BPM Meets Employee Performance
Leahy, Tad, Business Finance
Business performance management fools help companies bridge the gap between corporate strategy and human capital management.
by Tad Leahy
COMPANIES THAT HAVE ACHIEVED SOME success with business performance management (BPM) systems sometimes find themselves eyeing an ambitious goal: tying employee performance directly to overall corporate strategy. This is the ultimate BPM challenge because it requires a degree of integration between financial and HR systems that few organizations have achieved.
Distilling employee data from multiple sources into a single version of the truth has long been a headache for HR directors and finance executives seeking to better understand workforce performance. "You might have an HR system within your ERP [enterprise resource planning] system which is a basic employee services package, plus a compensation tool which is a niche application, along with other systems focusing on different aspects of employee data," says Mark Smith, CEO and senior vice president of research with Ventana Research in San Mateo, Calif. "All of this becomes cumbersome - particularly for large companies to manage. The CFO has to get more involved with these people-oriented [systems] and realize that financial performance and workforce performance must both come together."
BPM tools that offer HR functionality can help CFOs bring some order to the morass of data. But they cannot by themselves align individual employees' performance with corporate objectives, says Jonathan Wu, senior principal with professional services firm Knightsbridge Solutions LLC in Oakland, Calif. "PeopleSoft, for instance, has an enterprise performance management product with a series of modules that includes HR analytics and metrics for HR, and you can pull information out of that transaction system," he notes. "But when it comes to linking your company's strategies to individual performance and knowing how to set tactics for that purpose, there's a disconnect. It's a challenge for any company to manage, monitor and tie individual performance to strategies."
But it's a challenge that can be met. A select group of innovative organizations have achieved success by combining BPM software with a departmental or enterprisewide scorecard.
Building on the Scorecard
Using BPM software and the Balanced Scorecard to leverage HR data is a new tactic for most organizations. "In the past, when a i company would focus on the Balanced Scorecard, HR was frequently outside of it," says Toni Hicks, senior vice president of practices at Parson Consulting in Chicago. HR was often "considered too insular" to participate, she notes. But now companies are adopting a more comprehensive methodology. "Eventually, all the performance information, including employee performance data, needs to feed into one scorecard," she says.
A scorecard-based approach worked well for Maine Medical Center, a teaching hospital in Portland with some 5,400 employees. "We had established an institutional scorecard and 50 organizational unit scorecards within areas such as finance; processes of care; and satisfaction of patients, physicians and family, along with education and academic achievement," reports Dr. George L. Higgins III, the hospital's chief medical officer and vice president of medical affairs. "We took all that data and produced it on paper. Then we realized we needed an electronic tool to translate it into one central system which could populate our scorecards. So in 2003, we chose the SAS BPM solution."
The hospital drove employee performance improvements by analyzing key metrics such as fall rates (the incidence of patients falling out of bed) and identifying internal best practices. "We noticed that some units had lower fall rates than others, so managers would share their data with other managers to help reduce the fall rates across our different functional areas," Higgins explains.
The BPM system tracks such metrics as outcomes of surgeries, operating room starting times and number of prescription errors for some 1,100 physicians. …