The Performance Scorecard in Human Resources

The HR Dashboards are one of the best-performing HR communication and promotion tools. They tell the basic facts about the productivity of Human Resources. All employees and managers want to know key measures about the performance of the business; they want to see clearly how Human Resources contributes to overall results. All walls in Human Resources needs to be covered by different dashboards indicating successes, gaps and opportunities to improve. HR Big Data can make HR Dashboards even more attractive than we know them today.

A great HR Dashboard tells a story of Human Resources, but it is not alive. However, it is not truly an engaging tool. It requires many comments from HR employees. They must point key measures and how Human Resources improved them over the period. An excellent and widely recognised HR Department celebrates its successes; it does hide any serious gaps and issues. It makes everything visible on walls and puts good and issue spotting comments next to charts and graphs.

Most HR Dashboards are updated just after the month is closed. On the other hand, employees want to see the story about the performance and productivity daily. They are interested in seeing their effort pays every day. It is an excellent opportunity for HR Big Data to tell engaging HR stories.

HR Dashboards and HR Big Data

Our information society produces many data every day. Even a simple business generates data that can lead to a significant improvement of operations. The modern organisation collects data and turns them into useful pieces of information; the leadership team makes decisions using received data. However, the company cannot afford to employ as many analysts as required; it has to apply the big data analytics solution. The automated HR Big Data solutions are the key HR tools of the future.

Smart HR Dashboards support the competitiveness of employees. They can support innovations because employees have to find new smart ways how to improve results. They want to win; they do not wish to be seen as losers. The motivation of employees is difficult but they can self-motivate themselves just by seeing their results online. Top performers will always find ways how to compete against others.

HR Big Data solutions offer new exciting opportunities how to display HR dashboards. They can be individualised; they can become a part of the Intranet homepage. Each employee can see an updated ranking against others in the organisation. No one wants to be regarded a loser; employees improve his or her performance to be at least in the middle of the peloton. The business enjoys a significant increase in the productivity.

HR Dashboards are a great tool to manage and improve the relationship with internal clients. Most internal customers have just information from direct subordinates; they do not have any data supporting their arguments. The HR Manager can demonstrate real results and trends. It can calm the relationship, and improve the satisfaction with provided HR services.

Human Resources should forget about its visibility in the organisation. It has to ask the IT Department to deliver online HR Dashboards. The initial costs are not huge, and it is a universal adoption of HR Big Data solutions.

What is HR Scorecard?

The balanced scorecard was originally developed and introduced by David Norton and Robert Kaplan as a tool to improve the management practice in organizations. They introduced the balanced model as the organization can focus on the manageable growth of the business and that no major risk occurs.

The balanced scorecard helps to translate the vision into measurable key performance indicators, which can be divided among the managerial population in the organization. This is not the major advantage of the balanced scorecard as it introduces sharing of the key performance indicators among different managers as they focus on the growth of the organization, not just reaching their own targets. This is extremely important as the managers are pushed automatically to co-operate, communicate and share the best practice as the organization is successful and not just a single manager in the organization.

The balanced scorecard is a great managerial tool for the communication with the employees and other managers as it can easily show the progress of the strategic initiatives in the organization and the areas, which need a special focus as the goals are not reached yet.

The balanced scorecard divides the key performance indicators into 4 main areas, which have to be mutually balanced at the end:

  • Financial KPIs – the key performance indicators about the financial results of the organization and the productivity measures, which can be financially measured
  • Customer KPIs – the key performance indicators about the number of customers, the customer satisfaction, improving the products and other customer related key performance indicators
  • Process KPIs – the key performance indicators about the existing business processes, the efficiency of the business processes and potential cost savings resulting from the process re-engineering
  • People related KPIs – sometimes they are called Learning and Growth, but they are generally focused on the people development in the organization as the employees are able to utilize the other improved areas.

The concept of the balanced scorecard is simple, but it is extremely powerful as it helps during the strategic sessions to identify and agree on the strategic approach of the organization. As People KPIs are present, the balanced scorecard model expects Human Resources to be fully involved in the process of creating the balanced scorecard for the whole organization and influencing the other KPIs as well, not to be involved just in KPIs in the People area.

Benefits of HR Scorecard

The balanced scorecard model was the first managerial model, which introduced the full involvement of Human Resources into the process of the development of the new business strategy and to the process of the definition of the strategic goals for the organization.

Additionally, the balanced scorecard did not assign the individual goals to the individual managers, but it introduced the concept of the shared goals, which is an excellent situation for Human Resources. HR is not responsible for the employee satisfaction on its own; it shares the responsibility with other managers in the organization. It is good, isn’t?

The balanced scorecard model requires more from Human Resources. HR has to become co-responsible for reaching the goals in other areas and the bonuses in HR are influenced by the overall business results. It is a natural part of the HR job to teach people new products and develop new HR procedures for the improved processes. It sounds easy, but it can be extremely difficult in some situations.

HR has to develop its knowledge of the business processes and it has to develop the HR tools to identify the gaps in the people area quickly as it can react to the real needs of the managers and not sending the general messages.

HR should prepare its own balanced scorecard for the HR department as it can fit with the rest of the organization. HR cannot forget about its role in the organization, but it has to focus on building the better organization every day.

How HR contributes and support Balanced Scorecard

Human Resources plays an important role in the process of the development of the strategic balanced scorecard. HR is usually responsible for the leading and facilitating the People part of the balanced scorecard. HR has to prepare a lot of data and it has to prepare many analyses to propose to the management, what should be included in the People KPIs.

Additionally, Human Resources has to play its role as the employee advocate and it has to ask the employees about their opinions and emotions. Sure, it has to have the courage to tell the feedback from employees to the management. The employees are extremely important source of knowledge and they usually know, what is the real situation of the organization. When HR understands the employees, it can contribute to the creation of the balanced scorecard with highly appreciated remarks, which can be easily translated into long-term goals.

The balanced scorecard is about the shared responsibility among the managerial population in the organization and HR has to study the information about the products and services. HR has to find a way, how the financial and process reports can be connected with the reports produced by HR Controlling as the joint information creates the value added for the decisions of the top management. Many times, the decision of the top management is postponed just because of missing additional information (and honestly, HR is not good in reporting).

The HR contribution to the balanced scorecard is about the courage to stand up in the front of the managers responsible for the sales results and telling the HR opinion and what can be improved in the sales process from the HR perspective. It can hurt, but it is necessary, when Human Resources wants to evolve in the real Business Partner.

Human Resources is not just a department to contribute to the development of the balanced scorecard, but Human Resources can support the process of the development of the balanced scorecard.

HR has to support the general knowledge about the balanced scorecard in the organization. The balanced scorecard is not just about the top management, it is cascaded through all the managerial levels and the employees can be the contributors as well. Human Resources should be the part of the communication stream and it should offer a short training to employees about the balanced scorecard and the process of development.

The development of the first balanced scorecard can take a long time and HR can save a lot of time and many mistakes, when the training for the participant is prepared and executed, as some basic rules have to be respected. The people have to co-operate, they have to inspire each other and they have to be able to generalize each sentence.

Additionally, the finished balanced scorecard generates a huge workload for many employees and managers in the organization. The managers have to manage the daily operation of the organization and they have to contribute to many project teams, which are set up.

The employees are in the same situation. Some employees can be put fully to the projects, but most of them are in the project effort just partially and they should be rewarded for such an extra effort.

Human Resources should always consider the project incentives, when the new balanced scorecard is introduced as the paid effort is usually better and when the organization demonstrates its willingness to pay for the implementation of the balanced scorecard, it demonstrates, the balanced scorecard is really important.