Performance, Compensation, and the Balanced Scorecard*
The HR Scorecard Refernec By Meghna Haridas
Summary
The essay introduces the framework of the HR scorecard, which is modelled after the Balanced Scorecard developed by Kaplan and Norton. The first few sections describe the problems with traditional approaches to viewing HR’s role in business performance. It explains why HR should be looked at as a strategic asset. The HR architecture is then described in brief. It highlights the links between the HR scorecard and the Balanced Scorecard. The nature of HR deliverables including performance drivers and enablers is explained. The seven-step model explains the details of implementing an HR Scorecard. The basic benefits of the HR Scorecard are highlighted. Finally, to highlight the implementation details, a case study of the Verizon HR scorecard is presented.
Introduction
The new economic paradigm is characterised by speed, innovation, quality and customer satisfaction. The essence of the competitive advantage has shifted from tangible assets to intangible ones. The focus is now on human capital and its effective alignment with the overall strategy of organisations. This is a new age for Human Resources. The entire system of measuring HR’s contribution to the organisation’s success as well as the architecture of the HR system needs to change to reflect the demands of succeeding in the new economy. The HR scorecard is a measurement as well as an evaluation system for redefining the role of HR as a strategic partner. It is based on the Balanced Scorecard framework developed by Kaplan and Norton and is set to revolutionise the way business perceives HR. Based on various studies, it can be concluded that firms with more effective HR management systems consistently outperform the competition. However, evidence that HR can contribute to a firm’s success doesn’t mean it is now effectively contributing to success in business. It is a challenge for managers to make HR a strategic asset. The HR scorecard is a lever that
Summary
The essay introduces the framework of the HR scorecard, which is modelled after the Balanced Scorecard developed by Kaplan and Norton. The first few sections describe the problems with traditional approaches to viewing HR’s role in business performance. It explains why HR should be looked at as a strategic asset. The HR architecture is then described in brief. It highlights the links between the HR scorecard and the Balanced Scorecard. The nature of HR deliverables including performance drivers and enablers is explained. The seven-step model explains the details of implementing an HR Scorecard. The basic benefits of the HR Scorecard are highlighted. Finally, to highlight the implementation details, a case study of the Verizon HR scorecard is presented.
Introduction
The new economic paradigm is characterised by speed, innovation, quality and customer satisfaction. The essence of the competitive advantage has shifted from tangible assets to intangible ones. The focus is now on human capital and its effective alignment with the overall strategy of organisations. This is a new age for Human Resources. The entire system of measuring HR’s contribution to the organisation’s success as well as the architecture of the HR system needs to change to reflect the demands of succeeding in the new economy. The HR scorecard is a measurement as well as an evaluation system for redefining the role of HR as a strategic partner. It is based on the Balanced Scorecard framework developed by Kaplan and Norton and is set to revolutionise the way business perceives HR. Based on various studies, it can be concluded that firms with more effective HR management systems consistently outperform the competition. However, evidence that HR can contribute to a firm’s success doesn’t mean it is now effectively contributing to success in business. It is a challenge for managers to make HR a strategic asset. The HR scorecard is a lever that
References: [1] Becker, Huselid, Ulrich; The HR Scorecard (2001) [2] Garrett Walker and J. Randall MacDonald; Designing and implementing an HR Scorecard; Human Resource Management, Winter 2001, Vol. 40, No. 4, Pp. 365–377 [3] Arthur K. Yeung; Measuring human resource effectiveness and impact; Human Resource Management; Fall 1997, Vol. 36, No. 3, Pp. 299–301 [4] Dave Ulrich; Measuring human resources: An overview of practice and a prescription for results; Human Resource Management, Fall 1997, Vol. 36, No. 3, Pp. 303–320 [5] Arthur K. Yeung, Bob Berman; Adding value through human resources: Reorienting human resource measurement to drive business performance; Human Resource Management, Fall 1997, Vol. 36, No. 3, Pp. 321–335 [6] Richard E. Wintermantel, Karen L. Mattimore; In the changing world of human resources: Matching measures to mission; Human Resource Management, Fall 1997, Vol. 36, No. 3, Pp. 337–342 © www.hrfolks.com All Rights Reserved