INTRODUCTION New economic paradigm characterized by Speed, innovation, quality and customer satisfaction Essence of competitive advantage shifted from tangible to intangible assets Focus on human capital and its effective alignment with overall organizational strategy HR Scorecard measurement/ evaluation system for redefining the role of HR as a strategic partner Based on Balanced scorecard developed by Kaplan and Norton HR transformed from administrative to strategic role Challenge for managers to make HR a strategic asset HR scorecard is a lever that enables managers to do so
TANGIBLE VS INTANGIBLE ASSETS
WHY TRACK HR EFFECTIVENESS? To Guide Decision Making It helps HR staff in how best to manage the HR system to support the company. To Evaluate Program/Department Effectiveness It constitutes a “report card” to guide improvement efforts.
EFFECTIVE HR MEASURES Identify a clear, consistent, and compelling connection between the company’s strategy and the work of each employee. Focus on the critical few measures that have the greatest impact on the company’s bottom line. Document the effects of HR on company performance in credible ways that employees, line supervisors, and managers can understand.
BALANCED SCORECARD Kaplan and Norton model (1996) Customer perspective Corrective activity Developmental activity Balancing compliance with added value Balanced Scorecard Financial Measures Key performance ratios Financial health Balancing leading with trailing indicators Learning and growth People measures Knowledge measures Balancing soft and hard indicators Business Processes Drumbeat Time, cost, quality Balancing inputs and outputs HR Function Fits Here as HR Deliverables
HR DELIVERABLES HR Performance Drivers Determines the results Unique to the firm Identification and direct integration into performance criteria e.g employee productivity HR Enablers Reinforce the core performance drivers Strategy implementation impossible without properly aligned enablers For employee productivity enabler could be training
LAGGING INDICATORS Lagging indicators are outcome measures that help you gauge your HR progress by examining the final end result or outcomes of your collective efforts. Use of the “lagging” term reflects the delay or gap between your actions and a change in the final end result. Non-HR Example Economy — GNP growth, national debt, unemployment rate, etc. HR Examples Employee retention. Employee performance. Employee productivity.
LEADING INDICATORS Leading indicators are process measures that help you gauge incremental progress you are making toward key HR outcome (lagging) measures. Since leading indicators measure the results from your processes, there is less of a delay between your actions and a change in the system. They are the performance drivers — the key factors that enable the overall end result (outcome) you want to achieve. Non-HR Examples Economy — capital equipment purchases, layoffs, stock market value, public confidence, exchange rates, etc. HR Examples A reduction in absenteeism in key positions. % increase in internal people expressing interest in position
HR SCORECARD Measures effectiveness and efficiency of HR functions in producing the employees behaviors required to achieve organizational strategic aims Focuses on leading indicators Identifies the differences between HR doables and HR deliverables Demonstrates HR’s contribution to strategy implementation and to the company’s bottom line Helps HR managers focus on and manage their strategic responsibilities Encourages HR flexibility and change.
CREATING HR SCORECARD Outline value chain activities Define the business strategy Outline a strategy map Identify strategically required outcomes Identify required workforce competencies and behaviors Create HR Scorecard Identify required HR policies and activities Choose HR Scorecard measures Summarize Scorecard measures on digital dashboard Monitor, predict, evaluate The 10-Step HR Scorecard Process
OUT LINE VALUE CHAIN AND STRATEGY MAP Value chain analysis A tool for identifying, isolating, visualizing, and analyzing the firm’s most important activities and strategic costs Identifying the primary and crucial activities that create value for customers and the related support activities Strategy Map A diagram that summarizes the chain of major inter related activities that contributes to a company's success
IDENTIFYING WORK FORCE REQUIREMENTS AND STRATEGIC OUTCOMES
IDENTIFYING COMPETENCIES, SYSTEMS, PRACTICES HR Systems Alignment with Strategy Internal HR Alignment Matching HR Strategy to Company Culture HR Strategic Focus HR Competencies Operational Efficiency High Performance Work Sys Employee Relations Strategy Execution HR Practices Recruitment & Selection Employee Orientation Performance Measurement Training & Development HR Deliverables High Employee Satisfaction High Customer Satisfaction Low Key Staff Turnover Knowledge Growth
CREATE HR SCORECARD NOT CLEAR WHAT TO ADD HERE NEED YOUR INPUT
HR SCORECARD MEASURES Review existing measures and identify their strengths and weaknesses Identify corporate goals and HR’s contribution toward these goals Create a customer diagram and list of results HR produces to support the organization Define measures for each result Define levels of goals for each measure Define two tracking reports to communicate actual vs. planned performance.
HR DASHBOARD “A picture is worth a thousand words” sums up the purpose of HR Dashboard. An HR Dashboard presents the manager, via a PC desktop screen containing graphs and charts, with a bird’s eye view of how the HR management function is doing Summarizes how core measures from HR scorecard are doing
CONCLUSION HR Scorecard Enables Managers to Understand how to Align HR Strategy with Overall Business Objectives Tracking and Performance Evaluation Of Business Strategies HR Scorecard a Tool to Ensure Continued Learning and Change Management