HR are considered to lack business-focus
HR is often accused of not being strategic enough, with many considering people-related activities as being ‘soft and fluffy’ rather than ‘tough’ and business-focused. By building an HR Balanced Scorecard, HR and L&D Professionals can demonstrate the worth of ‘people stuff’ in relation to business outcomes.
How HR can become more strategic
The first stage in adapting this popular tool developed by Kaplan and Norton in the 1900s would be to develop an HR Business Strategy; which we cover in an earlier blog. Once a strategy has been developed, in building an HR Balanced Scorecard we need to consider the right metrics for our business.
Building an HR Balanced Scorecard
To understand what the right metrics are, we can ask questions relating to the four quadrants of the Balanced Scorecard tool: Financial, Customer, Process and Learning & Growth. These four quadrants are indicative of future business results.
Financial:
How can we quantify the financial impact of HR/L&D over the next year? What do we do that directly impacts the bottom line? For example, think recruitment spend; training budgets; reward management.
Customer:
What can we do that directly and positively affects our internal customers (and will, in turn affect the external customer?). How can we measure this? Employee engagement or satisfaction surveys are common here, as well as measuring the internal impact of HR supporting the business with recruitment or performance management.
Processes:
Often the HR sweet spot, but how can we measure the effectiveness of these systems put in place to serve the business need? Consider the speed of hire; uptake of performance management software or absence management.
Learning and Growth:
Ask the question, how are we supporting the future capability of the business? Viability of succession plans; take-up of suggestions schemes or leadership training would all fit in this category.
Using the HR Balanced Scorecard to report in line with business goals
Choose 2-4 indicators in each quadrant and then test them to ensure that they are being driven by your current strategies and are likely to support the overall business strategy. Report on these monthly or quarterly and review them annually in line with business goals. If you use performance management software or systems, then these metrics can provide the basis for HR performance objectives. This will help to provide a clear line of sight between people and business activities. For an example of what an HR Balanced Scorecard looks like, click here to download our slide set on this topic.
This content is based on an episode of The HR Uprising Podcast hosted by the CEO of Actus Software, Lucinda Carney. The Podcast is intended to help HR and L&D professionals to elevate the way their role within the organisation is perceived by delivering real, lasting value. Listen Here.
Why not download our infographic on the 5 steps to building an HR/L&D Strategy below:
