What is the HR scorecard?
One well-known HR tool is the HR scorecard, sometimes known as the Human Resource Scorecard. This article will define the HR scorecard, discuss its differences from the balanced scorecard, offer a contemporary critique, and provide an example HR scorecard template.
The idea that HR doesn’t contribute to the business strategy has been one of the main issues that HR has faced in recent decades. In fact, HR directors in a lot of companies are still waiting to be invited to the so-called (board) table. HR hasn’t been able to accomplish this at many firms.
This problem is intended to be resolved by the HR scorecard, which was initially discussed by Becker, Ulrich, and Huselid in their book of the same name from 2001.
The HR department’s strategic function can be measured, managed, and enhanced with the aid of the HR scorecard, a strategic HR measurement tool.
The HR scorecard is designed to measure key HR metrics that affect business performance. Metrics known as leading indicators are used to forecast future business growth. We refer to these as HR deliverables. Since they are connected to the business plan, they are also referred to as HR metrics, and more especially, HR KPIs.
A HR scorecard can be made in five steps:
- Make a strategy map for HR.
- Determine the deliverables for HR.
- Development of HR procedures, practices, and policies
- Coordinating HR systems
- Developing Efficiencies in HR
Let’s create a sample HR scorecard and go over each of the steps above individually.
Map of HR strategy
One of the major European shipbuilding companies aims to lead the industry in innovation. In the outside market, European manufacturers are the preferred choice for technologically sophisticated ships, such as navy boats and superyachts, while cost-effective shipbuilding projects are shifting to Asia. Because of this, a good innovation rating is crucial to this organization’s competitiveness going forward.
A strategy map can be made to show how HR relates to this business result. The strategy map makes it easier to see how Human Resources is influencing these business results. Here’s the question: which HR procedures support the organization’s strategic objectives?
At the top of the map is the company’s strategic goal. HR has also recognized how recruiting contributes to this objective. The hiring of more competent people is one way to contribute. Reducing the lead time—the amount of time it takes to find a new employee—and improving your employer appeal in the highly competitive mechanical shipbuilding labor market are the two ways to do this. This particular organization was losing candidates due to their poor lead time performance.
Deliverables in HR
HR deliverables, known as KPIs, are developed to quantify this. This sample HR scorecard demonstrates how these strategic objectives can be quantified. For instance, the “hiring time in days,” which is now 38, is used to calculate the lead time. This is an improvement of over thirty percent!
Now that the organization has this HR scorecard and strategy map example, it knows what the best metrics are for business performance. In this instance, the key performance markers for attaining the business goal are ranking as a major employer and raising the hiring quality, as measured by the manager’s satisfaction rating one year later.
The HR department has a very crucial role because of these undeniable indicators. They show that increasing those two human resources deliverables will help the company achieve its goal of being more innovative.
HR guidelines, procedures, and methods
The HR scorecard also includes a section related to policies, procedures, and practices. Here, we examine the steps we could take to guarantee HR’s success with regard to its primary deliverables.
Here, the goal is for HR to develop several High-Performance Work Systems (HPWS). A collection of distinct yet related HR procedures intended to improve efficacy is called an HPWS. A high rating and a shorter lead time in the top employer scale are the main deliverables in the preceding case. Support for the said deliverables can be provided by:
1. Policies: A robust employer branding policy will facilitate establishing a solid reputation that will enable one to become a top employer.
2. Procedures: Improving communication between managers and recruiters will be key to cutting lead times. Managers frequently take a while to go through resumes and schedule candidate interviews. The time it takes to hire new employees can be cut down by days or even weeks by transforming these cumbersome procedures into workflows that ensure action the next day.
This is just one of the many procedures that can be put in place to facilitate improved performance on the deliverables related to HR. An additional example may be the procedure for candidates to apply. In order to draw in the best prospects and guarantee a high ranking in the top employer scale, the candidate experience is essential.
3. Practices: This section examines the particular procedures that HR uses to accomplish the previously specified deliverables. “Bundles” of practices are established policies, procedures, and practices that promote synergy. Together, these procedures produce a synergistic effect on the HR deliverables. Aligning HR systems is the next phase in the scorecard, and it centers around this as well.
Coordinating HR systems
Software systems are not the focus of system alignment. Instead, it’s about coordinating the various HR procedures to produce harmony.
Employee branding initiatives, for instance, ought to concentrate on the kinds of people that the company is truly seeking. Furthermore, cutting lead times by moving quickly through the process could result in a poorer caliber of hire, which would be inconsistent with certain of HR’s objectives.
Achieving the HR deliverables requires these HR systems to be in alignment.
Developing efficiencies in HR
HR has historically placed a lot of emphasis on efficiency-building. Some of the efficiencies must be abandoned in order to create an HR scorecard.
The straightforward explanation for this is that hiring someone may become more expensive if you want to, say, obtain a higher caliber employee. A strategic HR metric in our scenario is the recruit quality. It is definitely worthwhile to spend money on hiring higher-quality candidates. Investments in evaluations, employer branding campaigns, and other HR projects that enhance the primary HR deliverables are therefore justified.
The balanced scorecard for HR
The idea that there is a balanced scorecard for HR is a frequent misunderstanding. A hybrid of the balanced scorecard and the HR scorecard is the HR balanced scorecard.
Early in the 1990s, Norton and Kaplan produced the first publication describing the balanced scorecard. The two released a book with the same title in 1996.
One instrument for strategy and performance management is the balanced scorecard. The scorecard lists financial, client, internal business, learning, and innovation goals. These four objectives provide a clear picture of the company’s objectives and approach.
Since the HR strategy is known to follow the company strategy, the business scorecard has a significant impact on the HR scorecard. As a matter of fact, the HR scorecard starts with the balanced scorecard’s specified strategy and proceeds to identify the HR deliverables that propel these results. But remember that these are two distinct documents!
An analysis of the HR scorecard
One of the authors of the initial 2001 book on the HR scorecard, Dave Ulrich, stated the following in a 2019 podcast interview:
Research has shown that looking at data and HR professionals knowledgeable in People Analytics—the HR aspects of it—doesn’t produce commercial outcomes. However, as an organizational competence, it was the single largest predictor of the business outcome when you look at the data that links the company to the marketplace. That was referred to as external sensing.
External sensing involves examining market opportunities for customers and investors. Integrating that information into the company is the biggest driver of business results. Therefore, the key is to link metrics and analytics to the business.
While not actually a criticism, it offers a warning concerning how the HR scorecard is used. The HR scorecard is not a reflection of HR. It is meant to promote market opportunities, build competitive advantage, and drive business outcomes.
According to Ulrich, when he speaks with company or HR leaders, he usually begins with a question. What is the best or most crucial benefit HR can offer a worker? This is an intriguing question since it starts a conversation. Typically, the responses include a feeling of direction, a feeling of community, learning opportunities, pay, and teamwork. You’ve missed it, is his response. A company that succeeds in the marketplace is the most valuable gift HR can offer an employee.
https://california-business-lawyer-corporate-lawyer.com/wp-content/uploads/2025/03/What-Is-a-Pay-Stub-and-Why-It-Matters-for-Employees-and-Employers.jpg
787
1191
Amit
http://california-business-lawyer-corporate-lawyer.com/wp-content/uploads/2022/05/Nakase-Wade-logo-transparent-200x54px.png
Amit2025-03-28 04:24:272025-03-28 04:24:29What Is a Pay Stub and Why It Matters for Employees and Employers
