An HR scorecard identifies department areas that have an impact on the organization’s goals. Productivity, turnover, promotion and employee satisfaction are common categories for an HR scorecard. HR scorecard categories aren’t static. They change according to the organization’s needs, previous scorecard measurements and the effectiveness of HR functions and outcomes.
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HR scorecards emerge out of the “balanced scorecard” theory founded by management consultant Arthur M. Schneiderman. Schneiderman originated the balanced scorecard out of a work assignment to connect the dots between his employer’s quality improvement and strategic goals. The end goal for an HR scorecard is to establish a linkage between HR and organizational goals in support of strengthening the employer-employee relationship, creating a productive work environment and improving the bottom line. For example, one of the categories that HR scorecards measure is employee turnover. Through measuring turnover, an HR scorecard evaluates how turnover impacts the company’s profits, how much it costs to replace employees, the effect turnover has on remaining employees’ morale and, thus, the organization’s strategic goal to foster a productive work environment.
One of the disadvantages of the HR scorecard is that measuring intangibles is difficult, if not impossible, without imparting a degree of subjectivity on the part of HR staff. Subjectivity undermines the validity of data and, therefore, limits the credibility of HR and its ability to prove its worth to an organization. The very things HR is charged with and the organization believes HR can do well are the most difficult to measure, such as issues related to employee concerns.
Employees have been known to fudge on exit interviews and workplace surveys, which results in inaccurate HR scorecards that propose measurements of employee sentiment. Employees may not intentionally attempt to skew survey results; however, they may provide distorted answers to questions about their employment experiences to appease HR staff or their supervisors and managers. They might pretend they are perfectly happy with the workplace when they are actually dissatisfied with certain aspects of the employment experience. The clear disadvantage of HR scorecards is that they cannot be 100 percent accurate.
HR practitioners who fully understand the implications of workplace metrics should interpret HR scorecard results. If metrics contained in an HR scorecard are produced or synthesized by an outside consultant, it can result in complex or even inaccurate interpretations. HR scorecards are more effective and more useful when they’re produced in-house by HR staff who are familiar with the organization’s goals from an insider’s point of view.
The term “HR scorecard” can be a misnomer because it suggests that measurement is the only expectation. Another disadvantage to HR scorecards is that their usefulness can be limited by both HR staff and the company’s leadership. Ideally, an HR scorecard doesn’t just contain metrics related to HR functionality and the linkages between HR, the workforce and the organization’s business goals. The extended purpose of an HR scorecard is to develop action plans for the HR department and the company’s leadership team. For example, instead of simply measuring the impact of turnover on the organization’s workforce goals, use HR scorecard metrics in drafting an action plan for turnover reduction.