HR Scorecard Aligns People, Strategy, and Performance
Organizations consist of people who perform the needed work for them. Also, such work is determined by the strategies that the organizations plan for the year or quarter ahead. Thus, it can be said that while the organization strategizes, the people implement the strategy.
In this context, there has to be a mechanism to measure the outcomes of the strategy such as the performance of the organization across the parameters and the individual components of the strategies.
This is where the Human Resources (HR) Scorecard comes into the picture wherein it provides the decision makers with an easy method to evaluate the success or otherwise of the strategies by quantifying the outcomes associated with such strategies.
While one can legitimately ask about how organizations overall measure their outcomes of the strategies, the answer to this would be that tools such as Balanced Scorecard and other methods are typically employed by the organizations as far as the overall strategies are concerned.
On the other hand, the HR Scorecard provides the decision makers with an easy tool to measure the Human Resources component of the strategies in addition to aligning the HR Outcomes with the overall strategic outcomes of the organization.
Specific Ways in Which the HR Scorecard Helps Organizations
Thus, the HR Scorecard ties in the organizational strategic outcomes with the HR outcomes thereby bringing in the people aspect into the equation. For instance, if the Head of HR wants to know how well the people his or her function or group recruited preformed against the overall organizational imperatives, he or she can then use the HR Scorecard to evaluate the success or otherwise of the specific people component of the performance matrix.
In other words, the real usefulness of the HR Scorecard is that it integrates the HR Function into the overall organizational grid of strategic outcomes. To take an example, say a software firm wants to find out how much a particular employee who was recruited in the last fiscal contributed to the success of the organization.
Using the HR Scorecard, such measures can be quantified by tying in the costs spent on recruitment, training, and compensation with the benefits that the organization actualized from that particular employee. In this manner, the HR Scorecard provides decision makers with an easy to use tool to align the people, strategy, and performance aspects of the integrated organizational strategic matrices and the grids.
Limitations of the HR Scorecard and How Technology can help
Having said that, it is also not the case that the HR Scorecard does an excellent job in this respect as often it is difficult to quantify the individual components of the tool and compare them against the overall outcomes.
For instance, one can argue that performance in numerical terms is an intangible aspect as it is not always easy to put a number on the specific performance of the employees in monetary terms. Indeed, the fact that the monetary calculations are often the hardest part of the HR Scorecard means that cost-benefit analysis and other aspects have to be taken up only after due diligence is done on the measures as well as the methods to arrive at such measures.
This is where Algorithmic methods come in handy as it becomes easy using Big Data and Algorithmic driven tools to at least arrive at approximations of how the performance of specific employees measures against the overall strategic objectives.
Further, the best part in this respect is that the HR Scorecard provides the Algorithms with the needed parameters through which the measurement of such parameters can be arrived at. Thus, the HR Scorecard used in conjunction with such computing tools can help decision-makers make considered decisions.
Where the HR Scorecard “Scores”
On the other hand, where the HR Scorecard “scores” (literally as well as figuratively) is by measuring the success or otherwise of the HR function against the overall organizational objectives. In other words, the HR Scorecard is an excellent macro tool that enables the organizational decision makers to assess the competence and the performance of the HR Function as well as the people in the organization.
As can be seen from the discussion so far, the HR Scorecard provides us with a method to align the broader organizational strategies with the specific people aspects by bringing in the performance measures into the calculation.
While quantification of the measures would indeed help the organization, it needs to be remembered that even qualitative tallying of the measures and reporting them would help all stakeholders.
To take an example, end of year assessments can be done using the HR Scorecard both by quantitative as well as qualitative means. Whereas the former can be done using any of the methods as discussed earlier, the latter can be done in a tabular or grid manner wherein the objectives and the outcomes can be arrived at using the HR Scorecard.