Many businesses I work with want to believe that developing employee performance and business contribution scorecards is how to measure their employee’s value. I hear them saying, “my employees are my best assets” all the time. Now, they want to measure that.
They’ve got the right idea. A scorecard is definitely the right way to go. However, there are preliminary steps required in order to do it right.
HR scorecards have to align with the organizational strategy
In his book Balanced Scorecards and Operational Dashboards, Ron Person writes about how to make sure scorecards will provide business success.
According to Ron, the most common reasons why scorecards don’t work are:
- Lack of senior executive commitment
- Lack of a case of change
- Too many metrics
- The wrong metrics
- Fear of measurements
- Cultural mismatch
- Lack of an experienced consultant
- Too long to develop
In order for HR scorecards to be effective, they must be everything but what is listed above. In fact, the principal of right measurements is to make sure businesses are using a top-down approach as opposed to a bottom-up.
Model for business alignment
Let me share the characteristics of proper metrics:
- Aligned with the business
- Actionable and Predictive
- Consistent
- Simple, understandable, logical and repeatable
- Unambiguously defined
- Capable of tracked over time
- Capable of comparison (external benchmarks)
- Capable to drive appropriate action
Levels of metrics
There are 3 levels of metrics: Impact, Effectiveness and Efficiency.
Let me share the questions you need to ask in order to develop metrics to measure
Impact:
- What is the link between sustainable strategic success and human resource management?
- Which talent pools are most critical for competitive advantage?
- How would you improve human capital increase value?
Effectiveness:
- What unique combination of policies and practices would best build the necessary human capital? • What factors link policies and practices to human capital enhancement?
- What attributes distinguish effective and ineffective policies and practices?
Efficiency:
- What range of resources (financial and non-financial) should be considered?
- What is the appropriate level of investments?
- How should the resources you invest be allocated to maximize results?
Remember, if you’re not keeping score you won’t be able to measure the impact of your people on your business. Get ready for change and a sustainable growth.
For more information on scorecards, call us at 416-368-0720.
