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HRD SCORECARD &

BALANCED SCORECARD

Presented By :

Sindhu N. M. - Roll No. 71


Yogesh Kanchi - Roll No. 33
Puja Desai - Roll No. 12
Topics Under Study
❚ Evolution of HR as a Strategic Partner
❚ What is HR Scorecard & its benefits
❚ How to Create an HR Scorecard
❚ Cost Benefit Analysis
❚ Principles of Good Measurement
❚ Measuring HR Alignment
❚ Competencies for HR Professionals
❚ Guidelines for Implementing HR Scorecard
❚ What is Balanced Scorecard ?
❚ Developing a Balanced Scorecard ?
❚ Applying BSC at the functional level ?
What is HR’s Challenge ?
Cultural change
(metamorphosis) Human Capital
of Human Resources Management

Human
Resources

Personnel
Management

Personnel
Administration To Provide
Greater Value
Emerging HR Roles
Business Partner
❚ Knows Mission
❚ Understands business processes
❚ Understands organizational culture
❚ Understands nature of public service
❚ Recommends alternative solutions
❚ Is innovative and creative
❚ Thinks strategically
❚ Communicates well
Change Agent
❚ Designs and implements change process
❚ Uses consultation and negotiation skills
❚ Builds relationships on trust
❚ Works well in teams
❚ Uses coalition building skills
❚ Demonstrates problem solving skills
❚ Willing to take risks
Leader
❚ Takes risks
❚ Manages conflicts
❚ Demonstrates ability to make a decision
❚ Effectively manages resources
❚ Models ethical behavior
❚ Applies coaching, mentoring, and
❚ Counseling skills to develop talent
THE EVOLUTION OF HR FROM
PROFESSIONAL TO STRATEGIC PARTNER

❚ Initially :
❘ Administrative & Professional

❚ Focus on Individual Employee


❘ Incentive compensation

❚ In 1990, HR system to be linked with firm’s strategy –


need for measurement system
What is HR Scorecard
❚ HR Scorecard = filling the gap between what
is usually measured in HR, and what is
actually essential to the firm.

❚ Too often “the cobbler’s children go


barefoot” and HR lacks its own
performance measurement system.
Benefits Of The HR
Scorecard
❚ It reinforces the distinction between HR doables and
HR deliverables
❚ It enables you to control costs and create value
❚ It measures leading indicators
❚ It assesses HR’s contribution to strategy
implementation
❚ It lets HR professionals effectively manage their
strategic responsibilities
❚ It encourages flexibility and change
Tangible Versus Intangible
Assets
❚ Readily visible ❚ Invisible

❚ Rigorously quantified ❚ Difficult to quantify

❚ Part of the balanced sheet ❚ Not tracked through accounting

❚ Can be easily duplicated ❚ Cannot be bought or imitated

❚ Appreciates with purposeful use


❚ Depreciates with use
❚ Has multiple applications without
❚ Has finite applications value reduction
❚ Dynamic, short shelf life when not in
❚ Can be accumulated and use
stored
HR’s Strategic Architecture
3 dimension “value chain”

THE HR FUNCTION THE HR SYSTEM EMPLOYEE


BEHAVIOURS
HR professionals with High-performance,
strategic competencies strategically aligned policies Strategically focused
and practices competencies, motivations,
and associated behaviours
The Laws of Systems Thinking
Peter M. Senge
1. Today’s Problems come from yesterday’s
“solutions”.
2. The Easy Way Out Usually Leads Back In
3. Cause and Effect Are Not Closely Related in
Time and
4. The Highest Leverage Points Are Often The
Least Obvious
5. Cutting an Elephant in Half Doesn’t Get You
Two Smaller Elephants; It gets You a Mess
Clarifying and Measuring HR’s
Strategic Influence

❚ Step 1 : Define Business Strategy


❚ Step2 : Build a Business Case For HR as Strategic
Asset
❚ Step 3 : Create a Strategy Map
❚ Step 4 : Identify HR Deliverables
❚ Step 5 : Align HR Architecture with Deliverables
❚ Step 6 : Design Measurement System
❚ Step 7 : Implement
Strategy Map
HR Strategic
Alignment

Firm
Balanced Employee Strategy
Performance
Performance Strategic Focus Implementation
Measurement

Knowledge
Management
System
Alignment of HR Architecture with
HR Deliverables

Focus of HR HR Deliverable Single Performance


System (enabler) Driver
Alignment

•Market Senior staff


Rewards employment R&D cycle
•Career
stability time
Opportunities
Creating An HR Scorecard
❚ Themes
1. identifying the HR deliverables,
2. identifying and measuring the High-Performance Work
System elements;
3. developing a validated competency model that will focus on
outcomes
4. identifying HR efficiency measures that link costs and
benefits.

❚ Architecture
1. Leading indicators of HPWS
2. HR system alignment
3. Lagging indicators
Creating An HR Scorecard
Contd…
❚ Balance Between Cost Control and Value Creation

HR deliverables
(empty set) disciplined by
attention to both
benefit and costs
ROI

Undisciplined attention
HR “doables” to value creation that
driven entirely misjudges benefits and /
by cost control or ignores efficiency

Strategic Focus
Creating An HR Scorecard
Contd…

❚ HR ‘doables’ = cost focussed with little opportunity


to impact the bottom line
❚ HR deliverables = benefit focussed with the
connection to overall strategy
❚ Efficiency measures come in two categories :
❙ core items - represent expenditures that are important but
do not contribute to strategy implementation,
❙ strategic items that are designed as investments that
produce value.
Re- Check
❚ Reinforce the distinction between doables and deliverables

❚ Enable cost control and value creation

❚ Measure leading indicators

❚ Assess contribution to the bottom line

❚ Let HR professionals effectively manage their strategic


responsibilities

❚ Encourage flexibility and change


Cost Benefit Analysis Decisions

Benefits
Estimates : good
Cost Estimates:good
Calculations : NPV
Frequency : Regular

Benefits Estimates : Intuition


Cost Estimates : Good
Calculations : Payback, breakeven
Frequency : Irregular

Benefits Estimates : Intuition


Cost Estimates : Intuition
Calculations : None
Frequency : Never
Principles of Good Measurement

❚ Linking HR Deliverables to Strategy


Implementation
❚ Focus on creating value
❚ Relationship between attributes and strategic
outcome
❚ Measurement numbers to be compared with
Historical data or to industry standards
Competencies For HR
Professionals
❚ In 1988 – 98 ,
❙ knowledge of the business,
❙ delivery of HR practices, and
❙ the ability to manage change.

❚ In 1997 – 98
❙ culture management and
❙ personal credibility.

❚ Strategic HR performance management.


❙ process of orchestrating strategy implementation through
performance measurement systems
The STRATEGIC PERFORMANCE
MANAGEMENT Competencies Include :
❚ critical causal thinking,
❚ understanding principles of good
management,
❚ estimating causal relationships, and
❚ communicating HR strategic
performance results to senior line
managers.
Five Core Competencies
❚ cultivating the performance of HR professionals,

❚ assessing HR performance.

❚ rewarding it appropriately,

❚ designing HR development programs.


Guidelines for Implementing an HR
Scorecard

“Effective change = Quality x Acceptance


(EC = Q x A)”…….Steve Kerr

❚ Linking strategy with HR architecture


❚ Acceptance of change
❚ Use of checklist
Seven Keys & Processes for Making
Change….
❚ Leading change (who is responsible)
❚ Creating a shared need (why change)
❚ Shaping a vision (what will it look like when
finished)
❚ Mobilizing commitment (who else needs to be
involved)
❚ Building enabling systems (how will it be
institutionalized)
❚ Monitoring and demonstrating (how will it be
measured)
❚ Making it last (how will it be initialed and sustained)
4 Critical Dimensions

❚ HRD systems maturity


❚ HRD competencies in the company
❚ HRD culture
❚ HRD linkage to business goals
HRD Systems Maturity

❚ The systems should be appropriate & relevant


❚ Focus and balance the culture & future needs
❚ HRD strategies to flow from corporate strategies
❚ Systems to be well designed
❚ Should be implemented & integrated (synergy)
❚ Should be adequate
❚ Eg : MPP, Training, PA, Job rotation etc.
HRD COMPETENCIES IN THE
CORPORATION :

❚ Competencies include Knowledge, attitude, values and


skills
❚ Categories assessed :
❙ The HRD staff
❙ The top management
❙ Line managers and supervisory staff
❙ Union and association leaders
❙ Workmen, operators and grass-root level employees
HRD CULTURE AND VALUES

❚ Dimensions Assessed:
❙ Openness
❙ Collaboration
❙ Trust & Trustworthiness
❙ Authencity
❙ Proaction
❙ Confrontation
❙ Experimentation
❙ Learning Culture
❙ Listening
Evolution of Balanced Scorecard

❚ Developed in 1990’s – Robert Kaplan & David


Norton

❚ WHY ???
❙ Lack of clarity as to what should be measured and
how should it be measured
❙ Provided feedback around internal and external
Balanced Scorecard
❚ Based on Vision & Strategy of the company
❚ Varies from company to company
❚ Through Identified Drivers, manage areas,
❘ Customer satisfaction
❘ Internal business process
❘ Strategic specific measures
❘ Financial objectives
Four Key Areas :
By Kaplan & Norton
❚ Learning and growth perspective
❚ Deals with people
❚ Emphasises on continous learning through
❙ Mentorship
❙ Tutorship
❙ Providing communication channels to focus on
solving problems
Four Key Areas :
By Kaplan & Norton
❚ Business process perspective
❚ Refers to internal business processes
❙ the mission-oriented process - unique areas
of business
❙ the support process – business processes,
which are more repetitive in nature
Four Key Areas :
By Kaplan & Norton

❚ Customer Perspective
❙ Critical predictor of future success of an
organisation

❚ Financial Perspective
❙ Timely and accurate financial related data
BSC APPROACH TO HRM
Key Performance Indicators
❚ Performance measures also serve as a clear basis for aligning
all HR objectives with the company’s business goals.
❚ KPI’s help in assessing the progress and introducing
corrective action in a timely manner
❚ Need for “management by fact”
❙ An organization’s internal and external customers
❙ The performance of an organization’s products and services
❙ Market competitive comparisons
❙ Employee-related statistical data such as attrition rate, turn over
costs, and labor cost
❙ System integration and support
Developing A Balanced Scorecard
Step 1: Identify clearly defined value drivers for the audit
function

Step 2: Specify actions needed to support each of the value


drivers

Step 3: Review categories and action steps with key


stakeholder

Step 4: Implement a process for measuring what's been


accomplished

Step 5: Establish a system for reporting results to key


stakeholders
Developing A Balanced
Scorecard

❚ Step 1: Identify clearly defined value drivers for the


audit function
❙ pinpointing the value drivers that major stakeholders agree
are most vital to superior audit performance

❙ Audit Committee/Board of Directors, executive


management, regulators, line management, and even
customers.
Developing A Balanced
Scorecard

❚ Step 2: Specify actions needed to support each of the


value drivers

❙ Refers to defining actions

❙ Eg : working more closely with Human Resources to


attract a broader range of audit candidates, interacting with
other departments etc.
Developing A Balanced
Scorecard

❚ Step 3: Review categories and action


steps with key stakeholders
Developing A Balanced
Scorecard

❚ Step 4: Implement a process for measuring what's been


accomplished
❚ For eg : the value driver on your scorecard is "Building expertise."
Action steps aimed at meeting this goal might include:

Promoting training and certification


1)

2) Acquiring specialized skills


3) Expanding networking activities
4) Improving retention rates.
Developing A Balanced
Scorecard
❚ Step 5: Establish a system for reporting results to key
stakeholders

❙ Review
❙ Communicating
❙ Through interviews, surveys and team discussions
A Final Glance….
❚ World-class companies are investing to ensure
that their internal audit function delivers full
value in high-impact areas such as risk
management—and your company should
consider pursuing the same route

❚ Avoid the "silver bullet" syndrome and focus


on identifying and developing best practices
from within
A Final Glance….

❚ Keep your scorecard simple

❚ Stay focused and be prepared to fine-tune


the process over time.
In Short…
❚ Converting the four perspectives into clear HR strategic
business objectives that will align with an organization’s
business objectives.
❚ Having specific measurement criteria such as KPIs to
measure and assess the effectiveness of the business
objectives on an on-going basis.
❚ Having a clear definition of information requirements,
and factual data to support the performance measurement
process and
❚ Having the necessary system supports to provide
relevant data, information and analysis.
Conclusion
“What Gets Measured….
Gets Managed…..”

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