Question

• Explain how improvement is measured with KPIs and give one example related to Human Capital and how this KPI might help you improve your organization.
• What do you think is the difference between traditional risk management and enterprise risk management?

Answer 1

`Hey,

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1)

Key performance indicators (KPI’s) come from defining critical success factors divided

into meaningful criteria. Human capital KPIs align with the company performance strategy and

relevant to business goals. Improvements can be measured with looking at relationships between

time periods relative to risk. Having the right team is essential in maintaining company and

product stability. There are many human capital KPI’s which can measure different areas within

HR depending on the desired objectives. Compensation, culture, employment, and performance,

are just some of the over arching critical success factor subgroups which break up human capital

potential KPI’s into meaningful criteria available to be considered. Since a company can

measure anything, they need only gather data to evaluate and have a perspective on company

performance with respect to human capital.

In order to help improve an organization, a human capital key performance indicator to

consider is the absenteeism rate. Regardless of sick days or vacation days, if employees are not

at work to participate in the success of the organization, there are repercussions on the company

as a whole. Absenteeism results in overall inability to accomplish the quantity and quality of

tasks the team as a whole could. If your human capital is not available to ensure the product is available, the company will have nothing to provide. Being able to evaluate the absenteeism rate

can be calculated by totaling the number of workdays lost due to absence, divided by the number

of workdays available in the company, would equal the absenteeism rate.

Success with respect to human capital can be subject to everyone connected to the

company – employees, contractors, volunteers, and interns. When evaluating the KPI’s to

implement for human capital, focus on a few specific pieces so they can be detailed enabling to

see success or failure. Data should be easily read or analyzed, and ownership of the information

should be maintained so adjustments can be applied as needed.

2)

Traditional Risk Management	Enterprise Risk Management
Segmented / Departmentalized	Holistic approach
Each department/business unit/silo deals with own risk	Emanates from the "top" – typically the Board of Directors
Little or no knowledge of overall organizational risks	Broad perspective on overall organizational risks
Focus is on preventing loss within the business unit (tactical)	Focus is on lowering risk, increasing sustainability and providing savings/value across the entire organization (strategic)
Manages uncertainties around physical and financial assets	Assesses entire asset portfolio including intangibles such as customers, employees, suppliers, innovative processes, proprietary systems
Solutions to mitigating risk based on each silo's expertise and decision-making skills	Solutions to mitigating risk based on strategy-setting across the entire organization

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