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Since the adoption of HR scorecard as an evaluation system for redefining the role of HR as a strategic partner, many HR metrics have been developed with which organizations benchmark performance of an HR department and measure its value as a strategic partner. However, some HR metrics are more important than others because they measure critical activities that have a great impact on the business bottom line. In my point of view, compensation & benefits, training and development, retention rate, and cost effectiveness are the most valuable HR metrics.
Compensation & Benefits
According to Grossman, the author of the article titled "If people are a company's biggest asset, why don't Wall Street analysts pay more attention to them?" Companies develop compensation systems that incent the right behavior and performance so that the best workers stay and move up -- and the worst ones move on. We all know that a good Compensation & Benefits package is imperative to most employees and among the first things they look for in their careers, so using this metric we will assure that HR department has an attractive benefits package that enable us to compete in a global economy and support our mission in attracting the most talented people and retaining them as long as they add value and contribute to our success. Also, it is very important to know that we are allocating recourses wisely and not overpaying.
Training and Development
According to Grossman, the author of the article titled "If people are a company's biggest asset, why don't Wall Street analysts pay more attention to them?" Successful companies manage their human capital well. They hire the right people and train them in the skills they need to help the company perform spectacularly. In today's economy, employees are eager to develop their abilities and enhance their skills. So even if we hire the best specialists we need to integrate them into our company and train.
This metric is very critical indicator of HR department effectiveness because with the high costs associated with hiring and training, if HR cannot manage to retain employees, this is definitely not good. Also, this indicator is very valuable in measuring the overall employees' commitment and satisfaction.
It all comes to cost effectiveness after all. All above-mentioned factors influence performance of HR department which has one goal - minimize costs and boost performance. If the HR department manages to cut costs and at the same time increase effectiveness, you can be proud of the HR specialists who know how to keep pace with the modern business.
Is the HR Scorecard an appropriate tool? Why or why not?
The HR scorecard is the most appropriate tool for evaluating HR departments; it's a measurement as well as an evaluation system for redefining the role of HR as a strategic partner. It is set to revolutionize the way business perceives HR. Having a measurement system in place helps an organization to define HR strategically and organizationally. In summary, HR scorecard provides management a set of metrics with which to benchmark performance of an HR department and to show its value as a whole. Assigning metrics to the activities lets managers track progress on goals and ensure that they are working toward strategic objectives. It adds rigor and lets managers quickly identify gaps. The scorecard helps to present an HR department as a strategic asset and establish it as a partner in the organization.
There are a number of benefits to the HR scorecard, according to the authors of "The HR Scorecard: Linking People, Strategy and Performance." Implementing an HR scorecard focuses the company on deliverables that lead to competitive business advantages. It enables HR executives to monitor costs while tracking the value added to the company's bottom line. However, the book's authors (Brian E. Becker, Mark A. Huselid and Dave Ulrich) argue that companies must regularly review scorecards to make sure the metrics tracked remain meaningful in the context of the business' overall strategy.
The HR Scorecard, when applied to HR, helps managers align all HR activities with the company's strategic goals. Companies that measure intangibles such as employee performance, innovation, and change perform better financially than companies that don't use such metrics.
HR Scorecard will help you evaluate performance of HR managers and find solutions to problems. Once you enter all data, you will see graphs and values in percent which will indicate how well HR department is performing. Sometimes, it is difficult to find what takes the department down or what causes losses. With HR Scorecard you will be able to evaluate all KPI to see what needs to be improved.
What role, if any, would technology play in your plan?
Technology will play an important role in our evaluation to the HR department and will automate the evaluation process, thus it will enable us to measure HR performance easily and effectively. There are many tools available in the market that many organizations use to track HR performance, the most valuable tool is HR dashboard.
A dashboard is a graphical display within software (or a browser interface) that compiles data such as key performance metrics and displays the data for a real-time view into what is happening in the workplace. The dashboard is usually customizable to display only what needs to be displayed as selected from a whole host of metrics. Management can utilize these tools to get a window on current business performance, view workplace trends, predict future needs, adjust focus to accommodate those needs, and much more ("HR dashboard", 2008).