The cost, timely acquisition and quality of the human element are important factors for the evaluation of business processes.
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The human capital scorecard consists of four categories, similar to traditional scorecard. Each category is devoted to one of the basic human capital management activities: HC acquiring, maintaining, developing and retaining. These categories should contain metrics that provide a thorough look at the investment and utilization levels of human capital within the organization. They should reflect the dimensions of cost, time, quantity and quality.
The scorecard base may also cover reaction factors — the reactions of managers and employees to HR programs, as well as employee satisfaction and morale measures.
Acquisition is the principle HR activity. It contains such tactics as hiring and renting (employing a person for a limited time without adding him or her to the company’s payroll). The main metrics of this category are cost per hire, number of new hires, time to fill jobs, quality of new hires and number of replacements.
Another important HR activity is Maintenance, which includes creating compensation plans, paying salaries and benefits. It can be monitored by a number of cost ratios, such as average pay per employee, total labor cost as percentage of operating expense, benefits cost as percentage of payroll and average performance score.
Development is one of the most difficult HR categories to measure. Most accounting systems do not include formal training expenditures. Typically, human capital development covers a broad range of activities, from daily coaching to external educational ventures. Some useful metrics are training cost as percentage of payroll, training hours by function, training hours by job group, average number of training hours per employee, total training hours, training ROI.
Talent retention is crucial for any organization. When people and people-related issues such as culture are ignored, the potential for failure is very high. Therefore separation rates and costs are vital and should be considered in all types of HC scorecard systems.
HC scorecard is an important element of the data-to-value cycle. It provides key measures of the human effects within tasks and processes. To get specific scorecard metrics for HR-related activities, you can use various metrics packs.
- For more information on available HR metrics, click here.