Human resources (HR) personnel frequently use tools called scorecards to measure the impacts that their programs and services have on overall business. The aim of such evaluation is to create and maintain a firm link between HR and the organization’s goals, ensuring that they remain closely aligned. Though this is certainly helpful for testing HR effectiveness, however, it is not a perfect solution.
- Provide a focus for future development. Scorecard results can highlight strengths and weaknesses in a company’s inner workings, as well as the factors influencing these issues.
- Show HR contributions to strategy implementation and bottom line growth. HR can use these findings to increase the department’s visibility within the company and increase employees’ understanding of its role in their work lives.
- Identify areas for manageable growth. Scorecards reveal trends and quantify the results of investments such as training programs. They also expose correlations between people and business outcomes. For example, when personnel undergo leadership development, productivity usually increases.
- Subjectivity skews results and undermines credibility. While there is a substantial amount of objective data, such as yield and financial trends that can be calculated using this tool, factors like supervisor and newhire satisfaction are subjective. This is particularly difficult in HR because this position necessarily involves handling intangible, non-quantifiable issues such as interpersonal conflict.
- Inaccuracy is another problem. Any form of measurement that asks employees to describe their opinions of company programs or activities may be affected by a desire to please or fear of offending higher-level personnel. Other unintentional inaccuracies may occur when they hurry through a survey in order to return to their daily tasks.
- Interpretation must be completed by someone possessing a deep understanding of the individual business. Scorecards may be misread and misunderstood by outside consultants who do not have regular contact with the company’s practices. Any external advice, then, must be evaluated and carefully considered by internal personnel before using such conclusions to implement new procedures.
- Balance the scorecard in order to compare non-financial and financial components affecting various situations. For example, to analyze factors impacting turnover costs, a scorecard should include sections for company-focused data such as cost-per-hire and time-to-fill the position, as well as employee-focused information like newhire satisfaction with the orientation program and customer satisfaction with the newhire’s performance.
- Collaborate with other business personnel to accurately identify company goals and how they align with current company operations and efficiencies. Make sure to determine who is accountable for providing different information, particularly as certain departments may have more direct contact with the outcomes of HR projects.
- Take action! Just measuring and recording the results of the scorecard is not enough! For this tool to have any positive effect on the company, it has to drive planning and development for new initiatives.
Ruth Mayhew— The Disadvantages of an HR Scorecard
Tara Duggan— The Advantages of the Balanced Scorecard in the HR Business