Is it possible to measure the contribution of the human resource department into the financial outcome of a company? A lot of business owners are concerned with this question and explore different ways of doing that. Actually, there is no need to look for dozens of options that will enable you to evaluate the performance of you HR department, since the Balanced Scorecard system and metrics it uses will allow you to do that quickly and effectively.
What makes HR metrics so valuable? The fact is that they make it possible to get evidence of the overall efficiency of the company’s human resource department, thus contributing to the improvement of its functioning. Implementation of these metrics is frequently reported to be a significant part of human resource management. This is because they help make a reasonable assessment of indicators that show how well human resource activities accomplish the objectives of this particular department, which further affect other business goals you have set. Typically, the company’s managers can easily make use of valuable information they have managed to gain from the established metrics and review the strategic mission of the human resource department.
So, how exactly are these metrics organized? The best way to present them is to use the Balanced Scorecard system, which has already become popular in lots of business organizations. This tool specifies all strategic plans with regard to four basic perspectives, namely financial, customer, internal and organization learning. To understand the idea of the HR balanced scorecard system better, we should discuss each of these perspectives separately.
The financial perspective gives an answer to the following question: “What human resource strategies should the management of the company have in order to come up to the customers’ expectations?” The customer perspective, in its turn, is closely connected with the first one, since it is applied with the only purpose – to define what exactly the company’s clients wish to get from it. The internal perspective helps decide in what way it is possible to make the human resource function consistent with the customers’ needs. Finally, the organization learning aspect focuses on the professional enhancement of the company’s employees, which may affect long-term business objectives. If you manage to consider all these human resource BSC perspectives and establish all the metrics used by this system correctly, it will contribute to the development of your business, thus bringing you the increased income.