HR Scorecard

Dr Vasudha Dhingra
What is an HR Scorecard?

• The HR scorecard is a strategic HR measurement system that helps to

measure, manage, and improve the strategic role of the HR
department.

• The HR scorecard is meant to measure leading HR indicators of

business performance. Leading indicators are measurements that
predict future business growth. These are called HR deliverables. They
are also known as HR metrics, and more specifically HR KPIs, as they
are metrics that are linked to the business strategy.
HR Scorecard Usage
• HR managers and human resource management can use the tool to:
• Evaluate and measure the effectiveness of human resource function
and allocate budget towards HR initiatives
• Give clear insights into which human resources initiatives should be
prioritized, and set realistic human resources targets
• Determine who needs support from HR and make informed decisions
regarding resource allocation
There are five steps to create an HR scorecard:

• Create an HR strategy map.

• Identify HR deliverables.
• Creation of HR policies, processes, and practices(High performance
work system).
• Aligning HR systems.
• Creating HR efficiencies.
1. Create HR Strategy Map

• To identify how HR can connect to this business outcome, one can create a
strategy map. The strategy map helps to identify how HR is driving these
business outcomes.
2. HR Deliverables

• To measure this, HR deliverables or KPIs are created. This HR

scorecard example shows how these strategic goals can be
measured. For example, the lead time is measured as the ‘time
to hire in days’, which is currently 38, but has to be decreased to
25, a 34% improvement!
3. Creating High Performance Work System

• Once the HR deliverables have been clearly defined, we can begin to

identify and measure the foundational High-Performance Work System
elements that help to generate those deliverables. We term these
elements a High Performance Work System to represent the fact that they
have been selected specifically with the intent of implementing strategy
through the HR deliverables
• For example, you would define six benchmarks to achieve a 10% reduction
in cost per unit sold over the next 12 months. These might include:
Achieving $5,000 savings over last year through improved quality and
reduced waste Eliminating overtime hours for specific staff members
Improving delivery times for outside and human resource customers from
five days to three days.
4. Aligning HR Systems

• For some organizations, an effective strategy includes aligning their

employee management system. There is a central repository
(Employee Information System) where all information about
employees — including payroll, attendance records, leave requests,
etc. — is stored. In simple words, we can say that it’s like your
personal database. But there’s no point in having an excellent
repository unless it supports your organizational goals. Therefore,
design the systems so they are in sync with each other and are easy to
utilize. You can try implementing the following steps to help you align
your EIS:
• Gather Employee Data and Put it Into the System. You upload current personnel
records to enable better visibility into data and processes. However, before you
begin uploading employee data, you may want to think about how much you
wish to reveal about your workforce to managers and supervisors. There are two
ways to do that. On the one hand, you can allow managers and supervisors to see
everything about their employees — even confidential details like bank
statements and medical diagnoses. On the other hand, you can restrict access to
only necessary parts of the information.
• Generate Employee Reports. You will agree on which types of reports you should
provide. For example, many departments will insist on getting specific, detailed
information while others won’t care much about these reports. As long as your
organization receives the raw data, everybody is happy. The good thing about
centralized HR systems is that you can share the data among stakeholders via
email or upload them onto an online portal.
5. Identifying HR Efficiency Measures

• Finally, it’s crucial to assess your HR scorecard and identify areas that
require improvement. This involves looking into the relationships
between HR initiatives and business outcomes. By identifying these
relationships, you can make data-driven decisions to improve your HR
strategy and achieve your company objectives in an efficient manner
Benefits of HR Scorecard
1.Strategic alignment: The employment of an HR scorecard offers myriad advantages,
primarily in terms of strategic alignment. This process of alignment helps organizations
sync their HR strategies with their overall business objectives, which results in the
establishment of a cohesive and effective unit. By utilizing an HR scorecard, HR
professionals can guarantee that their initiatives are in line with the organization’s
mission, vision, and values, all while supporting the achievement of strategic goals.
Moreover, the alignment of HR strategies with the organization’s objectives is imperative
for HR professionals to demonstrate the value of their function to the organization and
enhance their credibility.
2.Performance measurement: Using an HR scorecard has several benefits for an
organization. One of the main advantages is that it allows HR professionals to measure
their performance effectively. The scorecard provides a detailed overview of the
organization’s HR performance, including both leading and lagging indicators.
3.KPI- Leading & Lagging Indicators: Leading indicators are predictive measures that help
HR professionals anticipate future performance. Examples of leading indicators include
employee satisfaction, retention rates, and employee engagement levels. By monitoring
leading indicators, HR professionals can take proactive steps to address potential issues
before they become significant problems.
1.Lagging indicators: Lagging indicators, on the other hand, are retrospective measures
that provide insight into past performance. Examples of lagging indicators include
turnover rates, absenteeism, and time-to-fill open positions. By monitoring lagging
indicators, HR professionals can identify areas of weakness and take corrective action to
improve performance.
2.Causal relationships: The utilization of an HR scorecard can provide HR professionals
with a comprehensive understanding of the intricate causal relationships that exist
among various HR metrics. Through the meticulous analysis of these relationships, HR
professionals can promptly identify the fundamental origins of potential problems and
instigate the necessary corrective action to promptly address them. For example, if the
employee turnover rate is high, HR professionals can analyze the data to identify the
causes and take steps to improve retention.
3.Balanced perspective: An all-encompassing method of evaluating HR performance is to
use an HR scorecard. This strategy uses a range of metrics to assess the quantitative and
qualitative aspects of HR success, including but not restricted to employee satisfaction
and organizational culture. By quantifying these metrics, HR professionals can ensure
that their HR strategies are congruent with the cultural and value-based foundations of
the company.
Thanks

All the best…