A Balanced HR Scorecard

CEOs often have a single-minded focus on the bottom line. They assess financial performance, and tie outcomes to market trends. Many overlook (or avoid) recognizing that a leading indicator of financial results is a successful workforce. The truth is, competitive advantage begins with your human capital.

Measurement systems – whether for your company as a whole or the HR function – create value only when they align with organizational strategy and operational goals. Without a clear grasp of these things, it is impossible to implement a world-class performance measurement system.

Objective Mapping
Clarifying your objectives begins with candid questions and will typically force you distinguish a hierarchy among organizational priorities. As you evaluate which strategic objectives are mission critical vs. peripheral, you’ll naturally separate the urgent from the important. Don’t overlook the details – a lofty goal is likely to remain just that unless you articular performance drivers and metrics.

Critical Enablers
Next you’ll want to examine key issues like mind-set and culture, workforce competencies, behaviors and success metrics. To effectively align HR strategy (and your scorecard) with company objectives, it is essential to clearly define the strategic focus of your organization. This requires brutal honesty, and leadership must be intentional about creating an atmosphere that allows brutal honesty, or your workforce won’t feel safe and will avoid sharing important observations.

Create vs. Adapt
There are many examples and templates out there that you could model as a scorecard. Be cautious in doing so – I’ve rarely found an adapted scorecard to be as effective as a uniquely developed scorecard. Keep in mind that a balanced scorecard is not a timeless, static resource. It’s a dynamic tool that requires regular re-evaluation and updating to stay relevant with your company’s current direction.