Some managers and business owners do not understand why they need to invest in HR department. This business unit seems to do nothing. Of course, this is what they think. In fact, it is very easy to believe in a common misconception about HR managers. These people do not produce and sell anything. They render no services and provide no support for customers. However, HR managers are responsible for a very subtle and financially challenging task – to hire, educate and retain personnel in such a way so that employees are satisfied with wages and working conditions and company management spend adequate amount of money for personnel.
Poorly working HR department may plunge the entire company in crisis. Besides, the HR business units may cause financial troubles. For example, the company may simply spend too much money to hire employees, even competent and enthusiastic ones. As a result, company goals and business plan may deviate from HR goals and measures which are OK by themselves and inappropriate in terms of company strategy. That is why it is necessary to use special tools to align strategies of various departments, including HR.
Lots of managers prefer using Balanced Scorecard (BSC) which proved to be a universal framework suitable for all industries and sectors. Balanced Scorecard in HR will help in resolving the following tasks:
- Optimization of HR costs. As known, every HR department requires money to hire and educate personnel. Of course, company owners want to decrease these expenses. At the same time excessive saving may result in employment of unqualified personnel. BSC will help locate weaknesses in company hiring policy.
- Alignment of HR strategies with mission and strategy of the company/corporation. All huge companies consist of numerous departments. Sometimes it happens that various strategies may have discrepancies and contradictions. BSC is the tool that helps managers better understand company strategy and align goals and measures of various business units, including HR.
- Optimize HR performance. If there are ways to hire qualified personnel at low costs, it is necessary to find them. Of course, BSC will not do the job for you, but creation of HR scorecard will demonstrate all weaknesses of current HR policy. At the same time it should be noted that HR managers must be ready to act based on the obtained BSC results.
- Motivate HR personnel to show better performance.