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The Balanced Scorecard in the HR Context – What to Know

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A human resources scorecard is used to determine whether or not a company’s HR department is contributing to the business’ growth. Often, the variety of functions that this team performs makes it difficult for management to identify their contributions to the company goal. 

HR scorecards quantify the department’s participation and provide other information that defines the nature of HR’s role, what management expects of them, and key performance indicators for the term being measured. It functions in largely the same ways as an organizational scorecard would, but there are a few variations between the two.

1. They use strategy maps in different ways

Organization scorecards and HR scorecards both detail the main strategic goal and four perspectives that contribute to it—financial, customer, internal, and learning or growth. The difference between them is that HR balanced scorecards do not put the financial perspective first. The main goal of this department is to support other groups in the company, with the customer and financial perspectives side-by-side at the top.

This support comes in the form of creating culture maps, building a sound compensation scheme, and identifying the skills that each department needs to succeed. All of these are taken into consideration when the HR department makes an informal mission/vision statement that narrows down their duties. 

The first of these is identifying HR practices that push the company’s strategic goals. HR’s strategic goals would be geared toward recruiting and retaining talent for the company. Their contribution to the company’s financial performance lies in attracting and keeping employees who will perform to a high standard.

2. Their customers pertain to disparate groups

All departments in a company would need to do some form of customer relationship management. An HR department will have employees as their “customers.”  If not fellow employees, the human resources team’s customers are business partners of their company. Meanwhile, an organization-wide scorecard lists clients, audiences, or patrons of a brand.

If the HR team knows the needs of both their internal and external customers, they can provide initiatives or measures that respond better to these. Solutions such as providing sick leaves or new software for communications with partners are viewed through the HR balanced scorecard and analyzed for how well they contribute to the company’s strategic goal.

Detailed tasks geared toward business partners include finding good talent, making timely hires, and serving as a partner to leaders or managers of the different departments. For employees, HR supports company culture, offers employee training, mediates in conflict resolution, and ensures fairness in compensation among other things.

3. The financial investment will be different

The company will likely not make an official policy of it, but reducing or managing HR costs will be a big part of decision-making. Cost reduction would probably always be a part of the human resources department’s balanced scorecard. 

This does not mean, though, that HR should not consider investing in the team when planning for their financial perspective. There just needs to be a balance between the cost of acquiring or training and the ROI; since returns on human capital are less quantifiable, there must be a well-justified reason for these investments.

Conclusion

A balanced HR scorecard helps a human resource manager outline to business partners the milestones reached and the needs of their employees. Clear indicators and goals will make the team’s roles clearer and result in more efficient work. 

Investing in professional development, such as seminars or courses, will also make your HR team more productive. If you are looking for a talent management online course, or other learning courses for human resources personnel, visit Skill Builder today.

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