In my last post, I tried to lay the foundation for the value of aligning business metrics to make all areas of your business more strategic and value-rich. Let’s see if I can take it a step further by way of illustration.
Let’s assume a scenario involving a roadway construction company. The top priority corporate objective and commitment to shareholders is to increase overall margin by 1%. In order to support that objective, each area of the business must put in place objectives to help impact the bottom line, including the HR organization. In many organizations HR is traditionally viewed as necessary, but not necessarily strategic or a contributor to the bottom line.
So, work with me.
In our scenario, let’s assume the operation’s business unit has determined the best way they can contribute to the overall margin objective is to make 25% more use of a new type of machine which can lay pavement more efficiently and effectively and overall lay more pavement per day. However, this particular machine is more complex than other machines and requires specialized training and more experienced users. Remember, in order to hit the new margin objective, the new pavement machine requires an increased of usage by 25% for the year.
The HR business partner supporting the operations business unit now has to tie their goals and metrics to help operations hit their goals and thus directly contributing to the overall corporate objective. HR must put in place objectives to retain the skills required for this machines operation, cross-train individuals to operate the new machines and hire new skills that can operate the new machines. HR’s metrics map specifically to the operations team’s metrics which map directly to the overall corporate metrics. In this specific example, metrics are aligned top to bottom and across the organization.
It goes without saying that the data and data structure must be available and appropriate in order to successfully measure these metrics and create dashboards that monitor progress and success. However, if the data structure is present and objectives are in alignment, all aspects of an organization can be strategic and contribute to the overall success of the company. The HR business unit measures the cross-training it conducted which contributed to the number of qualified operators of the new machinery. The operations leader measures the number of hours the new machine was operated compared to last year. The finance team measures the profitability of the operations this year compared to last and quantifies operations increase in margin. Everyone works together towards a common objective, sets up metrics to monitor and measure their success and link them accordingly.
Sound like Pretendville? It’s not. BI, done properly, enables exactly this sort of objective alignment and cross-silo vision.