HR SCORECARDBy:-

Bryan E. Becker

Mark A. Huselid

Dave Ulrich

Meaning of HR Scorecard

• A concise measurement system, often summarized on a computer screen in a “Digital dashboard”.

• Shows the quantitative standards or “metric” the firm uses to measure HR activities.

• To measure the employee behaviours resulting from that activities.

• Thus to measure strategically relevant organizational outcomes of those employee behaviours.

Objectives

• To highlight in concise but a comprehensive way, the causal link between the HR activities & the employee emergent behaviours.

• To measure firm wide strategic outcomes & performance.

• Supplementary tool to Kaplan & Norton’s Balanced Scorecard which doesn’t focus on HR practices.

• In short to project HRM as a strategic asset.

In word of the authors

In our view, the most potent action HR managers can take to ensure their strategic contribution is to develop measurement system that convincingly showcases HR’s impact on business performance. To design such a measurement system, HR managers must adopt a dramatically different perspective, one that focuses on how human resources can play a central role in implementing the firm’s strategy.

Basic HR Scorecard Relationships

Current Scenario

• HR is still seen as a paper pushing work in most of the organisations.

• New economic realities are putting pressure on HR to widen its focus from administrative role to broader strategic role.

• More use of intellectual capital pushes HR to show how they create value for their organisation.

Information required for creating a HR Scorecard

1. Company’s Strategy2. Causal Links3. Metrics

HR as a Strategic Asset

Strategic asset is a set of difficult to trade & imitate, scarce, appropriate, specialized resources & capabilities that bestow the firm’s competitive advantage.

HR Scorecard Process

1. Define Business Strategy

• Define company’s strategic plans

• Translate broad strategic plans into specific, actionable strategic goals

2. Build a business case for HR as a strategic asset

• Strategy implementation in terms of money• Implementation is more important than selection

Value Chain

Value Creation Process

.

3. Create Strategy Map

• Strategy map is a diagram that summarizes the chain on major interrelated activities that contribute to a company’s success.

• Or simply map the value creation process

4. Indentify HR deliverables within Strategy Map

• Where on the map can HR create value• Identifying the HR deliverables

5. Align HR architecture with HR deliverables

• Strategy tells us what deliverables to focus on

• Structure of HR systems to provide deliverables

• Ex- rewards, competencies, organisation design, training & development programs.

• Internal & external assignments

6. Design strategic HR Measurement System

• Using the information collected & derived from earlier steps create a HR scorecard.

• Choose correct Hr deliverables

• Choose correct measures/ metrics

• Balance of financial & non financial measures, short term & long term goals, external & internal goals.

Examples for assessing employee Morales & motivation, and for HR activities

• Employee attitude survey results• Employee turnover• Level of organisational learning• Employee productivity• Customer complaints• Transfer requests• Percentage of employees making suggestions• Job understanding level of employees

Examples for assessing HR system activities such as Testing, training & reward policies & practices

• Proportion of employees selected based on validated selection methods

• No. of hours of training employees receive per year• Percentage of job filled from within• Effective internal communication• Percentage of employees eligible for annual merit cash or

incentive plans• Regular assessment via formal appraisal method

7. Implementation , monitoring & evaluation

• Summarizing in a digital dashboard

• Scorecard has predictive nature

• Monitoring the measures is very important

• Dynamic causal relation exists between Strategic measures & employee behaviour.

Advantages of HR Scorecard

1. Distinguishes between HR Doables & HR Deliverables

2. Control costs while creating value

3. Measures leading Indicators

4. Assess HR contribution to strategy & bottom line

5. Makes HR more strategically responsible & focused

6. Encourage flexibility & change- views no.s as a means to an end not an end itself

Themes of HR Scorecard

LEADING• Key HR Deliverables• High Performance Work Systems

LAGGING• Extent to which HPWS is aligned to firm’s strategy• Efficiency with which deliverables are generated

HR Scorecard & Efficiency

HR Scorecard emphasizes HR value creation tempered by attention to efficiency

OPERATIONAL STRATEGIC

High ROI---------------

HR deliverables disciplined by attention

to benefits & costs

Low ROI HR doables driven by cost control

Indiscipline attention that ignores efficiency

Competencies of HR Professionals

1. Business knowledge

2. Delivery of HR practices

3. Management of Change

4. Manager of culture

5. Personal credibility

THANK YOU

PRESENTATION BY:-NANDINI NIM

BBS 3HR