Importance of Correct HR Evaluation
The recent decade has vividly demonstrated importance of human resource management for every business and any industry. The problem of personnel can be solved only through employment of qualified professionals with experience and deep knowledge in a particular area. Yes, investments, real estate, offices, equipment and production facilities are very important for every business. At the same time, dedicated and loyal personnel can really do magic. All strategic plans and management systems will fail unless supported by ordinary employees, midlevel and top management. Investments in personnel work in a long-term. In order to succeed in implementation of strategic plans having qualified and loyal personnel is a must. The company should always maintain its competitive advantage in order to survive in the market. This becomes an increasingly difficult challenge, and thus, people who work in the company may contribute to implementation of strategic goals.
We have started this article with description of human resource management and its exceptional importance for business success to illustrate importance of managing work of employees, optimization of hiring and recruiting process, as well as optimization of human resource management costs. Besides, human resource strategy should always comply with general strategy of the company. What tool should be used in order to both evaluate current HR performance and progress of HR department on its way to implement own strategic goals, as well as to check compliance of human resource strategy with company values, mission and strategic goals? The answer to this question is quite simple. This is Balanced Scorecard created by Norton and Kaplan – that two business gurus who were the first to include nonfinancial indicators to the list of measures evaluated by top management.
In terms of HR, Balanced Scorecard does not differ greatly. Of course, every industry has its peculiar features. When we’re talking about and human resource management we have to keep in mind that everything done by human resource managers should be done for sake of both employees in the company. A definite balance should be found between interests of company owners and shareholders as well as employees.
In what way can Balanced Scorecard be used to measure human resource performance? Through creation of effective key performance indicators it is possible to get timely and adequate information on all decisions and programs being implemented in human resource department. For instance, evaluation of such indicator as number of employees receiving percentage from company sales or total revenue will help better understand motivation of employees and probably introduce some changes to improve individual performance of every employee.