The HR Scorecard: Linking People, Strategy, and Performance

I recently re-read this book and have even higher regard for it now than I did I when I first read it soon after it was published in 2001. Becker and Huselid later co-authored The Workforce Scorecard with Richard W. Beatty. With rigor and eloquence, they examine three separate but related challenges: Perspective (with an emphasis on differentiation), Metrics (and their relationship to strategy execution), and Execution (which holds senior executives and line managers accountable for workforce success). They suggest that all organizations which successfully meet these three challenges (i.e. those which "do it right") have these six characteristics in common: 1. HR professionals spend less time on employee performance than they did five years ago 2. The relationship between workforce success and strategy implementation defines the ROI of new HR initiatives. 3. Creating a shared mind-set is not taken for granted. 4. The HR function has a staffing structure that effectively balances the tension between being a strategic partner and delivering efficient and effective HR services. 5. Strategic workforce measures are "owned" and coordinated by a single individual or task force. 6. Senior executives, line managers, and HR professionals consider the results of the measurement system worth the implementation effort. Although it may seem to some who read this brief commentary that will be of substantial value only to large organizations, I hasten to reassure them that, after appropriate modifications, what Huselid, Becker, and Beatty recommend in The Workforce Scorecard can help any organization (regardless of size or nature) to improve the quality of their strategy execution by developing the right perspective on the contributions of its workforce to its success, and, by developing the right execution strategy to ensure that its managers are ready, willing, and able to use workforce metrics to drive business success. It is important to keep these points in mind when reading The HR Scorecard and I strongly recommend that, if possible, The Workforce Scorecard be read in combination with it, preferably but not necessarily afterward. Robert Kaplan and David Norton wrote three articles for Harvard Business Review ("The Balanced Scorecard," "Putting the Scorecard to Work," and "Using the Balanced Scorecard as a Strategic Management System") which led to a series of books in which their insights were developed in even greater depth. According to Norton who wrote the introduction to The HR Scorecard, in the New Economy, human capital is the foundation of value creation and that up to 85% of an organization's value is based on intangible assets. "This presents an interesting dilemma: The asset which is most important is the least understood, least prone to measurement, and, hence least susceptible to management." He goes on to commend the co-authors of The HR Scorecard for three specific contributions: their development of causal models which illu

The Scorecard approach enables the managing of HR as a strategic asset and demonstrates HR's contributions to financial success, A Scorecard helps put cost control (HR's efficiency measure) into balance with HR's value creation through focusing on: (1) the HR deliverables (e.g., providing excellent staffing) that leverage HR's role in achieving business strategy; (2) the High-Performance Work System (i.e., HR systems that enable deliverables); and (3) the HR systems' alignment with strategy. A central theme is that measures of efficiency do not sort out successful from unsuccessful firms; in contrast, the Scorecared emphasizes value creation tempered by efficiency. This book shows how to develop a Scorecard tailored for a specific organization. It also explores the competencies needed to implement the concept and provides guidelines. This book presents an important framework for understanding and assessing HR's role in the total context of business strategy and organizational performance. While strongly recommending the "HR Scorecared," we at Stern's Management Review Online (HRconsultant.com) also strongly urge you to check out "The Workforce Scorecard" by Huselid, Becker and Richard W. Beatty, a sequel which focuses on workforce strategy and its linkage with business strategy execution. These two books form a natural duo!

As a seasoned HR professional, I have spent the last decade looking for the "Holy Grail" of H.R. Metrics. My quest is not over after reading The HR Scorecard, but the book presented many helpful concepts and tools that we can use to measure the effectiveness of HR as a function, to measure R.O.I. on talent and talent initiatives, to measure the impact of HR on organizational performance, and as a basis for business case development of our deliverables.Three well respected thought leaders in the HR field have conducted extensive research of more than 2500 companies to uncover a model for implementing HR strategy and measuring results. If fully employed HR will deliver results linked to higher functional and organizational performance.To transform the structure of HR into a strategic function, HR leaders must:1. Clearly define the business strategy.2. Build a business case for HR as a strategic asset.3. Create a strategy map (with leading and lagging indicators, and tangibles and intangibles.)4. Identify HR Deliverables within the strategy map.5. Align the HR architecture with HR deliverables.6. Design the strategic measurement System.7. Implement management by measurement.The concepts in this book are useful but may not be practical for all HR leaders. This book is for organizations that have the resources to implement an in-depth system of measuring their HR performance. It is not a way to create a simple snapshot to be included in business reviews. While the authors suggest using no more than 25 measures so as not to create a burdensome systems, many of the examples in the book are quite complex and can by used only by the largest of organizations. It is also difficult to pick just a few efficiency measures and performance drivers from the comprehesive list prepared by the authors.Real life examples of scorecards are shown from organizations such as Verizon/GTE, General Mills, and General Electric. While these examples can help any size HR department think through how to measure the performance of their function, I would like to see a smaller organization profiled with more simple measures. This book should be in the library of all serious HR practitioners. It is well written, well researched, and well presented. If the tools and concepts are implemented, the HR function can rise to a new level. For those in smaller organizations, a few HR efficiency measures can be gleaned to build a simpler scorecard based on the key HR deliverables for the enterprise.

The position advocated in this book is a revolutionary one -- that HR can/should be the engine of strategy implementation. Why is this important? Well, nnumerous studies have shown that strategies that fail tend to do so in implementation, in the domain of people capacity.The organization that is charged with developing human capacity throughout any organization is HR, hence the critical role that HR must play in implementing strategy. Yet, HR has not traditionally been up to playing this role. The book very intelligently describes what must be done by HR departments to play this new role.HR must develop new measurement systems, new architecture and new systems to meet the needs of the company's corporate strategy. And it can demonstrate its contribution and value by accomplishing specific measurable results that alter the CEO's way of even thinking about HR.These are groundbreaking ideas, though the book must be wrestled with somewhat to wrestle out its gems of wisdom. But it's well worth a good wrestle.

The book Providing the tools and systems required for leading a measurement managed HR architecture and draw from an ongoing study of nearly 3,000 firms to outline a seven-step process they call an HR Scorecard, specifically designed to embed human resources systems within a firm's overall strategy and manage the HR architecture as a strategic asset. You can reading EMBA journal in june, it make an abstract the book.