Since 1992, balanced scorecards have played an important role in the business philosophy of many companies. The concept was first introduced by the Harvard Business Review, which coined the phrase “balanced scorecard” as a set of BI (Business Intelligence) data points used to make, measure, and meet goals. Successful balanced scorecards are specific. This means you don’t just need them for your organization’s overarching goals (like revenue) but for individual departments as well – including HR.
Like any department, your HR team needs the right framework to understand their goals. Without it, “success” is a vague target, and understanding – much less meeting – goals can be difficult. This is where your HR balanced scorecard comes into play.
How to Pick the Right HR Goals
Your goals will define your success. If you haven’t set specific, achievable goals, how will you know when you’ve reached them? Fortunately, the end of the year is the perfect time to take stock of your human resource department’s performance and set new objectives for the coming year.
It’s easy to think that, from a human resources perspective, the internal perspective is the only one you really need for a solid HR scorecard. In reality, a holistic perspective will help your HR department find the right areas to focus on in the future. Additionally, each perspective ties into the next, so considering all four will create a better view of the factors that influence your organization’s internal, HR-related issues.
What are the Four Perspectives of the Balanced Scorecard?
Like any balanced scorecard, your HR department scorecard will need the following perspectives:
- Learning / Growth
Let’s take a closer look at each of these four perspectives, and investigate what KPIs might be appropriate for a human resources department in each.
The Customer Perspective
Remember: Goal setting doesn’t have to be solely interdepartmental, because your organization depends on departments working together towards common goals. Let’s say you want to increase overall customer satisfaction. This means consistent customer communication and relationships, for starters. Other specific goals might include customer retention and return customer rates. Generally speaking, customer satisfaction correlates with lower turnover rates, which will influence employee satisfaction. Additionally, factors like employee productivity can affect turnover rate, etc. In the end, your customer service goals for HR should include direct actions that relate to finances, internal factors, and growth.
The Financial Perspective
For many organizations, the most important metric is the bottom line. Every other goal, data point, and objective should move your company toward better revenue. What’s more, financial goals involve numbers – so making them specific is pretty simple. For your human resources department, find financial goals that relate to the organization’s larger financial perspective. These might include:
- Reducing costs related to HR
- Reducing turnover rates
- Employee absenteeism
- Workers’ compensation
- Employee satisfaction
- Employee engagement
- Employee benefits
By tracking these measurable KPIs, your HR department can create a baseline of balanced scorecard metrics that can then be correlated to the overall financial health of the organization.
The Internal Perspective
In many ways, the internal perspective is most closely related to HR. Finding specific and measurable objectives for this perspective can bit a little bit trickier, though, since they tend to involve factors that are more qualitative than financial numbers. Identifying “success” from this perspective can include factors like turnover rates, manager performance and ratings, overall employee satisfaction, and recruitment / employee retention data. On a more granular level, you can track recruitment channels and relate them to employee success. These might include referrals, online applications (through your organization’s website), LinkedIn referrals, etc.
The Learning & Growth Perspective
Your employees should grow with your organization. Specifically, the learning and growth perspective focuses on communication and performance improvements. Are you implementing best practices to make sure everyone is aligned with your organization’s overall goals? Is every department, team, and employee privy to the data they need? Can they access and understand it easily? The answer to these questions can help you understand where your company’s learning and growth strategy is at – and help you pinpoint opportunities for improvement.
Integrating Your HR Balanced Scorecard Like a Pro
Setting goals and knowing what data points you want to track is only the beginning. To truly implement a balanced scorecard in HR, you’ll need a plan to deploy it. Dashboards offer an integrative, interactive way to keep your employees aligned company-wide. With an interactive dashboard, you can store your data in one place, get real-time updates – and most importantly – provide a single source of truth for your entire organization to share. This means each department and its stakeholders will share stakes in the same pool of data, saving time and eliminating confusion.
To learn more about dashboards and how they can benefit your organization, contact iDashboards via chat, email, our support portal, or by phone!