Human Resources System

What Is The Human Resources Scorecard

The traditional way of looking at the Human Resources (HR) department in any business enterprise has been to rate its performance as intangible. However, this outlook is now set to change through the Human Resources scorecard. The scorecard makes it possible to rate the performance of any HR department through the institution of certain key performance metrics.

The metrics are performance measurement criteria that are based on both qualitative and quantitative indicators. They include both financial and non-financial key performance indicators (KPIS) used to judge the performance of the HR department. It is important to include both financial (quantitative) and non-financial (qualitative) indicators to keep the scorecard balanced.

Such balance is conducive towards integrating the HR department's functioning with the overall direction that a business enterprise is required to move towards. In addition, the balance would lead to achievement of both qualitative and quantitative growth objectives of any business enterprise.

How the HR department contributes towards the corporate goals such as the turnover of the business can be segregated on the basis of certain qualitative and quantitative KPIs. To evaluate the effect of these indicators on the turnover of the business, HR must look at all other departments and functional areas in the business as its customers.

Next exactly what inputs coming from HR are directly contributing towards other departments in meeting turnover objectives needs to be identified. HR basically deals with recruitment of effective employees. It also assesses their training needs and provides them training for which it incurs costs.

So, the performance assessment of the HR department through the balanced scorecard is basically meant to find how much value it is directly contributing to the company's qualitative and quantitative growth vis-à-vis the costs which it is incurring in doing so. So, the balanced scorecard is as much the performance rating of the HR department based on costs as it is based on the value addition to the business.

When HR hires effective employees, based on their education, their academic and professional degree, and interview, it incurs costs. However, it also contributes to value addition to the company's growth objectives as these employees then directly contribute to them.

Moreover, HR also functions to identify the training needs of these employees and to provide them training in the areas that they need to strengthen and update. In this endeavor it incurs costs as well as contributes towards enhancement in their knowledge. This last is a qualitative KPI, which has repercussions on the future direction of the business.

To make the Human Resources scorecard effective, it is important to integrate the HR system with other important connected areas as the payroll. Most big corporations in the world are now moving towards this integration to give the scorecard a fillip.