In this week’s Jeitocast, Karen Beaman interviews Dr. Jac Fitz-Enz, President and Founder of Human Capital Source on the subject of using human resource metrics to determine business value. Dr. Jac is working on the next generation of workforce analytics by investigating what effects investing in people have on the business because, as Jac says, “it’s people who make the difference.”

His Workforce Intelligence Report (published twice a year) surveyed 750 companies, supported with data from 70 research institutions, to discuss how, when, where, and in which way investments in people are making a difference. The report provides many examples of business value being created through investments in human capital.

Dr. Jac’s latest project is the Predictive Initiative, which is developing a Predictive Model, along with applications, implementation tools, and a measurement system that focuses on future. The goal of this initiative is to understand how to predict what is most likely to happen if we try one thing or another… because “the only thing you can manage is the future. You certainly can’t manage the past.”

To get started with HR metrics, Dr. Jac describes three levels in demonstrating business value:

1- Internal Efficiency looks at the efficiency of the human resource operation — what does it cost to do the things we do, e.g., cost of hire, cost of training programs, total compensation as a percent of revenue, time various processes take, quality in terms of errors, customer reaction.

There are five ways to look at HR services: cost, time, quantity, quality, and human reaction. If you build a matrix with these categories across the top as columns and with the various HR services we provide (staffing, compensation, benefits, employee relations, learning and development) as the rows along the side, you end up with set of cells which can be evaluated in terms of internal efficiency.

2- External Effectiveness assesses the overall effectiveness of the internal metrics, e.g., handling calls quicker, answering calls more effectively, reduced number of call-backs.

3- Business Outcomes determines the effect of HR activities on the business financials through margin improvement, revenue growth, customer retention, etc.

Dr. Jac explains that the biggest obstacle to success with metrics is the HR department themselves: “we have found the enemy and he is us.” HR has to get over their own prohibitions in order to be successful with metrics. HR needs to learn that it’s not a great mystery, it’s very doable, it needs to be done, and it’s all learnable. (Dr. Jac himself was a political science major.)

 

 How do I use my human resource metrics to determine business value? [20:19m]: Play Now | Play in Popup | Download

Jeitosa is often asked to help companies assess their options when expanding their businesses in developing regions, such as Eastern Europe or Latin America. The following study talks about how the Ukraine has become the most attractive destination for outsourcing in Eastern Europe due to its geographical proximity to Europe, visa-free regime, high level of educational investment, and fast growing software industry.

Ukraine IT outsourcing tops in Eastern Europe

There are number of factors organization should consider when selecting a site for their shared services center (from Globalization: Payoffs and Tradeoffs, IHRIM Journal):

• Workforce Quality/Skill
• Workforce Availability
• Workforce Costs
• Workforce Flexibility
• Government Support
• Tax Considerations
• Communications Costs
• Communications Infrastructure
• Real Estate Costs
• Statutory/Legal Requirements
• External Infrastructure
• Travel Accessibility
• Political/Economic Stability
• Multi-Language Abilities

For more information on selecting outsourcing and offshoring sites, please see IHRM’s newest book Common Cause: Shared Services for Human Resources. Goal Europe also has some useful information on the Eastern Europe landscape for outsourcing.

In this week’s Jeitocast, Karen Beaman interviews Michael Novak, CEO of Tertia Corporation, U.S. representative for China’s International Software Services Fair — the Comdex of China — and past president of Clark Consulting Group, the largest intercultural communications company in the U.S. with a focus on U.S.-Asia business communications. The jeito Karen and Michael discuss is:

What do companies need to know about doing business in China?

Michael begins by discussing some of the cultural differences that organizations need to be aware of when doing business in China:

1- Group Decision-Making: Decision-making and information sharing are considerably more consensus based and group-oriented, which can be a source of conflict when coming in contact with more individualistic cultures, such as the U.S.
2- Saving Face: The importance of saving face in a group and not putting someone in the position where they have to make a decision in front of others is important. There is a Chinese saying, “A person needs face like a tree needs bark.”
3- Demonstrating Humility: Humility is highly valued in China, particularly when talking about yourself or your family. Conflict can arise with the U.S. culture where much value is placed on self-promotion: this is seen as boastful in China.
4- Universal Knowledge: The Daoist tradition says that knowledge is universal: everyone is entitled to knowledge and wisdom. The cultural conflict shows up in issues around intellectual property, where in China ideas are seen as belonging to everyone.
5- Minimizing Idle Chatter: The Buddhist tradition values putting thought into everything you say; thus, typical Western activities like brainstorming can be more difficult in China as they are seen as wasting people’s energy.

Michael says there are four main reasons that companies are expanding their business into China:

1- Selling into consumer market, bringing growth opportunities outside of the first tier countries.
2- Lower costs, starting as a distributor and moving to set up offshore outsourcing operations.
3- Privatization of state-owned enterprises, offering significant new business opportunities.
4- Proximity to Korea and Japan, bringing access to other countries through regional operations.

 

 What do I need to know about doing business in China? [19:46m]: Play Now | Play in Popup | Download