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HR Scorecard : Making It Last

The HR scorecard is a report that bridges the gap between what is measured by the HR and what the firm requires. The four ideal motifs in an HR scorecard are:

• Identification of the HR deliverables
• Identification and measurement of the elements of High Performance Work Systems that produce those deliverables
• Development of a valid competency model that would focus on the desired outcomes
• Identification of HR efficiency measures that link costs with benefits

The HR scorecard architecture seeks to align the leading indicators of HR system and High Performance Work Systems as well as the lagging indicators of HR deliverables and HR efficiency. Such a measurement system should create a balance between the costs incurred and the value created within the firm. To mimic a certain model of HR scorecard without understanding the reasoning behind it would spell disaster. HR deliverables focus on the benefits to the firm that would impact the overall strategy of the firm. But a scorecard must always emphasize on the generation of value.

The following steps must be used to create a balanced HR scorecard:

- Review current measures

- Identify strengths and weaknesses

- Identify organizational objectives

- Identify HR contribution to meet these goals

- Define customer diagram

- Define measures for HR contribution to the goals

- Define levels of goals for each measure

- Define follow-up reports for actual versus planned performance

In a sample HR scorecard that was created, the following measures were used: total claims, reportable injuries, average cost/claim, cost /hire, turnover rate, lead time /hire, cost of training programs, and employees trained. All these measures were linked to the four objectives of the organization: growth of retail business sales, increase sales of a product X, increase profit, and reduction of operating expenses. An HR scorecard raised the fundamental question, “What is the contribution of HR to the realization of these organizational objectives?” The scorecard looked like this:

• Training employees on the usage of new technology
• Hiring of high quality managers
• Training the trainers and supervisors
• Creating a second shift staff as back-up
• Conducting workshops on safety measures
• Introducing a “pay-to-performance” pay structure
• Hiring a market development manager

Each of the above contributions of HR would be scrutinized by placing the individual role of HR at the center. They will form the value list and this list would decide which values are worth undertaking and which are not.

• HR has implemented a new pay structure
• HR has filled positions
• HR has trained supervisors in performance management
• HR has introduced a “pay-for performance” system
• HR has insisted on people satisfaction
• HR has managed compensation programs
• HR has created a niche of satisfied employees
• HR has introduced competitive employee benefit programs
• HR managers are well-trained
• Training programs have been implemented at other important facilities
• Employees have been recognized for their good work

A balanced HR scorecard pays equal attention to the financials of the firm, the internal business processes, learning and growth, vision and strategy of the firm, and the customers. The vision of an organization is decomposed into the business strategy of HR. This strategy is in turn translated into operations of HR. Each member of HR is then called to act upon the strategies and the performance is measured and followed upon. Outcome is the key concern of an HR scorecard rather than activities and outputs. The components of the scorecard are finally brought together in a matrix. The verticals are comprised of objectives, measures, targets and initiatives. The horizontals are comprised of total claims, reportable injuries, average cost/claim, cost /hire, turnover rate, lead time /hire, cost of training programs, and employees trained. The final matrix would look like this: 

                                               OBJECTIVES         MEASURES           TARGETS            INITIATIVES  


Reportable injuries


Turnover rate

Lead time/hire

Cost of training programs

Employees trained

Comments Listing
Posted: 11/08/2014 17:13:17

This information is very important and useful for me. thanks for sharing

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