Successful organizations have a clear vision and strategy and translate them into concrete goals. Only when management (3), measurement (2) and vision (strategy map) (1) are developed in conjunction, organizational success is possible. The balanced scorecard is a widely used assessment tool to determine whether goals are achieved. The HR scorecard, which is derived from the business balanced scorecard, is an assessment tool in relation to human capital. This blog discusses the HR scorecard.
With the help of the business balance scorecard the results of an organization are tracked through four perspectives: financial, customer, internal and innovation. The financial perspective concerns the question how shareholders are considered. The customer perspective concerns the question which value to delivere to customers. The internal perspective concerns the question of what internal processes must excel. The innovation perspective concerns the question of what skills and abilities are needed. The financial perspective is always important, but there must be a conscious choice to be made in the attention paid to the other perspectives. This choice depends on the organization’s strategy and determines the balance (1). Profitability is improved by increasing market share. Market share is increased by increasing operational efficiency. Operational efficiency is increased by developing the staff. Conversely, developing the staff will increase operational efficiency. If operational efficiency is increased the marked share will increase. If market share is increased the profitability will improve (2). The monitoring of the strategic plan takes place through a scorecard by placing goals, measures and targets (3). The development of staff and internal processes are the working area for HR.
With the HR scorecard the creation of added value to an organization through HRM is demonstrated and measured. Within the HR scorecard the various HR activities are placed in the perspective from the contributions to be made to an organization. Firstly, the financial perspective is important for every strategy: as HR activities are placed in the financial perspective, it is defined as the results of labor. These are the productivity and cost associated with getting the business results (1). Secondly, the customer perspective is important when using the strategy of customer partnership: if HR activities are placed in the customer perspective it concerns results as the number of people that can be used, its arrangement, the presence of adequate skills among employees and binding motivated and committed employees. Employees / managers are seen as (internal) customers (2). Thirdly, the internal perspective is important when using the strategy of cost leadership: if HR activities are placed in the internal perspective, choices are made how to arrange HR processes the best way, there should be clear whether HR has sufficient expertise and whether the infrastructure is sufficiently crystallized for efficient and effective HR processes. Finally, the innovative perspective is important when using the strategy of product leadership: if HR activities are placed in the innovative perspective, it is about growing and learning. This refers to skills, training, leadership and knowledge of staff (4).
When writing this blog I was inspired by Evers, Dijkstra and Baarda.
The above resulted in the paper ‘A business administration approach to HRM‘.
Don’t hesitate to comment and give me your feedback, suggestions and ideas are welcome too!