Maximizing HR Effectiveness and Value Added Through an Integrated Balanced Scorecard, Six Sigma, Lean and TOC Integration

Contributor: Jose Luis Chavez
Posted: 01/07/2010  11:43:00 AM EST  |  7

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Implementing an integrated HR strategy within your organization will help maximize the delivery of specific and measured added value to the business, assure effectiveness and increase productivity.

Creating the HR Strategy

At ITR, in order to create the capabilities that can deliver the business proposition of state of the art Aerospace experience and knowledge; on-time delivery; predictable and competitive budget and lead time; adaptability to customer’s needs and problem solving, a very distinct and unique culture must be built.

We are developing a culture where every employee can understand the business, is engaged, customer oriented, capable, resourceful, a team player, flexible, predictable and adaptable, create value, execute flawlessly and feels comfortable with uncertainty.

The Pillars of HR Strategy

To develop and support employees and the organizational culture, ITR designed an HR Strategy supported by pillars: (Click on diagram to enlarge.)

• Focus
• (Value Stream) Flow
• Maturity
• Execution
• Continuous Improvement

Focus: Implementing the Balance Scorecard

We use the Balanced Scorecard (BSC) as a fundamental tool to keep ITR focused; it consists of a methodology that turns the strategy of the organization into operative terms, this enables the process to emerge. Monthly meetings are conducted in a fashion in which results are evaluated within the different areas that integrate the company.

The Balanced Scorecard—along with a strategic map that describes and linkes all the initiatives in the business, including HR objectives and plans—is managed and deployed by the HR unit. We also use the Experience Co-creation Methodology to ensure that we have understood and prioritized our customers’ requirements, with accuracy.

The main HR objectives managed by the HR Score card are: (Click on diagram to enlarge.)

• Attract, Manage, Develop and Retain Talent
• Create an Engaged, Customer Oriented, Capable, Resourceful, Team Player, Flexible, Predictable and Adaptable culture.
• Create and Manage Knowledge

Value Stream (Flow): Linking HR Objectives to Business Initiatives

In order to achieve the HR objectives and to link and synergize our initiatives, we have designed a value stream (flow) that allows ITR to:

• Attract Talent
• Performance Management
• Train and Develop 
• Redeploy (Promote)

Based on Lean principles this flow is pulled by our customer´s needs. We used the Value Stream Mapping Tool in order to maximizing the capabilities of our HR Value Stream. (Click on diagram to enlarge.)


Maturity: Evaluating HR Process Maturity

All processes have different maturity levels. The People Capability Maturity Model described by Bill Curtis, William Hefley and Sally Miller described five levels:

• Initial 
• Managed
• Defined
• Predictable 
• Optimizing

To evaluate each HR process maturity level correctly, it’s fundamental to evolve this process and achieve organizational capability.

As an example when the ITR´s HR team started our evolution six years ago, the status of some of our HR process and their maturity targets were:

• (Attract Talent) Staffing: Status-Manage Level, Target- Defined Level
• (Manage and Retain) Compensations: Status Predictability Level, Target-Optimizing Level
• (Redeploy) HR planning: Status-Defined Level, Target-Predictability Level

Execution: Roadmap to an Added Valued HR Strategy

ITR defines an HR Roadmap in order to have a path that clearly communicates what steps we have to follow in order to implement an Added Valued HR strategy.

This path contemplates: (Click on diagram to enlarge.)

• Customer need
• Value Stream design and analysis
• HR Team Training
• HR Process Maturity
• Pull System
• Continuous Improvement

Continuous Improvement: Analyzing and Evaluating HR Processes

In order to have a positive evolution in our capabilities, ITR´s HR processes are constantly evaluated and improved in the light of their maturity, efficiency, effectiveness, flexibility and predictability.

TOYOTA A1 system is used to coordinate and prioritize this continuous improvement process. This system allows us to consider the information in one page as follows: (Click on diagram to enlarge.)

• Current Situation: Maturity Level
• Goal
• Analysis
• Plan 
• Follow-up

ITR uses this A1 methodology in all of its HR processes and we have identified that there is a deep correlation between the maturity level and the needed methodology to achieve the goal, different maturity levels, require different methodology approaches.

For example:

• To evolve staffing process that has a maturity level of “Manage” and the goal is to achieve the “Defined level," we use TOC Thinking Processes Tools
• To evolve Compensations process thats level is “Predictable” and the goal is “Optimizing” level, we use Six Sigma Tools

(Click on diagram to enlarge.)



Direct Results from the Implementation of an HR Strategy:

As a result of this HR strategy we can achieve: (Click on diagram to enlarge.)

• 60 percent of reduction in or Staffing time process
• 40 percent reduction of HR operational costs
• Reduce attrition from 13 percent to 1.7 percent
• Being the best evaluated area in ITR aerospace scoring 9.8 of 10 possible points.
• Awarded with the national best practices (2006) and the national HR innovation (2007)

Linking HR Strategy with Customer Needs

HR can be an area that can make a definitive and a measurable contribution to the business. To achieve this we have to clearly understand our customer´s needs and put in place a process which can satisfy these needs in a flexible, efficient, predictable a profitable way. There is a very large toolbox with different methodologies that we can use, the only challenge is to synergize these methodologies, and give them a clear purpose.

Report Abuse   ossama62 03/19/2010 8:06:12 AM EDT Its A very Impressive Article & HRM Road-map to Excellence .Ossama Ismail. Pls. kindly if you have draft , presentations in this field send to me http://www.linkedin.com/in/ossamaismail , qaqctqm6sigmalean@gmail.com Replies (0) Post a reply Sign in or Sign up to post a comment

Report Abuse   Marga 03/11/2010 7:48:26 PM EST Bien hecho! Jose, this article is clear and concise, even someone without too much expertise on the matter can get the overall picture. Replies (0) Post a reply Sign in or Sign up to post a comment

Report Abuse   Marga 03/11/2010 7:48:18 PM EST Bien hecho! Jose, this article is clear and concise, even someone without too much expertise on the matter can get the overall picture. Replies (0) Post a reply Sign in or Sign up to post a comment

Report Abuse   HR RECRUITMENT 01/28/2010 6:22:17 AM EST I'm sure every business is thankful to their HR people. HR department has a big part on a growing company. Presence of HR is a must because without it, it is a big loss for a company. Company might not stand for too long in industry. http://recruitment.kittelsoncarpo.com Replies (0) Post a reply Sign in or Sign up to post a comment

Report Abuse   cpsoliz 01/13/2010 5:40:51 PM EST Jose: Your article is a well structured template, road map and resource every HR Department should study and implement. You have adroitly defined an area every business old or new should focus on to maximize their productivity quotient. Bravo! Replies (0) Post a reply Sign in or Sign up to post a comment

Report Abuse   mikenugent 01/13/2010 4:20:02 AM EST Fascinating article - so much good stuff! But hard to view the slides which contain so much info. Have you thought of putting them on Slideshare? Replies (0) Post a reply Sign in or Sign up to post a comment

Report Abuse   ircastro 01/08/2010 8:19:31 PM EST Great Article.!! This is an outstanding and innovative methodology non, very often used by the HR Departments. This is thinking out of the box. Replies (0) Post a reply Sign in or Sign up to post a comment