Constructing Key Performance Indicators on Human Resource Management

CHAPTER Ⅳ Ⅳ Ⅳ Ⅳ RESEARCH FINDINGS

This chapter illustrates findings and analysis from the data collection based on the purposes of the study. The data was collected via Delphi technique with 12 experts who engaged in human resource management in domestic life insurance companies.

Constructing Key Performance Indicators on Human Resource Management

This section illustrates four rounds of data collection, including mode represents most experts’ opinions, mean score represents the importance of KPIs on HRM, standard deviation (S.D.) represent the consensus degree of participants, quartile deviation (Q.D.) represent experts’ consensus and rank order by its mean score of each KPI.

The questionnaire return rate of this study is 67%, 100%, 100% and 100%

respectively for round 1 to round 4 as shown in table 4.1. Besides, this study seeks to identify the importance of each KPI from the expert panel’s point of view, reach the consensus after three rounds of discussion through questionnaire and construct an instrument of KPI on HRM which is significant and meaningful to represent the importance and availability of it and is able to be conducted among insurance companies in Taiwan.

The KPIs on HRM in this study is divided into six categories, including labor

costs coded as A, recruiting indicator coded as B, retention indicator coded as C, HRD

indicator coded as D, benefit cost coded as E and employee relations coded as F.

Table 4.1 The Return Rate of Questionnaire

Round Mail-Out Copies Return Copies Return Rate

1 18 12 67%

2 12 12 100%

3 12 12 100%

4 12 12 100%

Statistical Result of Round One

From the result of first round questionnaire, retention indicator and labor costs relatively deemed as the highly important KPIs category among the six ones with average that their averages mean score reach upon 4, while benefit cost gets lower mean score in this round. The standard deviation is aroud 0.6 to 0.7. The detail information is listed in table 4.2

Table 4.2 Mean and S.D. Comparison of KPI Category for Round 1

KPI Category Mean S.D.

A. Labor Costs

B. Recruiting Indicator C. Retention Indicator D. HRD Indicator E. Benefit Cost

F. Employee Relations

4.06 3.98 4.29 3.80 3.67 3.98

0.79 0.74 0.72 0.65 0.69 0.58

As for each KPI under each category, appendix H illustrates mode, mean score, standard deviation (S.D.), quartile deviation (Q.D.) and ranker order by its mean score in the first round of data collection.

From appendix H, we can find that participants’ are relatively with low

consensus in the category E. Benefit Cost, there are six KPI out of 12 with Q.D. equal to 1. While in other categories, the participants almost reach consensus in each KPI (Q.D.≦0.6). Besides, The KPIs which are deemed as important (M≧3.75) in the first round of questionnaire are as follows,

Labor costs: A1, A2, A3, A4, A5, A6.

Recruiting indicator: B1, B2, B3, B4, B5, B6.

Retention indicator: C1, C2, C3, C4.

HRD indicator: D1, D2, D4, D5, D9, D10, D11.

Benefit cost: E1, E6, E7, E8, E11.

Employee relations: F1, F2, F3, F4, F5, F6, F9.

Statistical Result of Round Two

From data collection of round one, the panel added 5 KPIs. The researcher added those 5 KPIs into questionnaire round 2, which were as followings:

A7: employee quantity growth rate divide revenue growth rate A8: pay-to-grade

A9: employee’s age distribution rate

D15: the ratio of employee fully understanding the item of assessment F10: employee’s satisfaction toward executives

Among those six KPIs categories, the average mean score is quite the same as

round one. Table 4.3 is the mean score and standard deviation of six KPIs categories

in round two.

Table 4.3 Mean and S.D. Comparison of KPI Category for Round 2

KPI Category Mean S.D.

A. Labor Costs

B. Recruiting Indicator C. Retention Indicator D. HRD Indicator E. Benefit Cost

F. Employee Relations

4.04 3.99 4.34 3.78 3.53 3.93

0.47 0.57 0.58 0.51 0.50 0.54

The KPIs which are deemed as important (M≧3.75) in the second round of questionnaire are as follows,

Labor cost: A1, A2, A3, A4, A5, A7, A8, A9.

Recruiting indicator: B1, B2, B3, B4, B5, B6.

Retention indicator: C1, C2, C3, C4.

HRD indicator: D1, D2, D4, D5, D10, D11, D14.

Benefit cost: E1, E6, E8, E11.

Employee relations: F1, F2, F3, F4, F5, F6, F9, F10.

From appendix I, we can find that the panel had the tendency to reach the

consensus than the first round, only the KPI E-7 had the Q.D. ≧1. Other detail

information is listed in the appendix I.

Statistical Result of Round Three

From the data collection of round three, the average mean score is similar to the second round, the mean score just had slightly change, the detail information is listed in table 4.4.

Table 4.4 Mean and S.D. Comparison of KPI Category for Round 3

KPI Category Mean S.D.

A. Labor Costs

B. Recruiting Indicator C. Retention Indicator D. HRD Indicator E. Benefit Cost

F. Employee Relations

4.09 3.96 4.43 3.78 3.47 3.94

0.41 0.47 0.48 0.40 0.45 0.48

The KPIs which are deemed as important (M≧3.75) in the third round of questionnaire are as follows,

Labor costs: A1, A2, A3, A4, A5, A7, A8, A9.

Recruiting indicator: B1, B2, B4, B5, B6.

Retention indicator: C1, C2, C3, C4.

HRD indicator: D1, D2, D3, D4, D5, D10, D11, D14, D15.

Benefit cost: E1, E8, E10, E11.

Employee relations: F1, F2, F3, F4, F5, F6, F9, F10.

Other detail information is listed in the appendix I.

Comparison of the Statistical Result of each KPI for Three Rounds

Through the comparison of the statistical result of each KPI category for three rounds data collection, the tendency of how panel looks upon each KPI will be easily and clearly shown from the table. Table 4.5 to table 4.10 reveals the mean score, S.D.

and Q.D for the third round of each KPI category.

From table 4.5, except A-6, all the KPIs’ mean score reach the standard (M≧3.75), besides, all the KPIs in this category reach the consensus (Q.D. ≦0.6).

Besides, A-1, A-5 and A-9 got higher mean score in every round of data collection;

A-1 and A-5 were also looked upon the most important two KPIs in this category. The detail information is presented in table 4.5.

Table 4.5 Comparison of the Statistical Result from Three Rounds Data Collection of each KPI in the Category A. Labor Costs

KPI Mean S.D. Mean S.D. Mean S.D. Q.D.

Round 1 Round 2 Round 3

A-1

0.67 4.55 0.69 4.64 0.50 0

A-2

0.74 4.00 0.63 4.00 0.45 0

A-3

0.62 3.91 0.54 3.91 0.54 0

A-4

0.90 4.18 0.40 4.09 0.30 0

A-5

0.67 4.60 0.52 4.64 0.50 0

A-6

1.11 3.55 0.93 3.73 1.01 0

A-7 4.00 0.00 4.00 0.00 0

A-8 4.00 0.00 4.00 0.00 0

A-9 3.60 0.55 3.82 0.40 0

From table 4.6, the Q.D. of round three shows that the expert panel’s opinions reach the consensus. B-3 and B-7 fail to reach the standard by their mean score; other information is listed as follows.

Table 4.6 Comparison of the Statistical Result from Three Rounds Data Collection of each KPI in the Category B. Recruiting Indicator

KPI Mean S.D. Mean S.D. Mean S.D. Q.D.

Round 1 Round 2 Round 3

B-1

0.67 4.00 0.45 3.91 0.30 0

B-2

0.89 4.45 0.52 4.18 0.40 0

B-3

0.87 3.82 0.60 3.73 0.47 0

B-4

0.79 4.27 0.79 4.27 0.79 0

B-5

0.74 3.91 0.70 4.09 0.54 0

B-6

0.67 4.64 0.50 4.64 0.50 0

B-7 3.17 0.58 2.82 0.40 2.91 0.30 0

From table 4.7, the Q.D. of round three shows that the expert panel’s opinions reach the consensus. All the KPIs reach the standard by their mean score; other information is listed as follows.

Table 4.7 Comparison of the Statistical Result from Three Rounds Data Collection of each KPI in the Category C. Retention Indicator

KPI Mean S.D. Mean S.D. Mean S.D. Q.D.

Round 1 Round 2 Round 3

C-1

0.62 4.09 0.54 4.18 0.60 0

C-2

0.79 4.00 0.63 4.00 0.45 0

C-3

0.67 4.73 0.47 4.73 0.47 0

C-4

0.79 4.55 0.69 4.82 0.40 0

From table 4.8, the experts reach the consensus based on the Q.D. of the third round; D-3, D-12, D-14 and D-15 had the tendency to get higher mean score than the previous round, while D-8 and D-9 and obviously tendency to get lower means score than previous round; other information is listed as follows.

Table 4.8 Comparison of the Statistical Result from Three Rounds Data Collection of each KPI in the Category D. HRD Indicator

KPI Mean S.D. Mean S.D. Mean S.D. Q.D.

Round 1 Round 2 Round 3

D-1

0.72 4.09 0.30 4.09 0.30 0

D-2

0.43 4.00 0.00 4.00 0.00 0

D-3

0.67 3.73 0.65 3.82 0.40 0

D-4

0.60 3.91 0.54 3.91 0.30 0

D-5

0.79 3.82 0.60 3.82 0.40 0

D-6

0.82 3.45 0.52 3.18 0.40 0

D-7 3.67 0.65 3.73 0.65 3.64 0.50 0

D-8 3.50 0.52 3.18 0.40 3.09 0.30 0

D-9 3.92 0.67 3.73 0.65 3.64 0.50 0

D-10 4.17 0.72 4.18 0.60 4.00 0.45 0

D-11 4.25 0.62 4.64 0.50 4.55 0.52 0

D-12 3.17 0.58 3.18 0.40 3.27 0.47 0

D-13 3.58 0.67 3.73 0.47 3.64 0.50 0

D-14 3.80 0.84 4.00 0.45 0

D-15 3.60 0.55 4.00 0.45 0

From table 4.9, the experts reach the consensus based on the Q.D. of the third round. Besides, no mean score of KPIs in this category higher than 4, it reveals that experts’ relatively pay less attention to this category. Other information is presented as follows.

Table 4.9 Comparison of the Statistical Result from Three Rounds Data Collection of each KPI in the Category E. Benefit Cost

KPI Mean S.D. Mean S.D. Mean S.D. Q.D.

Round 1 Round 2 Round 3

E-1

0.75 3.82 0.60 3.91 0.54 0

E-2

0.67 3.36 0.67 3.36 0.67 0

E-3

0.80 3.27 0.65 3.27 0.65 0

E-4

0.75 3.00 0.45 3.09 0.30 0

E-5

0.52 3.18 0.40 3.09 0.30 0

E-6

0.51 3.91 0.30 3.73 0.47 0

E-7 4.17 0.58 3.55 0.69 3.18 0.40 0

E-8 3.92 0.51 3.91 0.30 3.82 0.40 0

E-9 3.50 0.90 3.36 0.50 3.18 0.40 0

E-10 E-11 E-12

3.67 3.92 3.50

0.89 0.67 0.67

3.73 4.00 3.27

0.47 0.45 0.47

3.91 3.91 3.18

0.30 0.54 0.40

0

0

0

From table 4.10, the Q.D. of round three shows that the expert panel’s opinions reach the consensus. All the KPIs reach the standard by their mean score except F-7 and F-8; other information is listed as follows.

Table 4.10 Comparison of the Statistical Result from Three Rounds Data Collection of each KPI in the Category F. Employee Relations

KPI Mean S.D. Mean S.D. Mean S.D. Q.D.

Round 1 Round 2 Round 3

F-1

0.67 4.45 0.69 4.55 0.69 0

F-2

0.52 4.64 0.67 4.64 0.67 0

F-3

0.43 3.82 0.40 3.82 0.40 0

F-4

0.29 3.91 0.30 3.91 0.30 0

F-5

0.39 4.00 0.45 3.91 0.30 0

F-6

0.79 3.91 0.70 3.82 0.60 0

F-7 3.50 0.67 3.18 0.40 3.36 0.50 0

F-8 3.50 0.80 3.55 0.69 3.36 0.67 0

F-9 3.75 0.62 3.82 0.40 3.91 0.30 0

F-10 4.00 0.71 4.09 0.30 0

The Instrument of Key Performance Indicators on Human Resource Management among Insurance Companies in Taiwan

Constructing the Instrument of KPIs on Human Resource Management

From three rounds of data collection, the researcher reserves the KPIs which are deemed as importantly and practically (M≧3.75) and also reaches the consensus (Q.D.≦0.6) of the third round by experts. There are totally 38 KPIs reserved out of 57, including 8 from A. Labor Costs, 5 from B. Recruiting Indicator, 4 from C.

Retention Indicator, 9 from D. HRD indicator, 4 from E. Benefit Cost and 8 from F.

Employee Relations. The detail quantity includes original KPIs, reserved KPIs and the percentage of reserved rate of each KPI category is presented in table 4.11, while those reserved KPIs are presented in table 4.12.

Table 4.11 Reserved Rate of KPI Category

KPI Category Original KPI Reserved KPI Reserved Rate

A. Labor Costs 9 8 89%

B. Recruiting Indicator 7 5 71%

C. Retention Indicator 4 4 100%

D. HRD Indicator 15 9 60%

E. Benefit Cost 12 4 33%

F. Employee Relations 10 8 80%

Table 4.12 Reserved KPIs on HRM from Three Rounds of Data Collection

KPI Mean Q.D.

A. Labor Costs

A-1

A-2

A-3

A-4

A-5

A-7

A-8

A-9

B. Recruiting Indicator

B-1

B-2

B-4

B-5

B-6

C. Retention Indicator

C-1

C-2

C-3

C-4

D. HRD Indicator

D-1

D-2

KPI Mean Q.D.

D-3

D-4

D-5 3.82

D-10

D-11

D-14

D-15

E. Benefit Cost

E-1

E-8

E-10

E-11

F. Employee Relations

F-1

F-2

F-3

F-4

F-5

F-6

F-9

F-10

After the KPIs are selected after three rounds of data collection via Delphi technique, the researcher develops an instrument of KPIs on HRM among insurance company in Taiwan. The information of the instrument includes the following information,

1. KPIs, which is generalized from the opinions of expert panel 2. goal, which should be decided by the user of this instrument

3. subject, including “all employees”, “executives” or “specific subjects” which are difficult to generalize,

4. achieve, including “yes” or “no” to show whether the KPI is achieved or not afterwards

5. result, showing the result of the KPI

6. evaluation, to examine the relationship between the goal and the result

7. description, at the each page of the instrument, the researcher lists the description about how to use the instrument

Besides, the researcher designs a questionnaire for collecting the opinions from experts’ point of views about the instrument as the fourth round of data collection, the purposes of the questions plan to ensure the experts understand each item of the instrument and the context of the instrument is appropriate to apply among insurance companies in Taiwan to meet the purposes of this study. 9 questions of the instrument in the fourth round data collection and coded numbers are as followings, the instrument and the questionnaire is present in appendix K and appendix L.

1. Have clear ideas about how to use this “Instrument of KPIs on HRM” coded

as Q1

and understandable coded as Q2

3. The arrangement of this “Instrument of KPIs on HRM” meets your expectation coded as Q3

4. Clearly understand the meaning of each column coded as Q4 5. Clear understand the meaning of each KPI coded as Q5

6. The categories of this “Instrument of KPIs on HRM” cover every needed function coded as Q6

7. This “Instrument of KPIs on HRM” meets the practical needs coded as Q7 8. This “Instrument of KPIs on HRM” reflects the needs of human resource

management coded as Q8

9. Overall, this “Instrument of KPIs on HRM” is practical and meets the expectation coded as Q9

As for the information of the statistical result of the fourth round data collection,

appendix L shows the mean score, S.D, Q.D. of all questions. The mean score of

every question is higher than 4 (agree), all the Q.D. are under 0.6 which means the

experts reach the consensus, other detail information is presented in appendix M.

Discussion

The findings of the Delphi technique will be further discussed in this section, including the comparison of each KPI category and the reserved KPIs of the instrument.

Comparison of each KPI category from three rounds data collection

From table 4.13, the overall mean score for the three rounds data collection didn’t change a lot. A. Labor Costs and C. Retention Indicator had the obviously higher tendency than previous rounds, while E. Benefit Cost, had the obviously tendency to get lower than previous rounds among the six categories. The detail statistical result is presented as follows.

Table 4.13 The Mean Score of the Statistical Result of Three Rounds data collection

KPI Category Round 1 Round 2 Round 3

Mean Mean Mean

A. Labor Costs

B. Recruiting Indicator C. Retention Indicator D. HRD Indicator E. Benefit Cost

F. Employee Relations

4.06 3.98 4.29 3.80 3.67 3.98

4.04 3.99 4.34 3.78 3.53 3.93

4.09 3.96 4.43 3.78 3.47 3.94

KPIs on HRM among Insurance Companies in Taiwan

Based on literature review, experts’ addition and the result of Delphi technique, the 38 KPIs whose mean score are upon 3.75 and reach the consensus (Q.D.≦0.6) were reserved for the KPI instrument on HRM among insurance companies in Taiwan are as follows.

A. Labor Costs A-1 HR cost rate A-2 Labor productivity

A-3 Proportion of total salary to revenue A-4 Net income per employee

A-5 Proportion of total salary to labor cost

A-7 Employee quantity growth rate divide revenue growth rate A-8 Pay-to-Grade

A-9 Employee’s age distribution rate

B. Recruiting Indicator B-1 Hire rate

B-2 Recruiting time B-4 Recruiting cost

B-5 New employee turnover B-6 Quality of hire

C. Retention Indicator

C-1 Turnover rate

C-2 Headcount

C-3 Retention rate

C-4 Total turnover and new-hire turn over cost

D. HRD Indicator

D-1 Implementation of annual training plans D-2 Proportion of annual training cost to revenue D-3 Proportion of annual training cost to total salary D-4 Proportion of annual training cost to labor cost D-5 Annual training cost per employee

D-10 Annual executives’ average training hours

D-11 Average of trainee’s satisfaction of the training class

D-14 The implementation of performance appraisal interview between executives and employees

D-15 The ratio of employee fully understanding the item of assessment

E. Benefit Cost

E-1 Proportion of benefit cost to labor cost

E-8 Proportion of reserve for employee retirement pension to practical pension E-10 Budget of year-end activity or annual activity

E-11 Extra benefits context and cost for executives

F. Employee Relations F-1 employee satisfaction

F-2 the Dispute times between the labor and capital F-3 Times of employee counseling

F-4 Times of problem solving for employees

F-6 Numbers of employee’s proposal F-9 Average absence rate

F-10 Employee’s satisfaction toward executives

Analyze the Findings

From table 4.11, we can know that experts pay relatively more attention to the KPI category “retention indicator” and “labor costs” among the three rounds. The research findings corresponds to what Buchen (2006) argues, the increasing focus on talent shortage as well as the steady decline of company loyalty as a means of retaining such expertise has reinvested the traditional HR or performance consultant role in both areas with greater urgency. Dess & Shaw (2001) further intended that potential cost comes from retention can include both direct costs (such as separation, replacement, training and general administration costs) and indirect costs (such as lower productivity and reduced customer loyalty), Wager & Rondeau (2006) also indicate while the loss of quality employees can be devastating for both big and small firms. To keep the talent to save the “direct” and “indirect” cost is a key HRM issue nowadays.

On the other hand, in order to remain competitive and keep talents, a well and

attractive benefit strategy will be an incentive to appeal talents. As Roberts (2001)

puts it, the benefit categories must not only maintain an attractive traditional benefit

package consisting of health insurance and pension coverage, but also offer selected

family-friendly benefits that accommodate changes in employee needs and

characteristics. In other words, benefit design, besides traditional health insurance and

a retirement and savings plan, should be also connected to paid leave, holidays,

vacations, compensatory time and personal days to allow employees with

words, a well design benefit system will have significant relationships with retention.

However, as the research findings shown, the average mean score between

“retention indicator” and “benefit cost” differ from each other a lot, what seems inconsistent with the literature. As some experts indicate, this may due to that the employee welfare committee and its budget is not directly under HR department in most insurance companies in Taiwan, the budget of benefit cost is usually related to revenue of the company, therefore, the HR department doesn’t have a lot to do with the benefit design. Furthermore, the other reason is that benefit cost is not the key and critical factor to influence organization’s business strategy, benefit cost is more aligned to labor costs, this is also the reason that why Dephi experts didn’t emphasize on the category “benefit cost” compare to others in this study.

Although training, development, and innovation must be valued and supported in

order for an organization to have the capacity to respond to changing conditions and

consistently achieve strategic goals, the HR professionals still believe that have the

right talent in the organization is more important than training conducted afterwards.