Scorecard Metrics for HR

This article discusses some of the most useful HR KPI, or key performance indicators. These are measurable quantities which help to gauge how well the organization is performing, and can help to guide management decisions.

Management has become more and more fact-based, over the years, as managers saw the benefits of having accurate and relevant information on which to base their decisions. Hence the concept of KPIs or key performance indicators developed naturally as an extension and distillation of the fact-based management approach.

HR KPI would then refer to those indicators which look at the employees’ performance. These indicators would encompass the employees’ productivity, job satisfaction, initiative, work quality, teamwork, and so on. Looking at various KPIs would allow management to quickly and accurately gauge how the organization is doing, as a whole, and thus allow for insightful decisions and management choices.

HR KPI could also help the employees themselves to get a quantitative grasp on their performance and what aspects they need to improve upon. The consideration of these key performance indicators is basically just a way to keep track of the important aspects of organizational (as well as personal employee) performance. Employees could use these benchmarks to try and better their personal performance.

Groups and teams would also benefit from being able to look at and quantitatively measure not only individual member performance, but also their performance as a unit. This would enable the group to make adjustments both at the individual level as well as at the group level to further improve their performance (and hence their value to the company).

An awareness and understanding of these key performance indicators thus helps at almost every level of the company or organization. It becomes important to select the proper aspects of the organization to monitor, and the metrics or standards of measurement by which to gauge these aspects.

Some of the most important HR KPI’s are those related to workforce productivity. The exact meaning of productivity is of course dependent on the context of evaluation. Generally, the improvement of employee productivity over previous time periods is what is important to monitor and maintain. There is of course no absolute comparison for productivity, and this is why changes and improvements are what are measured.

Recruitment is another vital HR aspect to be aware of. Indicators here include comparisons between the average appraisal results of newly hired employees with the previous batch of hires. Better recruitment would of course result in hires that are better appraised than previous batches, and so on. An improving quality of new hires would result in better performing employees to fill the positions in the organization.

Employee retention is also another important aspect. Key performance indicators in this regard would consist of a weighted turnover rate. This rate could be weighted based on employee performance, with top performers being the weightiest. Lowering this turnover rate should be of high priority; any organization would want to keep its top performers within its ranks.

These are just some of the HR KPI’s that an organization manager could consider. By keeping track of these and other key performance indicators, management would be able to determine what decisions and adjustments need to be made.

This article discusses the basic concepts behind the balanced scorecard approach, especially in relation to HR management, and how scorecard design and implementation should be based on a sound strategic map.

The balanced scorecard represents a concise distillation of a useful strategic management concept. It was introduced in the nineties by Kaplan and Norton in response to the previously existing management approaches that they felt leaned too heavily towards the financial aspects of the business. They termed their new approach ‘balanced’ to emphasize that there are other aspects of any organization that need to be considered as well, if management is going to get the whole picture.

This approach can be termed fact-based management, where the gathering of accurate and relevant information becomes crucial. It is on the basis of this information that management could then make better decisions, both for the short term and the long term.

The balanced scorecard approach espouses the consideration of four basic perspectives. Each of these perspectives have their corresponding metrics, which are the standards by which performance can be measured quantitatively. By analyzing these measurements, improvement goals can then be set and attained quantitatively.

One of these of course is the financial perspective. It is here where expenses and revenues are considered carefully, as well as the flow of money within the organization itself. In HR, in particular, this would include looking at the ratios of hiring costs versus productivity, and so on. Traditionally this is the aspect that has received the most attention, since most businesses have the primary goal of making profits while minimizing costs. However, this is just one of the four aspects which the balanced scorecard approach considers.

Another important aspect is the customer perspective. Here, customer satisfaction, among other things, is important to measure. The quality of the relationships between the organization and its clients is considered here using the appropriate metrics such as the percentage of return clients, etc.

The third aspect that the balanced scorecard approach considers is the internal business process perspective. What this encompasses are (of course) the internal processes that the organization needs to excel at. HR departments would do well to look at such things as new employee accommodation, the ease of communication between offices and staff, and so on.

The last aspect is the learning and growth perspective. Here, the organization’s capability to grow and adapt is measured. What is important here is then the quality of training that employees receive, as well as an efficient communications network that would allow fast and effective reaction to any contingency.

A strategic map is simply the process of drawing connections between the various processes and entities within the organization. This is in harmony with looking at the organization and its workings using these four perspectives as suggested by the balanced scorecard approach. Using a strategic map, the most important and relevant metrics may be identified. Once these are identified, creating the balanced scorecard itself becomes easy.

Implementing the balanced scorecard would then consist of just gathering the necessary data to evaluate performance using the selected metrics. These results are then put together in a weighted sum, balanced by the relative importance of each metric with respect to each other.

The balanced HR scorecard approach can help not only HR management, but any type of management to get a clearer picture of the organization. This then turns to the ability to translate this information into positive action, improving performance across the board.

HR Training Scorecard designed to help measuring general education and training performance. This metric includes such metric indicators as “Training Satisfaction”, “Training Targeting”, “Training Accessibility”, “Time efficiency”, “Behavior Progress”, “Diversity”.

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The training scorecard allows to evaluate the training program according to the current corporate goals and suggest the best ways to improve stuff education and training performance.

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HR Hire Scorecard will help to measure quantitative and qualitative indicators of HR Hire process, which include “Accession rate”, “Staffing yield”, “Referral hires”, “Efficiency of new hires”, “Retention rate”, “Staffing efficiency ratio” and some other.

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Also it focuses on internal hire-related processes, such as interview, suggesting “Interview-screen ratio”, “Hire-Interview ratio”, “Start/offer ratio”, “Diversity of hires” metrics.

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HR Scorecard was designed as a general metric framework for estimation of any HR-related issues. This set of metrics will provide common ideas about what indicators might be used to measure human resource performance. The four groups of metrics include “Employee turnover”, “Recruiting”, “Retention”, “Training and Development” groups. Each group has some basic metrics, which can be extended with more details.

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The “Employee Turnover” group includes financial indicators associated with HR: “Cost per Hire”, “Turnover Cost”, as well as metrics which helps to basically estimate the HR process: “Turnover Rate”, “Time to Fill”, “Length of Employment”. Metrics for recruiting framework are “Vacant Period”, “New Hires Performance Appraisal”, “Turnover Rates of New Hires”.

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Please, download and try trial version of HR Scorecard before placing order.

Balanced Scorecard Designer is a software tool by AKS-Labs, which helps to design performance indicators and metrics.

The main window of the program contains three parts: metric tree, metric details and metric settings. Each part allows to fine tune the scorecard to fit company’s needs.

The scorecard is a tree of metric, where each metric has its own name, description and relative weight. These indicators might be grouped. Each group might contain any number of indicators, but it’s recommended to keep the number of indicators on the one level about 2-4. The group can also be a container for any other group, so if needed you can design a scorecard with any level of details.

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Metric’s Details

The indicators details part of the window allows changing indicator name and adding description. Typically, description contains information on how to measure the progress within this indicator.

The weight value specifies the relative weight of the metric indicator. The weight should be between 1 and 10. The sum of weights of all metrics at the same level must be 10.

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Metric’s settings

The third part of the window is metric’s settings. User can specify the optimization direction, e.g. if the current value should be increased or decreased to achieve target results. Also, in metric settings user can specify the scale on which the data is calculated, for instance it might be [-5…5] scale or [10,01 … 10,04] scale. The measurement units might be percents or any other units.

Once the scorecard was designed it could be saved for future use or it can be exported in Excel file, which is very useful when scorecard need to be integrated with other data source.

There are some other industry default features that make software easy to use. You can copy and paste metrics, you can undo and redo changes; you can move metrics or export to other programs.

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There are indeed methods for non-financial employees motivation that companies can implement. This way, your employees become driven to perform better at their given job tasks and responsibilities.

For employees to perform at their very best, there would then come a need for companies to have them properly motivated. This way, the employees can then perform better and be more productive in the process. But when it comes to motivation, people often think that the only way to motivate employees is through financial rewards and means. This is not true at all. In fact, there are many effective methods for non-financial employees motivation.

The first effective method pertains to job enrichment. It is quite common for employees to find their jobs and the tasks that come with them tedious over time. An editor who has been working for a newspaper company for 15 years just might find editing news articles a bit boring already. And when this happens, the editor might not find his job appealing or interesting anymore. This is something you should definitely avoid because this can demoralize the performance of your editor. Pretty soon, your editor will be giving you edited articles that are in need of your attention simply because they are not edited well at all.

You should then set a work environment that promotes interesting and challenging tasks. This way, you give your workers opportunities to test their own skills. This, in turn, gives them the chance to use the full range of their skills and abilities. Job enrichment is actually better than job rotation. When you do job rotation, the given tasks are just rotated amongst your employees. Whereas with job enrichment, new sets of tasks are not given to the employees at all. Rather, more complicated tasks are given to the employees. This makes the employees motivated to do better because they feel that they have proven themselves worthy of being assigned more challenging and complex tasks. However, you do have to be careful when you are considering implementing job enrichment. You have to judge very carefully what sort of tasks a certain employee can handle. You would not want to assign your employees complicated tasks that they cannot handle now, would you?

Fostering teamwork is also an effective method to motivate employees in a non-financial way. People are inherent social beings. When you organize activities and events that foster teamwork, you actually give your employees the perfect chance to socialize and make new friends. The employees from the advertising department just might not know a lot of people from the information technology department. By organizing such events, you allow your employees to build camaraderie with their colleagues. And we all know how friendship and camaraderie can make any workplace fun. This, in turn, can motivate your employees to perform better.

Lastly, empowerment is also another aspect you can consider. This pretty much is similar to delegation. You actually give your employees the power or the authority to make certain decisions that affect their work load. Now, you also have to be extra careful on just how much power and authority to give to your employees. They might end up making wrong decisions that are costly for the company as a whole. But if your employees are indeed trustworthy of such delegation, then this would also greatly motivate them to perform better.

These are just some of the methods for non-financial employees motivation. Other methods include fringe benefits, training, and even seminars.