Here’s everything your HR scorecard should include.
Now that you know some of the basic differences, let’s dive into more detail on how to create your Balanced Scorecard for human resources, perspective by perspective.
Your HR mission or vision is separate from that of the organization, and should be used to highlight the key focus of your department. For example:
“We want to provide the highest-skilled employees for all our business departments and support a culture of collaboration between each department and all employees.”
For HR, supporting this mission requires having the right compensation systems in place, creating the right culture maps, and determining the skills necessary for every role in each department. While departments typically do not have a formal mission or vision, having an informal mission or vision to guide the department is quite helpful—especially in a larger organization.
HR typically has two sets of customers that need to be represented in a scorecard:
Knowing what is important to both groups of “customers” enables the HR department to better support wants and needs across the company. Traditional HR measures (like sick time and turnover rates) won’t cut it when thinking strategically. As an HR professional, it’s important to listen to the concerns and feedback from both groups; they may inform you that your department is too slow at a filling key jobs, or that you need to focus more on culture and training to better support the way your business units operate.
Your organization likely has a vested interest in reducing or managing HR costs, which means cost reduction or management needs to be part of your financial perspective. But there are also organization-wide benefits of investing in HR. This means you’ll need to balance both aspects by examining the ROI of investing in employees, lost time due to staff vacancies, ways to improve the skill sets of employees, etc.
As previously mentioned, your financial perspective might be side-by-side with your customer perspective, which can help demonstrate how your expenses link to meeting customer needs. For example, speedy hiring can increase productivity of a department, and managing labor costs and benefits could reduce turnover altogether. Therefore, it’s important to be able to explain the benefits of your activities, and how they directly relate to the financial contribution you (HR) make to the organization as a whole.
As we mentioned earlier, one of the major differences between a for-profit organization-wide scorecard and an HR scorecard is the difference in the internal perspective. In the former, you’ll likely see themes around innovation, customer management, and cost efficiency—whereas in an HR scorecard, you’ll likely see themes around some of the following:
Not all of the above will apply to every HR department. You are creating a strategy scorecard, which means you’ll only emphasize key strategic areas. For example, if compliance is an organization-wide challenge, then it might be an internal process you want to emphasize in HR. But if your organization has compliance well under control, it might not show up in your scorecard at all.
HR departments often get tripped up on the learning and growth (L&G) perspective because, in theory, they foster learning and growth for the entire organization—so they think they should try to emphasize L&G for the whole company in their scorecard. But the L&G perspective in an HR department scorecard should only apply to how HR team members learn and grow, and the skill sets they require.
Ted is a Founder and Managing Partner of ClearPoint Strategy and leads the sales and marketing teams.