Balanced Scorecard for HR Gains Popularity, Strategy Map Seen As Critical Success Factor

image I’ve been following a group conversation about balanced scorecard and HR and while I’m not an expert in these matters, the people driving this conversation seem to be zeroing in on some key elements that are important for HR organizations to consider.

According to Joe Clark, Chief Executive Officer at Prana Business, Arvato’s case study reveals a key success factor of HR is to provide measurable value to the business and shareholders.

As outlined by the Vice President, the HR team created a vision to transform the function of human resources into a leading-edge work team that delivers measurable value to the business and shareholders. The emphasis of the vision was on strategy execution and enabling the business to create sustainable competitive advantage.

The study follows a balanced scorecard approach to align and link the activities of the team to the firm’s objectives. While the case study provides clear guidelines for implementing an HR-centric approach to using balanced scorecard, Joe chimed into the real-time conversation adding,

“HR and many other functional units within an organization often lose site of the fundamental reason for any company to exist. That reason is to answer this question: ‘Why does our customer buy from us versus the competition?’ HR executives should rigorously focus their team’s activities on helping the firm answer that question.”

This seems like a reasonable method of focusing introspection on an organization and its ability to raise the value of the company. I suppose asking why customers but from your competition is also a worthy analytical point of view. But the ultimate test of of this introspection – can you answer the question – lay at the foot of strategic analysis. Joe makes it clear in this advice.

“If you can’t figure out how those items help answer that question then why is your group performing them?”

This is the nexus that leads to proper strategic alignment of functional support in a company such as the HR function. Joe’s company also provides a brief guide on this topic – 6 tips for HR execs to “get a seat at the table.” It’s a quick read and very useful guidance.

Alan Fell, Director at Alan Fell Consultancy Ltd, validates this approach.

“Challenge # 1 is to have a good corporate strategy map and then to develop an HR function strategy map as a subordinate exercise. That usually clarifies the questions of what is the real business purpose of HR. In other words – strategy alignment.”

Alan makes clear that a key problem is the existing role and capabilities of most HR departments – they are really not strategic. So a great outcome of creating an HR Scorecard is to open the debate concerning the strategic role of HR in a company. James Creelman, Senior Strategy and Quality Expert, Ministry of Works, Bahrain, echoes Alan Fell’s sentiments concerning strategy maps.

“… we should not use the term Balanced Scorecard unless it includes a Strategy Map. Remember a Balanced Scorecard is a Strategic Performance Management Framework not a performance measurement (or even management) framework.”

SHRM India provides a useful example of using scorecard to drive direct alignment of corporate goals with one aspect of HR, recruiting.

  • Objective: Reduce turnover costs.
  • Description: Develop effective recruiting methods and new-hire orientation methods to optimize the retention of new hires.
  • Actions:
    • Identify key attributes of successful employees who stay at company for two or more years.
    • Utilize technology more effectively for recruiting and screening applications.
    • Identify selection methods that will contribute to successful hires
    • Integrate branding efforts into recruiting.
    • Revise orientation program to ensure new-hire retention.
  • Measures:
    1. Cost-per-hire (financial).
    2. Turnover rates and costs (financial).
    3. Time-to-fill (business process).
    4. Customer satisfaction with new-hire performance (customer).
    5. New-hire satisfaction with orientation (learning and growth).
    6. Supervisor satisfaction with orientation (learning and growth).

As evidenced by a study conducted by SHRM India, slightly more than a third of executives view HR as a strategic partner, yet everyone gives enthusiastic lip service to the idea that its people are a company’s greatest asset. As I follow HR discussions concerning the application of balanced scorecard, it has become increasingly apparent that organizations which undertake the challenge of identifying clear and compelling connections between the company’s strategic plans and the work of each employee, naturally raise the HR performance and the company’s performance. This single directive seems to provide strategic continuity.

When I first started learning about balanced scorecard and how it can be used in a company, I assumed this approach was designed for the C-suite; the domain of executive management. But as I learn more about the unique relationships established through strategy maps and HR’s role, I can clearly see why democratization of scorecards and utilization down to every worker’s role in a strategic sense, is such a valuable idea and Balanced Scorcard (HR) for iPad is an ideal tool to embrace this emerging trend.

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One Response to Balanced Scorecard for HR Gains Popularity, Strategy Map Seen As Critical Success Factor

  1. Pingback: HR - Human Resource - Strategic Management | RIFT SUCCESS

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