unawareof what the strategy is, other than to make money; and further, that employeesare unclear how they specifcally contribute to the organization’s strategy.Lori knows from her experience that this is not uncommon. The HR Scorecardstresses that the business strategy must be very descriptive so that employeesunderstand their role in the plan and so that they can measure the successof the strategy. She raises this point in her weekly update meetings with MikeLowe, and he agrees that communication about the organization’s strategymust improve.For the second step in the process, Lori fnds that building the business casefor HR as a strategic asset is easier than she expected. In her meetings with thevice presidents, she shared various articles from SHRM and material from TheHR Scorecard and found that they understood that RFC had nothing different12 © 2008 Society for Human Resource Management. John Sherlock, Ph.D.in terms of weight training equipment, etc., from any other gym in town—itis the employees serving the members that make the difference. Finance hadalready worked up a fnancial scenario about how profts would improve withvarious increases in member retention. Lori plans to use these numbers todemonstrate how HR can support RFC’s retention strategy by helping to builda team trained and motivated to provide great service to members—and delivermember renewals.For the third step, Lori works with Mike Lowe on the following graphic (seeFigure 4.0) to show how RFC creates value—and ultimately, proft. While thisvalue map will likely be expanded, it provides a good pictorial for managers andemployees to better understand RFC strategy.Figure 4.0 – rFc strategy maprFc strategy map: How rFc creates valuediscussion Questions:1) Explain the difference between a leading and lagging indicator.2) What other potential leading indicators exist in this case?For the fourth step, Lori and her team spend considerable time discussing theRFC strategy and the organizational goals Mike Lowe had established:n Have a minimum of 50 percent of adult members visit an RFC center twotimes per week (currently only 35%).n Have 90 percent member satisfaction with RFC staff interactions (no formaldata collected, but anecdotal data suggests it’s well below that now).n Improve proftability by a minimum of 10 percent annually.interaction with staffduring workoutsLeading Indicatorsmember workoutsat center per weekLeading Indicatorsmember satisfactionmember renewalLagging Indicatorincreased ProftsStrategic Impact© 2008 Society for Human Resource Management. John Sherlock, Ph.D. 13n Continue to achieve new member goals at current rate.n Improve the annual member retention rate to 75 percent (currently 62%).Some of the key questions posed in The HR Scorecard related to this stepinclude, “How would employees need to behave to ensure that the companyachieves these goals?” and “Is the HR function providing the company with theemployee competencies and behaviors necessary to achieve these objectives? Ifnot, what needs to change?”In terms of HR deliverables, it becomes clear to Lori that there needs to bebetter alignment of the performance management system with RFC’s strategicplan. Currently, performance goals are focused on job description activitiesinstead of on results that contribute to RFC’s goals.As for member retention, Lori thought that HR needed to ensure that staffassigned primary responsibility for retention knew it, and that they had adequatecustomer service skills and training. While there was a need for an individual inmanagement to have primary responsibility for leading retention efforts, Lorifelt that HR should make sure that all RFC employees saw member retentionas part of their jobs as well. All managers should incorporate retention activitiesand goals into employees’ annual performance plans. Lori recognized that herteam and senior management must work to build a culture where excellentcustomer service is seen as an absolute priority and a core value. Lori decided topresent this culture change to senior management as a multi-year initiative.Finally, Lori knew that the compensation system should be analyzed to seeif an incentive program would be effective to focus performance not only onmember retention efforts but on proftability as well. Lori was aware of otherorganizations which had successfully implemented proft-sharing programslinked to achievement of strategic objectives, and she thought it might work wellat RFC. Lori would need to work closely with Pam Johnson and her fnanceteam to conduct a cost-beneft analysis of any proposed incentive program.discussion Question:1) What other HR practices/systems might Lori consider in developing acomprehensive HR scorecard?For the ffth step, Lori evaluated how best to align the HR architecture withthe HR deliverables her team was considering. Lori and her team thought abouthow the components within the HR system ft together (internal alignment) aswell as how the HR system aligned with (i.e., supported) the RFC’s externalstrategy components. While Lori felt her HR department’s organizational14 © 2008 Society for Human Resource Management. John Sherlock, Ph.D.structure was aligned well with the RFC strategy, she felt certain job functionsshould change to focus behaviors toward the HR deliverables identifed in thefourth step.For the sixth step, Lori and her team reviewed the deliverables that had beendeveloped within the strategy map and identifed the following preliminary HRscorecard measures (Figure 5.0).Figure 5.0: rFc Hr scorecard strategicobjectivespecifc, measureable goal (Hrdeliverable)HrscorecardprogressHave a minimum of50 percent of adultmembers visit anRFC center twotimes per week .Align the performance managementsystem to clarify skills and behaviorsrequired to increase member visitfrequency by _______.Have 90 percentmember satisfactionwith RFC staffinteractions.Create and execute a customer servicetraining program with 95 percent of staffcompleting training with satisfactorycompetency rating by _______.Improve proftabilityby a minimum of 10percent annually.Initiate a culture-building program by_______. Once implemented, achieve90 percent agreement (through anemployee survey) that culture promotesand recognizes excellence in customersatisfaction and organizationalperformance.Continue to achievenew member goalsat current rate.Align the incentive program for newmember sales with retention program by_______.Improve memberretention to 75percent.Have incentive program in operation by_______.Align the performance managementsystem with expected member retentionbehaviors for all positions by _______.Have 95 percent of employees receivesatisfactory or better performance ratingon customer service factors. discussion Question:1) Discuss the strengths and weaknesses of the RFC’s scorecard above. Shouldanything be added?© 2008 Society for Human Resource Management. John Sherlock, Ph.D. 15The last step, implement management by measurement, required a signifcantmind-set change within Lori’s HR department. The HR Scorecard states that theseven-step model Lori followed produces a powerful management tool that ismuch more than something to “keep score” of HR’s effect. Rather, it provides aframework for every team member to learn what it takes to actually manage HRas a strategic asset. Lori’s department had a history of measuring things. Thedramatic difference now is that the things being measured are directly relatedto RFC strategy. Lori talked with her staff about the change, but she realizes itwill require further discussion and experience with this new type of departmentmanagement approach for the signifcance of this difference to really sink in.FormaL Presentation oF Hr’s strategic objectivesand scorecardIt seemed as though the 45 days had flown by. Lori held a fnal meeting withher staff before the presentation to senior management. “I want to thank eachof you for embracing this strategic approach to HR. I realize it is new to manyof you. You are all quick learners! Please understand that as we go forward withthe HR scorecard initiatives, I am going to ask Mike to support our team’scontinued learning of how to implement strategic HR, HR measurement, etc. Iam sure that the senior management team will have suggestions.”Lori had greatly appreciated the support received from Jonathan, her formalsupervisor. While she had kept Jonathan informed of her progress and askedfor his input periodically, she felt empowered throughout the process. She feltconfdent that she had his support going into the presentation.Lori took her PowerPoint presentation and notes and walked toward theboardroom to present her scorecard. She was pleased that all of the people inthe room were familiar with the work that had been done, and had contributedto its development with their comments and reactions. In particular, Lori wassatisfed with her efforts to gain support from Pam Johnson. Pam and her teamwere of incredible assistance in working through the metrics and deliverables.Their focus, she thought to herself, is appropriately on the dollars and cents; aslong as the HR strategic objectives were clearly tied to delivering that fnancialperformance, the HR team’s proposal should be well-received. The next twohours were spent presenting the HR scorecard and discussing strategy.Lori was exhausted driving home that day after the presentation to Mike andsenior management. The last 45 days had been quite a challenge—the dayto-day HR activities didn’t stop simply because HR had become strategicallyfocused. Time had to be managed so both could be done. In reflecting on thepresentation, many of the senior management team’s comments to Lori wereparticularly gratifying:16 © 2008 Society for Human Resource Management. John Sherlock, Ph.D.“You’ve done a good job linking your HR deliverables to what RFC is tryingto do as an organization. I feel like we’re all on the same page now,” remarkedPamela Johnson. She also appreciated Mike Lowe’s comments that the HRscorecard project had some unintended benefts: “Through the work yourHR team carried out, Lori, we’ve become aware how our corporate strategyand objectives could be clearer—not only to the senior management and theboard, but to the entire staff. Thank you for that.” She also appreciated thecomments that the exercise would be helpful for other VPs to go through withtheir departments as well, in some modifed form, because it provided a usefulprocess to identify and link what a department/division is striving to deliverdirectly into the RFC strategy.Lori realized that the real work, in a sense, had just begun. The HR scorecardinitiatives still needed refnement and communication throughout theorganization. Mike’s comments about clarifying some of RFC’s strategicobjectives would likely affect Lori’s HR scorecard. Lori had quickly learnedfrom this experience that HR flexibility is important, because any modifcationsto RFC strategy could affect the HR strategy and the HR scorecard. One clearaction item coming out of the presentation involved the need to decide whoshould have specifc responsibility for member retention activities and results.Mike had already pulled Lori aside and said he would like to get her input onthat decision. Everyone liked the idea of building a culture where everyonefelt a part of creating a great experience for members visiting an RFC center.The work on the performance management system, training program andincentive program would take considerable time and effort to develop becauseLori planned on having very open dialogue with the staff about what was beingdeveloped, why, and getting their input on the design of the initiatives. Sheknew from some of her discussions with staff that they were still a bit fuzzyon what the RFC strategy was all about and their role in it. Hopefully, thedevelopment of the HR scorecard would help all staff to better understand whatRFC was trying to achieve. While she had concerns about what might happenif she didn’t deliver on her team’s HR deliverables, this concern was more thanoffset with the satisfaction that, for the frst time in her HR career, she wasengaging in strategic HR and seeing a clear link between what HR was doingand the organization’s bottom-line performance. It felt good.discussion Questions:1) Consider the process Lori used to develop this frst draft of the HRscorecard. What do you think was done particularly well? Why? What mightyou have done differently?2) As Lori observed, the real work begins once the scorecard is developed andput in place. What critical things will Lori and her team need to do over thecoming months to be successful? What problems do you anticipate?sHrm members can download this case study and many others free of charge at www.shrm.org/hreducation/cases.asp.if you are not a sHrm member and would like to become one, please visit www.shrm.org/join.1800 Duke StreetAlexandria, VA 22314-3499

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