Implementation of Balanced Scorecard in HR department is quite popular for a number of reasons. Firstly, this is an excellent opportunity to test BSC and see what it actually can do. The problem is that BSC has received a huge portion of criticism from top managers and business experts that failed to have a positive experience. This is mainly because lots of typical mistakes were made during BSC implementation and maintenance. That is why, company owners and top managers are reluctant to invest huge funds into BSC implementation of a company scale. Development of a HR BSC is a perfect example of how the power of Balanced Scorecard can be tested.
Without any doubts, development of a HR BSC should start with a goals setting. At that, HR managers should not forget that HR goals and measures should meet requirements of a company mission and values. In other words, every decision in HR should correspond to a relevant goal on a company level. Thus, for instance, if the company made a decision to decrease cost per hire, it should anticipate how this decision would affect implementation of a company strategy. Sometimes, HR goals are fine by themselves, however, they look absolutely unacceptable in terms of a company strategy.
With a set of defined strategic goals, the company should proceed to development of BSC which start with selection of KPIs (key performance indicators). These measures should be also related to relevant measures on a company level. Thus, measurement of employee lateness or sickness rate should be useful in terms of evaluating company profit, operational losses etc.
At that, it should be mentioned that key performance indicators should be easy to understand and actually measurable. There is no point to waste money for measuring KPI that in no way affect department performance (some really silly measures). It is very important that every indicator is related to goals and measures of a higher level.
HR department is responsible for employment, education and retention of personnel. Thus, KPIs related to every stage should really reflect company goals. If the company needs to spend money to retain certain category of employees it should be aware of how to effectively use their knowledge and skills to achieve goals. Sometimes, companies spend huge money to hire experience employees who simply do not use their full potential.
Implementation of HR scorecard is a perfect way to improve performance of this business unit and consider using BSC on a larger scale.