Dissertation Report on Putting HR on Balanced Scorecard a Case Study of Verizon

8/15/2019 Dissertation Report on Putting HR on Balanced Scorecard a Case Study of Verizon

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A

Dissertation ReportOn

“Putting HR on Balanced Scorecard”

(A Case Study of Verizon

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&'e ne+ economic para%igm is c'aracterise% , spee%3 innovation3 2ualit an% customer

satisaction &'e essence o t'e competitive a%vantage 'as s'ite% rom tangi,le assets to

intangi,le ones &'e ocus is no+ on 'uman capital an% its eective alignment +it' t'e

overall strateg o organisations &'is is a ne+ age or /uman Resources &'e entire sstem

o measuring /R@s contri,ution to t'e organisation@s success as +ell as t'e arc'itecture o t'e

/R sstem nee%s to c'ange to relect t'e %eman%s o succee%ing in t'e ne+ econom &'e

/R scorecar% is a measurement as +ell as an evaluation sstem or re%eining t'e role o /R

as a strategic partner 4t is ,ase% on t'e >alance% Scorecar% rame+or %evelope% , =aplan

an% Norton an% is set to revolutionise t'e +a ,usiness perceives /R

>ase% on various stu%ies3 it can ,e conclu%e% t'at irms +it' more eective /R management

sstems consistentl outperorm t'e competition /o+ever3 evi%ence t'at /R can contri,ute

to a irm@s success %oesn@t mean it is no+ eectivel contri,uting to success in ,usiness 4t is

a c'allenge or managers to mae /R a strategic asset &'e /R scorecar% is a lever t'at

ena,les t'em to %o so 4mplementing eective measurement sstems or intangi,le assets is a

ver %iicult tas an% %eman%s t'e e5istence o a uniie% rame+or to gui%e t'e /R

managers 4t is t'is %iicult t'at 'as ,een t'e prime reason +' managers ten% to avoi%

%ealing +it' intangi,le assets as ar as possi,le 4n t'e process irms un%er-invest in t'eir

people an% at times invest in t'e +rong +as $not'er %iicult is3 managers cannot oresee

t'e conse2uences o t'eir investments in intangi,le 'uman assets in a +ell-%eine%

measura,le manner an% t'e are not +illing to tae t'e ris &'us3 t'e most eective +a to

c'ange t'is min%set is o,vious to ,uil% a rame+or ust lie t'e ,alance% scorecar%3 +'ic''as soun% measurement strategies an% is a,le to lin /R unctions3 activit an% investment

+it' t'e overall ,usiness strateg &'e /R scorecar% rame+or +as speciicall %esigne% or

t'ese purposes

AJAY KUMAR GARG INSTITUTE OF MANAGEMENT Page 1



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/.3.Researc4 O,ecti+es

! &o 'ig'lig't t'e importance o >alance% Scorecar% as a measurement tool

" &o in% out t'e nee% o >alance% Scorecar% in to%a@s competitive environment

< &o in% out 'o+ >alance% Scorecar% is useul or %eveloping t'e /uman Resource as

a strategic partner

? &o in% out 'o+ >alance% Scorecar% can ,e implemente% to /uman Resource

/./.$ype of Researc42 ;5plorator Researc'

/.:.Data sources5 &'e researc' is ,ase% on secon%ar %ata an% t'e %ata is collecte%

rom various +e,sites3 Hournals3 MagaIines3 $rticles an% Researc' Paper

/.;.Data Analysis5 &'e researc' is %ivi%e% into t'e si5 sections &'e #irst section

%eals +it' t'e overall intro%uction o t'e researc' an% t'e Second section 'ig'lig'ts

t'e /uman Resource as a strategic partner an% t'e tra%itional 'uman resource an% t'e

'uman resource in present an% t'e uture o t'e 'uman resource $!ird section

e5plains in %etail t'e /R $rc'itecture as a strategic asset +'ic' contains t'e 'r

unction3 'r sstem an% t'e emploee ,e'avior #ourt! section e5plains t'e

,acgroun% an% t'e concept o ,alance% scorecar%3 nee% o t'e ,alance% scorecar% in

to%a@s competitive environment3 an% %eines t'e ,alance% scorecar% as ameasurement tool #ift! section e5plains 'o+ ,alance% scorecar% can ,e

implemente% into t'e 'uman resource to %evelop t'e /R as a strategic partner Si%t!

section contains t'e case stu% o EeriIon an% e5plains 'o+ EeriIon 'as

implemente% t'e ,alance% scorecar% to 'uman resource to generate t'e value t'roug'

t'e intangi,le asset




:. '#$%RA$!R% R%V#%&

&. #s t4e ,alanced scorecard HREs tic8et to t4e ,oardF )elson- Paul. Personnel

$oday' :G>G/00/.

Most t'oug'ts comprise% o some com,ination o *># is a +on%erul tool to allo+ /R to

s'o+ its value to a irm.3 *>S#s +ill onl +or +it' senior management ,u-in. an% *>S#s

alone +ill not ,ring a irm closer to its goal3 contri,uting to t'e overall ,usiness +ill.

(. HR Perfor6ance Scoring De6onstrates Results. "c7een- Darren. /00;.

Career )ournal.co Accessed fro6 e,site.

&'e irst part o t'is article gives num,ers on t'e popularit o >#s t'roug'out in%ustr

9rom t'e article: *$ccor%ing to a recent surve , t'e >alance% Scorecar% #olla,orative an%

t'e Societ or /uman Resource Management3 a,out one-ourt' o /R organiIations 'ave

a%opte% t'e >alance% Scorecar% approac' /o+ever3 virtuall all o t'e !3<00 respon%ents

'ave e5plore% t'e possi,ilit. &'e rest o t'e article 'as no relation to ,alance% scorecar%s

*. $4e Balanced Scorecard5 Creating a Strategy2ocused &or8force. rangos-

Cassandra.

$ snopsis o t'ree sc'olars@ (Hac 9itI-enI3 Davi% Norton3 an% /elen Drinan+or) in t'e iel%

o /R metrics an% analsis3 , +a o selling t'e aut'or@s upcoming Net #onerence

1. #itz+enz evaluates a irm@s /R process , cost3 %uration3 accomplis'ment3 error rate3

emploee satisaction3 matricing t'ese ive over t'ree %istinct tass: ac2uiring talent3

%eveloping talent3 an% retaining it

2. Norton %evelope% t'e J/uman #apital Rea%iness Report3J +'ic' provi%es a snaps'ot

o an organiIationKs 'uman capital relative to its strategic re2uirements 4t %ocuments

t'e strategic re2uirements3 t'en s'o+s3 t'roug' its measures an% programs3 'o+

'uman capital is ,eing %evelope%

3. ,rinan 'a% ,een +oring on a proile o /R lea%ers




*So +'at is t'e proile o outstan%ing /R lea%ers $mong ot'er t'ings3 t'e %erive t'eir

agen%as rom enterprise ,usiness o,ectives t'e sta in touc' +it' t'e +ororce t'in

Jcustomer ocus3J not Jcustomer serviceJ an% concentrate on a e+ strategic priorities.

-. “A Balanced Scorecard C4anges HR "g6t ro6 Art to Science”. Hu6an

Resource Depart6ent "anage6ent Report. Ianuary- /00:. #ssue 320:- p. 3.

O,ecti+e52 Reasons or an% application o using t'e >S# as a +a to measure /R

pro%uctivit an% eectiveness

>iggest reason: a move to measuring tangi,le assets3 an% a nee% to turn t'e intangi,ilit o

/R into somet'ing more measura,le #ase: $lterra /ealt' #are in Mil+auee3 +'ic' use%

/R as t'e centerpiece o a larger strategic transormation t'at targete% t'e irm@s !?A

turnover rate

. “!nderstanding t4e Balanced Scorecard5 An HR Perspecti+e”. #C* Researc4.

/00:.

O,ecti+e52 /o+ to implement t'e >alance% Scorecar% to /uman Resource

! *>uil%ing t'e >alance% Scorecar% s'oul% ,e a team eort at t'e e5ecutive level an%

unctional 'ea%s must not create t'eir ,its o Scorecar% in isolation &'ereore3 /R

can ,e *custo%ians. ,ut not o+ners o t'e learning an% gro+t' perspective.

" *4mplementation is a ,igger issue t'an scorecar% %esign. *&'e %iicult o cultural

c'ange t'at accompanies Scorecar% implementation is tpicall un%erestimate% 1ne

o t'e ,iggest pro,lems is t'e (legitimate) ear t'at t'e Scorecar% +ill ,e use% to *,eat

up people.

< *&'e /R Scorecar% must mae visi,le t'e lin rom +'at sta %oes to strategic

outcomes #asca%ing goals3 +'ic' ma ,e %one t'roug' t'e ten-step process3 is one

element o successull creating t'e lin.




/. “Secrets to Success it4 Balanced Scorecards”. HR ocus. Octo,er- /003 Vol. @1-

no. 30- p. S:.

SummariIes t'e *!0 #omman%ments o Perormance Management. rom a ,oo , 7illiam

$,ernat': !anaging "ithout #uper$ising% reating an 'rgani(ation- "ide )erformance#ystem. Some o t'ese comman%ments:

! *No one s'oul% %esign 'is or 'er o+n incentive plan.

" *&'e re2uenc o measurement ee%,ac is as important as t'e amount.

< *Measure onl controlla,le o, outputs.

0. “A+oiding perfor6ance 6easure6ent traps5 ensuring effecti+e incenti+e design

and i6ple6entation”. "c7enzie .C. S4illing ".D. IulyGAugust- 3??1.

Co1ensation and Benefits Re2ie3. Vol. :0 (;- p. >@2=>.

Details met'o%s o perormance measurement an% t'e traps associate% +it' eac'

Measurements evaluate% inclu%e: &ra%itional accounting met'o%s (R143 ;PS3 R1N$)3 Ealue-

>ase%3 suc' as ;conomic Ealue $%%e%3 an% t'e >alance% Scorecar% &raps associate% +it'

t'e >S# are as ollo+s:

! $ssuming t'e >alance% Scorecar% is a perect tool or compensation

" Re%uce% ocus on perormance management

< sing measures t'at are %iicult to 2uanti

? #ontra%icting goals or ,enc'maring

A Getting tie%-up in implementation

Nine gui%elines or eective perormance management are outline%:

! ;mp'asiIe a e+ measures

" 9ocus on measures t'at participants can control

< $voi% *all-or-not'ing. programs

? >alance accurac an% simplicit

A 4nclu%e an appropriate su,ective element

B Min% t'e corporate culture

C #ommunicate up-ront3 t'en eep communicating

8 Revisit t'e program %esign oten

F 4ntegrate +it' long-term incentives




;. H!"A) R%SO!RC%S AS A S$RA$%*#C PAR$)%R< $H%

PR%S%)$ A)D $H% !$!R%

&'e general scenario in most companies is as ollo+s /R management teams 'ave +ell-

%evelope% visions o t'eir %epartments3 t'eir roles an% responsi,ilities >ut3 t'e senior

management is generall septical o /R@s role in t'e irm@s success &'e generall consi%er

/R to ust ,e anot'er necessar appen%age ,ut not somet'ing t'at can contri,ute to t'e

success o t'e compan ;ven i t'e senior management %oes ,elieve t'at 'uman capital is

t'eir most priIe% possession an% asset3 t'e cannot un%erstan% 'o+ t'e /R team can mae

t'is ,elie come alive

&'ere is one reason or all o t'is /uman capital is an intangi,le asset an% /R@s inluence onirm perormance is %iicult to measure &'e stan%ar% elements o a irm@s resource

arc'itecture t'at are measure% inclu%e total compensation3 emploee turnover3 cost per 'ire3

percentage o emploees t'at un%ergo perormance appraisals an% percentage emploee

satisaction &'e 2uestion to ,e ase% is: $re t'ese t'e measures crucial to implementing t'e

irm@s strateg &'is is clearl not t'e case 4nteresting attri,utes +oul% inclu%e a committe%

+ororce3 competenc %evelopment programs3 etc >ut3 it is ver %iicult to imagine

measures or t'ese 2uantities /ence3 in t'e current state o /R t'ere is a clear rit ,et+een

+'at is measure% an% +'at nee%s to ,e measure%

$s mentione% in t'e intro%uction3 t'e role o /R is no more ust a%ministrative 4t 'as a muc'

,roa%er3 connecte% an% strategic role to pla >ut3 t'ese statements must ,e su,stantiate% &'e

reasons +' /R must ,e consi%ere% as a strategic asset must ,e 'ig'lig'te% $ strategic asset

is somet'ing %iicult to tra%e or imitate &'e are normall a set o scarce3 special or even

e5otic resources an% capa,ilities t'at ,esto+ a irm its competitive a%vantage $n unliel

para%o5 is t'at t'e ver intangi,ilit o 'uman capital t'at maes it so %iicult to measure

an% evaluate3 also proves to ,e t'e one 2ualit t'at maes it a strategic asset #onsi%er t'e

%ierence ,et+een ,eing a,le to align emploee eorts +it' t'e compan@s strategic goals

an% instea% 'aving innovative policies o perormance appraisals &'e latter is a polic 4t is

visi,le to competitors an% can ,e easil copie% &'e ormer on t'e ot'er 'an% is a strategic

move 4t is not eas to imitate since it is a ver circumstantial eort3 +'ic' %epen%s on t'e

speciic irm3 its goals an% its people &'is proves to ,e a strategic asset ie somet'ing t'at

competitors cannot see ,ut t'at can ,e utilise% to gain a competitive a%vantage 4t is t'us




important to align t'e /R strateg to t'e overall ,usiness strateg signiing a top-%o+n

approac' as oppose% to a ,ottom-up approac' +'ere eac' %ivision suc' as mareting3 /R

etc perorms its stan%ar% in%ivi%ual roles +it'out a clear outloo to+ar%s t'e irm@s strateg

Man irms 'ave realise% t'is an% 'ave ma%e eorts to measure /R@s inluence on t'e irm@s

perormance /o+ever3 most o t'ese approac'es seem to ocus on t'e in%ivi%ual3 as it is

,elieve% t'at i one can ac'ieve an improvement in in%ivi%ual emploee perormance3 it

+oul% automaticall en'ance t'e perormance o t'e organisation &'e point t'at is misse% is

t'e act t'at organiIational units3 ,e it in%ivi%uals or teams3 %o not unction in isolation &'e

stress is on streamlining an% cooperativel +oring to+ar%s a common goal

>. $H% HR ARCH#$%C$!R% AS A S$RA$%*#C ASS%$




&'e ocus o corporate strateg is to create sustaine% competitive a%vantage +'ereas t'at o

/R strateg is to ma5imiIe t'e contri,ution o /R to+ar%s t'e same goal &'ining a,out

/R@s inluence on t'e overall strateg o t'e compan re2uires one to loo at all aspects o

t'e /R arc'itecture &'e /R arc'itecture %escri,es t'e relations'ip o t'e /R unction3 t'e

/R sstem an% t'e emploee ,e'aviour

igure 35 HR Arc4itecture Strategic co6ponents

>.3.$4e HR function

&'e oun%ation o a value-creating /R strateg is a management inrastructure t'at

un%erstan%s an% can implement t'e irm@s strateg &'e proessionals in t'e /R unction

+oul% ,e e5pecte% to lea% t'is eort &'is clearl implies t'at /R managers an%

proessionals nee% to get a %eeper un%erstan%ing o t'e /R unction &'ere are t+o ,asic

unctional categories in /R management &'e irst is tec'nical 4t inclu%es %eliver o /R ,asics suc' as recruiting3 compensation an% ,eneits &'e secon% is strategic 4t involves

%elivering t'e a,ove mentione% services in a +a t'at %irectl supports t'e implementation o

t'e irm@s strateg Most /R managers are proicient enoug' in t'e tec'nical aspect ,ut rarel

%o t'e even no+ a,out t'e strategic aspect &'us3 t'e competencies t'at t'e /R managers

nee% to %evelop an% t'e ones t'at 'ave t'e largest impact on organisational perormance are

t'e ,usiness an% strategic competencies

>./.$4e HR syste6






A 4t is important never to %issect t'e sstem an% vie+ eac' o its parts in%epen%entl

1ne must loo at t'e sstem as a +'ole an% t'e connections ,et+een t'e in%ivi%ual

parts is normall t'e vital place to loo at or a solution to an o t'e pro,lems

9irms +it' 'ig' perormance +or sstems ten% to %evote consi%era,l more resources to

recruiting an% selection &'ere is a strong emp'asis on training an% perormance management

an% compensation is tie% to perormance &eam+or is encourage%3 t'ere is generall less

unioniIation an% t'e 'ave a large an% eective /R team 4t is important to note3 t'at all

t'ese actors in tan%em3 not in isolation3 lea% to ,etter perormance3 once again s'o+ing t'e

sstemic nature o /R@s role in perormance en'ancement &'e eects o t'ese measures are

lo+er emploee turnover3 more retention3 greater sales per emploee an% a greater maret

value or t'e irm

4t is also important or t'e /R sstem to constantl c'ec or alignment o all its parts ie

'o+ muc' t'e reinorce or conlict +it' eac' ot'er $n e5ample o misalignment is a polic

t'at encourages team+or ,ut re+ar%s in%ivi%ual contri,utions

4n t'e service sector3 t'e emploee-customer relations'ip is ver o,vious an% visi,le an% so

t'e impact o value creation is unmistaa,le >ut3 in man irms3 t'e value is %erive% rom

t'e operational processes an% 2ualit o +or t'at t'e emploees generate &'is is less

o,vious to competitors an% it cannot ,e imitate% 4t is especiall in t'ese in%s o irms t'at

t'e alignment o /R strateg an% polic +it' t'e overall strateg o t'e irm matters t'e

most

&'e alignment process ,egins +it' a clear un%erstan%ing o +'at in% o value t'e

organisation is suppose% to generate an% 'o+ it s'oul% ,e generate% 4n t'e >alance%Scorecar%3 t'is is reerre% to as t'e Ostrateg map@ t'at stresses t'e relations'ip ,et+een t'e

ultimate goals an% t'e e success actors at t'e our important levels o customers3 internal

operations3 people an% sstems 1nce t'e irm 'as a clear un%erstan%ing o t'e value-creation

process3 it can t'en %esign an implementation mo%el t'at speciies nee%e% sills an%

competencies an% emploee ,e'aviours t'roug'out t'e irm &'e /R management section

can t'en ,e %irecte% to+ar%s generating t'ese necessar competencies an% ,e'aviours &'e

stress is not ust on t'e creation o soun% /R policies an% strategies /o+ t'ese are




implemente% is also ver important &'ere 'as to ,e a strong alignment +it' t'e irm@s

competitive strateg

$ 'ig' perormance /R sstem +ill also ten% ,e uni2ue &'is is ,ecause it %epen%s on t'e

particular organisation3 its goals3 people an% strateg /ence3 it proves to ,e a strategic asset

>.:.%6ployee Be4a+iours

$s mentione% a,ove t'e inal results o t'e strategies are mappe% to re2uire% emploee

,e'aviours 4t is important t'at eac' emploee ,e traine% not ust to %o 'is or 'er o, ,ut also

to 'ave a su,stantiall clear un%erstan%ing o +'ere 'e or s'e stan%s in t'e ,ig picture o t'e

overall strateg o t'e irm Strategic ,e'aviours are pro%uctive ,e'aviours t'at %irectl serve

to implement t'e irm@s strateg &'ere are t+o ,asic categories #ore ,e'aviours are

,e'aviours t'at are consi%ere% un%amental to t'e success o t'e irm3 across all ,usiness

units an% levels Situation-speciic ,e'aviours on t'e ot'er 'an%3 are more circumstantial

,e'aviours &'ese are not re2uire% all t'e time ,ut are a,solutel necessar in certain

scenarios

=. $H%OR9 B%H#)D $H% BA'A)C%D SCOR%CARD

=.3.Bac8ground of t4e Concept of Balanced Scorecard




&'roug'out t'e 'istor o contemporar management t'eories starting rom t'e ones t'at

+ere intro%uce% , t'e intrusion o t'e mass pro%uction in t'e ,eginning o t'e "0t' centur

an% until to%a3 all t'e gurus o management 'ave ,een tring to in% uniorm solutions on

more eicient allocation an% use o ver limite% resources availa,le to ,usinesses &'ose

pat's in seeing t'e /ol Grail o operational eicienc 'ave ,roug't up several ne+

management t'eories

4n t'e %a+n o t'e centur3 9re%eric 7 &alor esta,lis'e% t'e ver concepts o resource

allocation in 'is )rinciples of #cient*lc !anagement. 4n !F"0-ics it +ent aroun% assem,l

line an% motion stu%ies as t'e irst e5perience rom sstematic mass pro%uction 'a% given

t'eorists 2uite a lot o materials to ,e analse% rom t'e point o vie+ o using tra%itional

,lue-collar emploees more eicientl 4n t'e 4 F<0-ies3 t'e main topic +as motivation o

emploees3 as it turne% out t'at 'uman nature %oes not ena,le to +or long 'ours on a

repetitive tass +it'out rustration level getting so 'ig' enoug' to %iminis' pro%uctivit 4n

t'e lF?0-ics an% !FA0-ies3 t'e irst statistical an% linear met'o%s +ere intro%uce% in tring to

measure logistics o t'e operations management an% its implications to overall compan

success in inancial-analsis si%e 4n t'e ,eginning o !F80-ics3 partl ,ecause o intro%uction

o electronic %ata processing e2uipment an% 2uic %evelopment o computers3 t'e +'ole

arra o management tec'ni2ues +ere initiate% &'e particular reasons or t'e vast

%evelopment o t'e ne+ t'eories +ere catalIe% mainl , ever gro+ing competition

generate% t'roug' more sstematic use o computers3 an% o course also , rapi% gro+t' o

t'e importance o 'uman capital

&o%a@s companies are in t'e mi%st o a revolutionar transormation 4n%ustrial age

competition is s'iting to inormation age competition During t'e in%ustrial age3 roug'l

rom !8A0 to a,out +-, companies succee%e% , 'o+ +ell t'e coul% capture t'e ,eneits

rom economies o scale an% scope &ec'nolog mattere%3 ,ut3 ultimatel3 success accrue% to

companies t'at coul% em,e% t'e ne+ tec'nolog into p'sical assets t'at oere% eicient3

mass pro%uction o stan%ar% pro%ucts During t'e in%ustrial age3 t'e inancial control sstems

+ere %evelope% in maor companies to acilitate an% monitor eicient allocations o inancial

an% p'sical capital $ summar inancial measure suc' as return-on-capital-emploe%

(R1#;) coul% ,ot' %irect a compan@s internal capital to its most pro%uctive use an% monitor

t'e eicienc , +'ic' operating %ivisions use% inancial an% p'sical capital to create value

or s'are'ol%ers




&'e emergence o t'e inormation era3 'o+ever3 in t'e last %eca%es o t'e "1 centur3 'as

ma%e o,solete man o t'e un%amental assumptions o in%ustrial age competition &'e

inormation age environment or ,ot' manuacturing an% service organisations re2uires ne+

capa,ilities or competitive success &'e a,ilit o a compan to mo,ilise an% e5ploit its

intangi,le assets 'as ,ecome ar more %ecisive t'an investing an% managing tangi,le3

p'sical assets

4n%ustrial age companies create% a s'arp %istinction ,et+een t+o groups o emploees &'e

intellectual elite managers an% engineers use% t'eir analtical sills to %esign pro%ucts

an% processes3 select an% manage customers3 an% supervise %a-to-%a operations &'e

secon% group +as compose% o t'e people +'o actuall pro%uce% t'e pro%ucts an% %elivere%

t'e services &'is %irect la,our +or orce +as a principal actor o pro%uction3 +'ic'

perorme% its tass un%er supervision o t'e irst group &o%a automation an% pro%uctivit

'ave increase% t'e num,er o people perorming analtic unctions: engineering3 mareting3

management an% a%ministration &'ereore3 t'e people are more vie+e% as pro,lem solvers3

not as varia,le costs 4n ot'er +or%s3 inormation age 'as ,roug't a,out t'e concept o

no+le%ge management

&'e s'it to successul no+le%ge management 'as intro%uce% a variet o improvement

initiatives:

! Hust-in-time

" &otal 2ualit management3

< Lean enterprise3

? >usiness process re-engineering3

A &ime-,ase% competition3

B #ustomer-ocuse% organiIation3

C $ctivit-,ase% cost management3

8 ;mploee empo+erment3




F Living compan an% man ot'ers

Some o t'ose programmes 'ave meant in practice real ,reat'roug' an% improvement3

ot'ers 'ave proven to ,e in t'e ,est case ust a s'ort-time %istur,ance3 ,ut in t'e +orst cases

total ailures resulting in %isarra or even ,anruptc o a particular compan &'e main

reason or t'at lies in ive main implementation pro,lems:

! current perormance measurement sstems are ,ase% on t'e tra%itional inancial

accounting mo%el3 +'ic' %oes not ena,le to o,ectivel analse inormation-age

companies

" i some non-inancial perormance measurement even is ma%e3 it is solel ,ase% on

emploees@ tactical perormance3 not on strategic perormance

< maorit o management an% emploee salar-,ase% motivation sc'emes arc onl

s'ort-run proit oriente%3 t'at %oes not ena,le to align to+ar%s long-run goals

? overall compan strateg is not closel line% to organisational an% personal

improvement programmes an%

A strateg is not generall line% to resource allocation3 +'ic' results in un%er-

inancing some o t'e crucial parts o organisation@s %evelopment

$s or to%a3 superior inancial perormance an% eicienc in pro%uction are ust not enoug'

to gain suicient competitive a%vantage3 ,ut more an% more attention nee%s to ,e pai% to

intangi,le si%es o ,usiness

9or at least !A ears3 t'e lea%ing management ournals 'ave pu,lis'e% articles a,out 'o+ to

,uil% up a mec'anism t'at +oul% ena,le to control all t'e aspects o a compan@s

perormance 1ne o t'e most versatile tools or t'at purpose is >alance% Scorecar%

&'e long-term success o an organiIation is %etermine% , t'e capa,ilities an% t'e

competencies it 'as %evelope% &o%a@s ,usinesses re2uire a ,etter un%erstan%ing o t'eir

customers (,ot' e5isting an% potential ) an% t'eir nee%s3 ,etter streamline% processes an%

'ig'l sille% people or ensuring uture survival an% sustaina,le gro+t'




&'is innovative tool *>alance% Scorecar%. %evelope% , Ro,ert S =aplan an% Davi% P

Norton in !FF" is uni2ue in t+o +as compare% to t'e tra%itional perormance measurement

tools &'e are:-

3. 4t consi%ers t'e inancial in%ices as +ell t'e non-inancial ones in %etermining t'e

corporate perormance level an%

/. 4t is not ust a perormance measurement tool ,ut is also a perormance management

sstem

&'e aim o t'e >alance% Scorecar% is to %irect3 'elp manage an% c'ange in support o t'e

longer-term strateg in or%er to manage perormance &'e scorecar% relects +'at t'e

compan an% t'e strategies are all a,out 4t acts as a catalst or ,ringing in t'e c'ange@

element +it'in t'e organiIation

>alance% Scorecar% uses a ,alance% measurement sstem t'at comprises o *t'e ol%.

inancial si%e an% our *ne+. perspectives o:

! 9inancial Perspective - /o+ %o +e loo at s'are'ol%ers

" #ustomer Perspective - /o+ s'oul% +e appear to our customers

< 4nternal >usiness Processes Perspective - 7'at must +e e5cel at

? Learning an% Gro+t' Perspective - #an +e continue to improve an% create value

/ence3 rom t'e a,ove lines +e can sa t'at t'is tool 'as consi%ere% not onl t'e inancial

results to ,e important ,ut also t'ose actors +'ic' actuall %rive an organiIation to+ar%s

uture successes as mentione% earlier &'e tool 'as given stress on t'e ot'er areas +'ic' are

re2uire% to *,alance. t'e inancial perspective in or%er to get a total vie+ a,out t'e

organiIational perormance an% improve t'e same

&'e rame+or tries to ,ring a ,alance an% linage ,et+een t'e




! 9inancial an% Non-9inancial Measures3

" &angi,le an% t'e 4ntangi,le measures3

< 4nternal an% t'e ;5ternal aspects an%

? Lea%ing an% t'e Lagging in%icators

&'e >alance% Scorecar% emp'asises t'e importance o measuring ,usiness perormance rom

t'e perspective o strategic implementation3 rat'er t'an reling solel on inancial results

Senior managers ten% to pa ar too muc' attention to t'e inancial %imensions o

perormance an% not enoug' attention to t'e %riving orces ,e'in% t'ose results 9inancial

measures are lagging in%icators ie ,ac+ar% looing &'e are %esigne% to recti or c'ange

past results Perormance %rivers on t'e ot'er 'an% are +it'in t'e control o t'e management

in t'e present an% t'e >alance% Scorecar% met'o%olog encourages management to loo at

t'ese lea%ing in%icators as +ell > speciing t'e important process measures3 assessing

t'em3 an% communicating t'e irm@s perormance ,ase% on t'ese criteria to t'e emploees3

t'e managers can ensure t'at t'e entire organisation participates activel in t'e strateg

implementation process 4t is a uniing tool in strateg implementation

&o ac'ieve strateg alignment3 irms must engage in a t+o-step process $s mentione%

,eore3 irst t'e managers must un%erstan% t'e %etails o 'o+ value is create% in t'eir irm

1nce t'is is %one3 t'e can %esign a measurement sstem ,ase% on t'eir un%erstan%ing &'e

irst step ocuses t'e organisation on t+o %imensions o t'e strateg implementation process

namel ,rea%t' an% causal lo+ >rea%t' reers to t'e act t'at companies must stu% more

t'an ust inancial results as outcomes o strateg implementation 4t must also ocus on ot'er

e perormance %rivers #ausal lo+ reers to t'e series o linages ,et+een inancial an%non-inancial %eterminants o irm perormance &'is gives t'e managers a %eeper

perspective o +' certain inancial results are t'e +a t'e are 4t allo+s t'em to lin t'e

inancial measures to t'e non-inancial measures o success &'e secon% point is t'e %esign o

a measurement sstem &'is involves attac'ing metrics to t'e inancial an% non-inancial

%eterminants &'e >alance% Scorecar% i%entiies our e perspectives t'at %irectl an%

completel %eine strateg measurement an% analsis &'e inclu%e t'e inancial perspective3

t'e customer perspective (eg customer loalt an% satisaction)3 t'e internal processes




perspective (eg process 2ualit an% process ccle time) an% inall learning an% gro+t'

perspective (eg emploee sills) t'at is t'e lea%ing in%icator

&'e ne5t important step is communication &'e top management t'at 'as %one t'e a,ove

analsis must communicate t'eir in%ings an% %ecisions to t'e mi%%le an% ront-line

managers3 +'o in turn must communicate it to t'e ot'er emploees 4n t'is +a3 everone in

t'e organisation is ma%e a+are an% can participate in t'e strateg implementation process

&'is also 'elps allocate resources intelligentl an% gui%es emploees@ %ecisions &'e

>alance% Scorecar% mo%el recognises t'e importance o ,ot' tangi,le an% intangi,le assets

an% o inancial an% non-inancial measures 4t ocuses on t'e comple5 connections among

t'e irm@s customers3 operations3 emploees an% tec'nolog an% places an important role or

/R &'e >S# rame+or 'ig'lig'ts t'e %ierences ,et+een lea%ing an% lagging in%icators

Lagging in%icators inclu%e inancial metrics3 +'ic' tpicall relect onl +'at 'as 'appene%

in t'e past Suc' metrics accuratel measure impacts o past %ecisions ,ut %on@t 'elp in

maing current %ecisions or guaranteeing uture outcomes &'e lea%ing in%icators are t'e

uni2ue in%icators or eac' irm &'e inclu%e process ccle time3 customer satisaction or

emploee strategic ocus &'ese in%icators assess t'e status o e success actors t'at %rive

t'e implementation o t'e irm@s strateg an% 'ence emp'asise t'e uture rat'er t'an t'e past




=./. Defining Critical Success actors and "easures

our Perspecti+es

3. inancial Perspecti+e 2 Ho do e loo8 at s4are4oldersF

9rom all t'e measurement perspectives o a >alance% Scorecar%3 t'e inancial perspective

nee%s to ,e intro%uce% t'e least as t'e main inancial measurement sstems 'ave ,een

analse% %uring t'e past ears ver t'oroug'l

&'e particular inancial perormance measures or an >alance% Scorecar% s'oul% %eine

long-run inancial o,ectives or t'e organisation 7'ile most o t'e organisations +oul%

emp'asise proita,ilit o,ectives3 ot'er possi,ilities ma also ,e consi%ere% >usinesses +it'

man pro%ucts in t'e earl stage o t'eir lie ccle can stress rapi% gro+t' o,ectives3 an%

mature ,usinesses ma emp'asise ma5imising cas' lo+

Norton an% =aplan recommen% to simpli t'e inancial perspective measurement selection

pool to i%enti irst t'e organisation@s stage3 +'ic' +oul% mainl ,e one o t'e t'ree:

4 “rapid growth” organisations - are at t'e earl stages o t'eir lie ccle &'e ma

'ave to mae consi%era,le investments to %evelop an% en'ance ne+ pro%ucts an%

serviccs3 to construct an% e5pan% pro%uction acilities3 to ,uil% operating capa,ilities3

to invest in sstems3 inra-structure3 an% %istri,ution net+ors t'at +ill support

relations'ips3 an% to nurture an% %evelop customer relations'ips

44 “sustain” organisations organisations t'at still attract investment an%

reinvestment3 ,ut are re2uire% to cam e5cellent returns on t'eir investe% capital &'ese

,usinesses are e5pecte% to maintain t'eir e5isting maret s'are an% per'aps gro+ it

some+'at 4nvestment proects +ill ,e more %irecte% to relieving ,ottlenecs3

e5pan%ing capacit3 an% en'ancing continuous improvement

444 “har$est” organisations - 'ave reac'e% a mature p'ase o t'eir lie ccle3 +'ere t'e

compan +ants to 'arvest t'e investments ma%e in t'e earlier to stages &'ese

,usinesses no longer +arrant signiicant investment onl enoug' to maintain

e2uipment an% capa,ilities3 not to e5pan% or ,uil% ne+ capa,ilities $n investment




proect +ill 'ave to 'ave ver s'ort an% %einite pa,ac perio%s &'e main goal is to

ma5imise cas' lo+ ,ac to t'e organisation

&'e inancial o,ectives or ,usinesses in eac' o t'ese t'ree stages are Juite %ierent

9inancial o,ectives in t'e gro+t' stage +ill emp'asise sales gro+t' sales in ne+ marets

an% to ne+ customers sales rom ne+ pro%ucts an% services maintaining a%e2uate spen%ing

levels or pro%uct an% process %evelopment3 sstems3 emploee capa,ilities an%

esta,lis'ment o ne+ mareting3 sales3 an% %istri,ution c'annels 9inancial o,ectives in t'e

sustain stage +ill emp'asise tra%itional inancial measurements3 suc' as return on capital

emploe%3 operating income3 an% gross margin

4nvestment proects or ,usinesses in t'e sustain categor +ill ,e evaluate% ,stan%ar%3 %iscounte% cas' lo+3 capital ,u%geting analses Some companies +ill emplo

ne+er inancial metrics3 suc' as economic value a%%e% an% s'are'ol%er value &'ese metrics

all represent t'e classic inancial o,ective---earn e5cellent returns on t'e capital provi%e% to

t'e ,usiness

&'e inancial o,ectives or t'e 'arvest ,usinesses +ill stress cas' lo+ $n investments

must 'ave imme%iate an% certain cas' pa,acs &'e goal is not to ma5imise return on

investment3 +'ic' ma encourage managers to see a%%itional investment un%s ,ase% on

uture return proections Eirtuall no spen%ing +ill ,e %one or researc' or %evelopment or

on e5pan%ing capa,ilities3 ,ecause o t'e s'ort time remaining in t'e economic lie o

,usiness units in t'eir *'arvest. p'ase

So6e of t4e o,ecti+es toget4er it4 a 6easure6ent 6easures

O,ecti+es "easures

Survive #as' 9lo+

Prosper 4ncrease in Maret S'are

Proita,ilit Return on ;2uit

#ost Lea%ers'ip nit #ost




/. Custo6er Perspecti+e 2 Ho s4ould e appear to our custo6ersF

&'e customer perspective a%%resses t'e 2uestion o 'o+ t'e irm is vie+e% , its customers

an% 'o+ +ell t'e irm is serving its targete% customers in or%er to meet t'e inancial

o,ectives Generall3 customers vie+ t'e irm in terms o time3 2ualit3 perormance3 an%

cost Most customer o,ectives all into one o t'ose our categories

4n t'e customer perspective o t'e >alance% Scorecar%3 managers i%enti t'e customer an%

maret segments in +'ic' t'e ,usiness unit +ill compete an% t'e measures o t'e ,usiness

unit@s perormance in t'ese targete% segments

&'e customer perspective tpicall inclu%es several generic measures o t'e successul

outcomes rom a +ell-ormulate% an% implemente% strateg &'e genetic outcome measures

inclu%e customer satisaction3 customer retention3 ne+ customer ac2uisition3 customer

proita,ilit3 an% maret an% account s'are in targete% segments 7'ile t'ese measures ma

appear to ,e generic across all tpes o organisations3 t'e s'oul% ,e customise% to t'e

targete% customer groups rom +'om t'e ,usiness unit e5pects its greatest gro+t' an%

proita,ilit to ,e %erive%

4. 5ar6et and Account S!are

Maret s'are3 especiall or targete% customer segments3 reveals 'o+ +ell a compan

is penetrating a %esire% maret 9or e5ample3 a compan ma temporaril ,e meeting

sales gro+t' o,ectives , retaining customers in non-targete% segments3 ,ut not

increasing its s'are in targete% segments &'e measure o maret s'are +it' targete%

customers +oul% ,alance a pure inancial signal (sales) to in%icate +'et'er an

inten%e% strateg is iel%ing e5pecte% results

7'en companies 'ave targete% particular customers or maret segments3 t'e can

also use a secon% maret-s'are tpe measure: t'e account s'are o t'ose customers@

,usiness (some reer to t'is as t'e s'are o t'e *customers@ +allet.) &'e overall

maret s'are measure ,ase% on ,usiness +it' t'ese companies coul% ,e aecte% ,

t'e total amount o ,usiness t'ese companies are oering in a given perio% &'at is3




t'e s'are o ,usiness +it' t'ese targete% customers coul% ,e %ecreasing ,ecause t'ese

customers are oering less ,usiness to all t'eir suppliers #ompanies can measure-

customer , customer or segment , segment-'o+ muc' o t'e customers@ an%

maret segments@ ,usiness t'e are receiving Suc' a measure provi%es a strong ocus

to t'e compan +'en tring to %ominate its targete% customers@ purc'ases o pro%ucts

or services in categories t'at it oers

44. Custoer Retention

#learl3 a %esira,le +a or maintaining or increasing maret s'are in targete%

customer segments is to retain e5isting customers in t'ose segments Researc' on t'e

service proit c'ain 'as %emonstrate% t'e importance o customer retention#ompanies t'at can rea%il i%enti all o t'eir customers-or e5ample3 in%ustrial

companies3 %istri,utors an% +'olesalers3 ne+spaper an% magaIine pu,lis'ers3

computer on-line service companies3 ,ans3 cre%it car% companies3 an% long-%istance

telep'one suppliers- can rea%il measure customer retention rom perio% to perio%

>eon% ust retaining customers3 man companies +ill +is' to measure customer

loalt , t'e percentage gro+t' o ,usiness +it' e5isting customers

444. Custoer Ac7uisition

#ompanies seeing to gro+ t'eir ,usiness +ill generall 'ave an o,ective to increase

t'eir customer ,ase in targete% segments &'e customer ac2uisition measure tracs3 in

a,solute or relative terms3 t'e rate at +'ic' a ,usiness unit attracts or +ins ne+

customers or ,usiness #ustomer ac2uisition coul% ,e measure% , eit'er t'e num,er

o ne+ customers or t'e total sales to ne+ customers in t'ese segments #ompanies

suc' as t'ose in t'e cre%it an% c'arge car% ,usiness3 magaIine su,scriptions3 cellular telep'one service3 ca,le television3 an% ,aning an% ot'er inancial services solicit

ne+ customers t'roug' ,roa%3 oten e5pensive3 mareting eorts &'ese companies

coul% e5amine t'e num,er o customer responses to solicitations an% t'e conversion

rate- num,er o actual ne+ customers %ivi%e% , num,er o prospective in2uiries

&'e coul% measure solicitation cost per ne+ customer ac2uire%3 an% t'e ratio o ne+

customer revenues per sales call or per %ollar o solicitation e5pense




4V. Custoer Satisfaction

>ot' customer retention an% customer ac2uisition are %riven rom meeting customers@

nee%s #ustomer satisaction measures provi%e ee%,ac on 'o+ +ell t'e compan is

%oing &'e importance o customer satisaction pro,a,l cannot ,e over-emp'asise%

Recent researc' 'as in%icate% t'at ust scoring a%e2uatel on customer satisaction is

not suicient or ac'ieving 'ig' %egrees o loalt3 retention3 an% proita,ilit 1nl

+'en customers rate t'eir ,uing e5perience as completel or e5tremel satising

can t'e compan count on t'eir repeat purc'asing ,e'aviour

V. Custoer Profita8ility

Succee%ing in t'e core customer measures o s'are3 retention3 ac2uisition3 an%

satisaction3 'o+ever3 %oes not guarantee t'at t'e compan 'as proita,le customers

1,viousl3 one +a to 'ave e5tremel satisie% customers (an% angr competitors) is

to sell pro%ucts an% services at ver lo+ prices Since customer satisaction an% 'ig'

maret s'are are t'emselves onl a means to ac'ieving 'ig'er inancial returns3

companies +ill pro,a,l +is' to measure not ust t'e e5tent o ,usiness t'e %o +it'

customers3 ,ut t'e proita,ilit o t'is ,usiness3 particularl in targete% customer

segments $ctivit-,ase% cost ($>#) sstems permit companies to measure in%ivi%ual

an% aggregate customer proita,ilit #ompanies s'oul% +ant more t'an satisie% an%

'app customers t'e s'oul% +ant proita,le customers $ inancial measure3 suc' as

customer proita,ilit3 can 'elp eep customer-ocuse% organisations rom ,ecoming

customer-o,sesse%

&'e customer proita,ilit measure ma reveal t'at certain targete% customers are

unproita,le &'is is particularl liel to occur or ne+l ac2uire% customers3 +'ere

t'e consi%era,le sales eort to ac2uire a ne+ customer 'as et to ,e oset rom t'e

margins earne% , selling pro%ucts an% services to t'e customer 4n t'ese cases3

lietime proita,ilit ,ecomes t'e ,asis or %eci%ing +'et'er to retain or %iscourage

currentl unproita,le customers

Ne+l ac2uire% customers can still ,e value%3 even i currentl unproita,le3 ,ecause

o t'eir gro+t' potential >ut unproita,le customers +'o 'ave ,een +it' t'e

compan or man ears +ill liel re2uire e5plicit action to cope +it' t'eir incurre%

losses




V4. Beyond t!e Core: 5easuring Custoer Value Pro1ositions

#ustomers@ value propositions represent t'e attri,utes t'at suppling companies

provi%e3 t'roug' t'eir pro%ucts an% services3 to create loalt an% satisaction in

targete% customer segments &'e value proposition is t'e e concept or

un%erstan%ing t'e %rivers o t'e core measurements o satisaction3 ac2uisition3

retention3 an% maret an% account s'are 9or e5ample3 customers coul% value s'ort

lea% times an% on-time %eliver &'e coul% value a constant stream o innovative

pro%ucts an% services 1r t'e coul% value a supplier a,le to anticipate t'eir nee%s an%

capa,le o %eveloping ne+ pro%ucts an% approac'es to satis t'ose emerging nee%s

7'ile value propositions var across in%ustries3 an% across %ierent maret segments+it'in in%ustries3 =aplan an% Norton 'ave o,serve% a common set o attri,utes t'at

organises t'e value propositions in all o t'e in%ustries +'ere +e 'ave constructe%

scorecar%s &'ese attri,utes are organise% into t'ree categories

Pro%uctService $ttri,utes

#ustomer Relations'ip

4mage an% Reputation

Pro%uct an% service attri,utes encompass t'e unctionalit o t'e pro%uctservice3 its

price3 an% its 2ualit &'e image an% reputation %imension ena,les a compan to pro-

activel %eine itsel or its customers &'e customer relations'ip %imension inclu%es

t'e %eliver o t'e pro%uctservice to t'e customer3 inclu%ing t'e response an%

%eliver time %imension3 an% 'o+ t'e customer eels a,out t'e e5perience o

purc'asing rom t'e compan




4n summar3 t'e customer perspective ena,les ,usiness unit managers to articulate t'eir

uni2ue customer an% maret-,ase% strateg t'at +ill %eliver superior uture inancial returns


O,ecti+es "easures

Ne+ Pro%uct o sales rom ne+ pro%uct

#ustomer Relations'ip o retaine% customer

Responsive Suppl 1n time Deliver

:. #nternal Business Processes Perspecti+e 2 &4at 6ust e eKcel atF




4nternal ,usiness process o,ectives a%%ress t'e 2uestion o +'ic' processes are most critical

or satising customers an% s'are'ol%ers &'ese are t'e processes in +'ic' t'e irm must

concentrate its eorts to e5cel

4n t'e internal ,usiness process perspective3 e5ecutives i%enti t'e critical internal processes

in +'ic' t'e organisation must e5cel &'e critical internal ,usiness processes ena,le t'e

,usiness unit to %eliver on t'e value propositions o customers in targete% maret segments3

an% satis s'are'ol%er e5pectations o e5cellent inancial returns &'e measures s'oul% ,e

ocuse% on t'e internal processes t'at +ill 'ave t'e greatest impact on customer satisaction

an% ac'ieving t'e organisation@s inancial o,ectives

&'e internal ,usiness process perspective reveals t+o un%amental %ierences ,et+eentra%itional an% t'e >alance% Scorecar% approac'es to perormance measurement &ra%itional

approac'es attempt to monitor an% improve e5isting ,usiness processes

&'e ma go ,eon% ust inancial measures o perormance , incorporating 2ualit an%

time-,ase% metrics >ut t'e still ocus on improving e5isting processes &'e >alance%

Scorecar% approac'3 'o+ever3 +ill usuall i%enti entirel ne+ processes at +'ic' t'e

organisation must e5cel to meet customer an% inancial o,ectives &'e internal ,usiness

process o,ectives 'ig'lig't t'e processes most critical or t'e organisationOs strateg to

succee%

&'e secon% %eparture o t'e >alance% Scorecar% approac' is to incorporate innovation

processes into t'e internal ,usiness process perspective &ra%itional perormance

measurement sstems ocus on t'e processes o %elivering to%a@s pro%ucts an% services to

to%a@s customers &'e attempt to control an% improve e5isting operations - t'e s'ort +ave

o value creation >ut t'e %rivers o long-term inancial success ma re2uire t'e organisation

to create entirel ne+ pro%ucts an% services t'at +ill meet t'e emerging nee%s o current an%

uture customers &'e innovation process-t'e long-+ave o value creations3 or man

companies3 is a more po+erul %river o uture inancial perormance t'an t'e s'ort-term

operating ccle >ut managers %o not 'ave to c'oose ,et+een t'ese t+o vital internal

processes &'e internal ,usiness process perspective o t'e >alance% Scorecar% incorporates

o,ectives an% measures or ,ot' t'e long-+ave innovation ccle as +ell as t'e s'ort-+ave

operations ccle




Soe of t!e o89ecti2es toget!er 3it! a easureent easures

O,ecti+es "easures

Manuacturing ;5cellence #cle &ime per nit

Saet inci%ence 4n%e5 Num,er o $cci%ents

4ncrease% %esign Pro%uctivit ;ngineering ;icienc

4ncrease% Pro%uct Launc' Das $ctual Launc' Das Es Plan

;. 'earning and *rot4 Perspecti+e 2 Can e continue to i6pro+e and create

+alueF

Learning an% gro+t' metrics a%%ress t'e 2uestion o 'o+ t'e irm must learn3 improve3 an%

innovate in or%er to meet its o,ectives Muc' o t'is perspective is emploee- centere%

&'e ourt' >alance% Scorecar% perspective3 Learning an% gro+t'3 i%entiies t'e inrastructuret'at t'e organisation must ,uil% to create long-term gro+t' an% improvement &'e customer

an% internal ,usiness process perspectives i%enti t'e actors most critical or current an%

uture success >usinesses are unliel to ,e a,le to meet t'eir long-term targets or

customers an% internal processes using to%a@s tec'nologies an% capa,ilities $lso3 intense

glo,al competition re2uires t'at companies continuall improve t'eir capa,ilities or

%elivering value to customers an% s'are'ol%ers

1rganisational learning an% gro+t' come rom t'ree principal sources: people3 sstems3 an%

organisational proce%ures &'e inancial3 customer3 an% internal ,usiness process o,ectives

on t'e >alance% Scorecar% +ill tpicall reveal large gaps ,et+een e5isting capa,ilities o

people3 sstems3 an% proce%ures an% +'at +ill ,e re2uire% to ac'ieve targets or ,reat'roug'

perormance &o close t'ese gaps3 ,usinesses +ill 'ave to invest in re-silling emploees3

en'ancing inormation tec'nolog an% sstems3 an% aligning organisational proce%ures an%

routines &'ese o,ectives arc articulate% in t'e learning an% gro+t' perspective o t'e

>alance% Scorecar% $s in t'e customer perspective3 emploee-,ase% measures inclu%e a




mi5ture o generic outcome measures- emploee satisaction3 emploee retention3 emploee

training3 an% emploee sills- along +it' speciic %rivers o t'ese generic measures3 suc' as

%etaile% in%e5es o speciic sills re2uire% or t'e ne+ competitive environment 4normation

sstems capa,ilities can ,e measure% , real-time availa,ilit o accurate customer an%

internal process inormation to ront-line emploees 1rganisational proce%ures can e5amine

alignment o emploee incentives +it' overall organisational success actors3 an% measure%

rates o improvement in critical customer-,ase% an% internal processes


O,ecti+es "easures

&ec'nolog Lea%ers'ip &ime to %evelop ne+ pro%uct

Manuacturing Learning &ime to ne+ process maturit

Pro%uct 9ocus L o pro%uct representing 80 o sales

=.:.$4e our Perspecti+es5 Cause and %ffect Relations4ip




&'e our perspectives as mentione% a,ove are 'ig'l interline% &'ere is a logical

connection ,et+een t'em &'e e5planation is as ollo+s 4 an organiIation ocuses on t'e

learning an% t'e gro+t' aspect3 it is %einitel going to lea% to ,etter ,usiness processes &'is

in turn +oul% ,e ollo+e% , increase% customer value , pro%ucing ,etter pro%ucts +'ic'

ultimatel gives rise to improve% inancial perormance

igure /5 $4e Cause and %ffect relations4ips a6ong t4e four perspecti+es

=.;.$4e Balanced Scorecard "odel




%Kplanation5

9ollo+ing steps are to ,e taen so as to utiliIe t'e >alance% Scorecar% as a strategic

management tool:

3. &'e maor o,ectives are to ,e set or eac' o t'e perspectives

/. Measures o perormance arc re2uire% to ,e i%entiie% un%er eac' o t'e 1,ectives

+'ic' +oul% 'elp t'e organiIation to realiIe t'e goals set un%er eac' o t'e

perspectives &'ese +oul% act as parameters to measure t'e progress to+ar%s t'e

o,ectives

:. &'e ne5t important step is t'e setting o speciic targets aroun% eac' o t'e i%entiie%

e areas +'ic' +oul% act as a ,enc'mar or perormance appraisal /ence3 a

perormance measurement sstem is ,uil% aroun% t'ese critical actors $n %eviation

in attaining t'e results s'oul% raise a re% signal to t'e management +'ic' +oul%

investigate t'e reasons or t'e %eviation an% recti@ t'e same

;. &'e appropriate strategies an% t'e action plans t'at arc to ,e taen in t'e various

activities s'oul% ,e %eci%e% so t'at it is clear as to 'o+ t'e organiIation 'as %eci%e%

to pursue t'e pre-%eci%e% goals >ecause o t'is reason3 t'e >alance% Scorecar% is

oten reerre% to as a ,lueprint o t'e compan strategies




igure :52 $4e "ain fra6eor8 of Balanced Scorecard


&o ac'ieve our vision3

'o+ +ill +e sustain

our a,ilit to c'ange

an% improve

'earning and *rot4

O,ecti+es Measures

&argets 4nitiatives

Vision and

Strategy

&o ac'ieve our vision3

'o+ s'oul% +e appear to

our customers

Custo6er O,ecti+es

Measures &argets

4nitiatives

&o Satis our

s'are'ol%ers an%

customers3 processes

must +e e5cel at

#nternal Process

O,ecti+es Measures

&argets 4nitiatives

&o succee% inanciall3'o+ s'oul% +e appear to

our s'are'ol%ers

inancial O,ecti+es

Measures &argets

4nitiatives



=.>.Balanced Scorecard as a "easure6ent $ool

&o illustrate t'e use o to%a@s main measurement tools3 =aplan an% Norton ,ring

t'e ollo+ing e5ample:

4magine entering t'e cocpit o a mo%ern et airplane an% seeing onl a single

instrument t'ere /o+ +oul% ou eel a,out ,oar%ing t'e plane ater t'e

ollo+ing conversation +it' t'e pilot

: 4 am surprise% to see ou operating t'e plane +it' onl a single instrument

7'at %oes it measure

$: $irspee% 4 am reall +oring on airspee% t'is lig't

: &'at@ goo% $irspee% certainl seems important >ut +'at a,out altitu%e

7oul% an altimeter ,e 'elpul

$: 4 +ore% on altitu%e or t'e last e+ lig'ts an% 4@ve gotten prett goo% on it

No+ 4 'ave to concentrate on proper airspee%

: >ut 4 notice ou %o not even 'ave a uel gauge 7oul%n@t t'at ,e useul

$: You are rig't uel is signiicant3 ,ut 4 cannot concentrate on %oing too mant'ings +ell at t'e same time So on t'is lig't 4@m ocusing on airspee% 1nce 4

get to ,e e5cellent at airspee%3 as +ell as altitu%e3 4 inten% to concentrate on uel

consumption in t'e ne5t set o lig'ts

7e suspect t'at ou +oul% not ,oar% t'e plane ater t'is %iscussion ;ven i t'e

pilot %i% an e5ceptional o, on airspee%3 ou +oul% ,e +orrie% a,out colli%ing

+it' tall mountains or running lo+ on uel #learl3 suc' a conversation is a

antas since no pilot +oul% %ream o gui%ing a comple5 ve'icle lie a et

airplane t'roug' cro+%e% air spaces +it' onl a single instrument Sille% pilots

are a,le to process inormation rom a large num,er o in%icators to navigate t'eir

aircrat Yet navigating to%a@s organisations t'roug' comple5 competitive

environments is at least as complicate% as ling a et 7' s'oul% +e ,elieve t'at

e5ecutives nee% ant'ing less t'an a ull ,atter o instrumentation or gui%ing

t'eir companies Managers3 lie pilots3 nee% instrumentation a,out man aspects

o t'eir environment an% perormance to monitor t'e ourne to+ar% e5cellent




uture outcomes

@. #"P'%"%)$#)* BA'A)C%D SCOR%CARD $O H!"A)

R%SO!RC%

@.3.#ntegrating HR into t4e perfor6ance 6easure6ent syste6

&o integrate /R into a ,usiness perormance measurement sstem3 managers

must i%enti t'e points o intersection ,et+een t'e /R an% t'e organisation@s

strateg implementation plan &'ese points are commonl calle% t'e /R

%elivera,les &'e are t'e outcomes o t'e /R arc'itecture t'at serve to e5ecute

t'e irm@s strateg &'is is in contrast to t'e aspects o /R t'at ocus on /R

eicienc an% activit &'e %elivera,les can ,e classiie% into t+o groups3 namel

t'e perormance %rivers an% t'e ena,lers Perormance %rivers are core people-

relate% capa,ilities or assets suc' as emploee pro%uctivit an% satisaction &'ere

is no single correct set o perormance %rivers ;ac' irm nee%s to i%enti its o+n

set ,ase% on its uni2ue c'aracteristics ;na,lers reinorce perormance %rivers

;g Preventive maintenance can ,e consi%ere% an ena,ler o on-time %eliver3

+'ic' is a perormance %river $ perormance %river can 'ave several ena,lers

Most o t'e time3 eac' ena,ler separatel ma seem rat'er mun%ane ,ut it@s t'e

cumulative eect t'at 'as strategic importance

Perforance ,ri2ers:

/R managers ten% to ocus on perormance %rivers in an attempt to %emonstrate

t'eir strategic impact /o+ever3 in most cases alt'oug' t'e %o stress on t'ese

%rivers t'e are una,le to mae a soli% case or it since t'e %o not 'ave t'e rig't

measures 7it'out measures one cannot %ispla /R@s actual contri,ution to t'e

overall mission Most o t'e measures use% are ver simplistic an% it un%ermines

/R@s cre%i,ilit in t'e organisation &'is cre%i,ilit is ver important since it is

+'at matters +'en a manager is ace% +it' a conlict ,et+een inancial an% non-

inancial reports 9or e5ample3 i people measures are goo% ,ut inancial

measures are ,a%3 t'e manager +ill go or t'e solution t'at supports t'e cre%i,ilit




o inance or /R 4n most cases it is inance an% t'e imme%iate %ecision is

re%ucing ,onuses etc as t'e #91 mig't eel it is not +arrante% +'en t'ere is no

proo o perormance &'e point t'at is ,eing misse% is t'at t'e #91 is looing at

t'e lagging in%icators >alance% perormance nee%s one to loo at t'e lea%ing

in%icators suc' as /R measures as +ell since t'ese are t'e ones t'at create value

in t'e organisation /ig' /R scores in t'e ace o lo+ inances actuall signal

improve% inances in t'e uture (provi%e% ot'er lea%ing in%icators are also on t'e

positive si%e) Similarl3 strong inancial measures an% +ea lea%ing measures

suc' as /R measures are in%icative o a inancial pro,lem in time to come &'us3

managers must interpret t'ese measures in a ,alance% manner looing at t'e past

an% into t'e uture 4%entiing /R perormance %rivers can ,e ver c'allenging

since it is uni2ue to t'e irm 4t is important to i%enti t'e perormance %rivers

an% integrate t'em %irectl into perormance criteria giving t'em e2ual +eig't

+it' t'e more tra%itional perormance measures 9or e5ample3 one 'al o t'e

,onus pas can ,e ,ase% on t'e inancial results +'ile t'e ot'er 'al is ,ase% on

t'e emploee@s a%'erence to t'e value ,e'aviours

HR ena8lers:

/R ena,lers reinorce t'e core perormance %rivers 4 emploee pro%uctivit is

i%entiie% as a perormance %river3 re-silling an% training can ,e consi%ere% an

ena,ler Some ena,lers mig't ,e speciicall /R ocuse% ie t'e en'ance t'e

eectiveness o /R perormance %rivers &'ere mig't also ,e some /R ena,lers

t'at %o 'ave prooun% positive eects +it' respect to t'e ot'er perspectives as

+ell3 suc' as customers3 operations an% t'e inancial segment 4t is important to

i%enti t'ese an% eep t'em up to %ate +it' t'e current goals o t'e organisation

7it'out t'e properl aligne% ena,lers3 it is not possi,le to implement ne+

strategies &'e sstemic aspect o /R once again comes to t'e oreront3 +'ere,

t'e entire /R sstem can inluence emploee ,e'aviour rom %ierent points

&'us3 /R managers s'oul% evaluate t'e %egree to +'ic' t'eir irm@s sstem o

ena,lers support t'e /R as +ell as non-/R perormance %rivers as liste% in t'eir

>alance% Scorecar%s > i%entiing t'e lins ,et+een ena,lers an% universal

perormance %rivers3 t'e /R team can pla a muc' larger role an% suggest i%eas

t'at can aect ot'er sectors in t'e irm as +ell




@./.$4e Se+en2Step "odel for #6ple6enting HRs Strategic

Role

lric! et al. %iscuss a seven step mo%el or ormalising t'e strategic role o /R

&'e are summarise% ,elo+:




igure ;52 "odel for i6ple6enting HRs Strategic Role

3. Defining Business Strategy5

/R managers s'oul% ocus on implementation o strateg > %oing so3 t'e can

acilitate %iscussion a,out 'o+ to communicate t'e irm@s goals t'roug'out t'e

organisation 7'en strategic goals are not %evelope% +it' an ee to+ar%s t'e

implementation %etail3 t'e ten% to ,e too generic an% a,stract &'ese vague goals

+ill ten% to conuse emploees an% t'e +oul% not no+ 'o+ e5actl to

implement t'e strategies &'e important t'ing or /R managers is to state t'e


Perio%icall

test /R

measures

against t'e

irm@s strateg

map an%

a%ust as

re2uire%



goals in suc' a +a t'at t'e emploees un%erstan% +'at e5actl t'eir role in t'e

organisation is an% t'us t'e organisation no+s 'o+ to measure success in

ac'ieving t'ese goals

/. Building a case for HR as a strategic asset5

1nce a irm clariies its strateg3 /R proessionals nee% to ,uil% a clear case or

t'e strategic role o /R 4n concrete terms3 t'e must ,e a,le to e5plain 'o+ an%

+' /R can support t'e strateg 4t is important to loo at as muc' o case

'istories an% internal as +ell as e5ternal researc' +'ile going t'roug' t'is p'ase

$lt'oug' it is not +ise to imitate ot'ers3 one can learn a lot , looing t'roug'

past e5periences o ot'ers >asicall3 t'e %irect impact on t'e /R sstems@ 'ig'

perormance c'aracteristics is non-linearl relate% to t'e increase in maret value

&'is is ,ecause in t'e lo+er ranges o perormance3 increase in maret value is

,asicall ,ecause /R stops maing mistaes it use% to mae in t'e past 4t is

almost lie it is getting out o t'e +a an% avoi%s ,lun%ers an% +rong practices

t'at +orsen t'e situation 4n t'e mi%%le range o perormance3 /R starts

consoli%ating its eorts 4t is learning rom its mistaes an% in t'e process %oes

not actuall a%% muc' to t'e maret value o t'e emploees an% t'e compan3 ,ut

once a certain t'res'ol% is crosse% in%icating t'at t'e irm 'as a%opte% t'e

appropriate /R practices an% implemente% t'em eectivel3 t'e maret value

soars e5ponentiall &'is is mainl ,ecause t'e /R sstem starts getting

integrate% into t'e overall strategic sstem o t'e irm >asicall3 t'e irms must

consoli%ate t'e appropriate /R policies an% practices into an internall co'erent

sstem t'at is %irectl aligne% +it' ,usiness priorities an% strategies t'at are most

liel to create economic value &'is can lea% to signiicant inancial returns tot'e compan 4t is t'is plan t'at must ,e ma%e concrete an% s'o+n as a strong

case to mae senior management ,elieve in /R@s potential

4t is important to note 'o+ever3 t'at simple c'anges in an /R practice %o not

mae a %ierence &'e /R measures %escri,e t'e +'ole /R sstem an% c'anging

t'e sstem to cross t'e t'res'ol% mentione% a,ove nee%s time3 eort3 insig't an%

perseverance since results are not %irectl proportional &'is clearl in%icates t'e

re2uirement o an /R transormation rat'er t'an a c'ange 4t is t'is ver c'aracter




o transormation3 +'ic' is %iicult an% time-consuming to ac'ieve3 t'at maes

/R a strategic asset

igure >5 A Hig4 Perfor6ance &or8 Syste6

$long +it' value creation3 t'ere must also ,e a strong case or /R@s role in

strateg implementation Strateg implementation rat'er t'an strateg content

separates t'e successul rom t'e unsuccessul irms 4t is easier to c'oose an

appropriate strateg t'an to implement one &'is once again s'o+s t'e strategic

nature o /R@s role in perormance improvements Successul strategimplementation is %riven , emploee strategic ocus3 /R@s strategic alignment

an% a ,alance% perormance measurement sstem &'e most important /R

perormance %river is a strategicall ocuse% +ororce ;ective no+le%ge

management com,ine% +it' t'e a,ove-mentione% actors creates a strategicall

ocuse% organiIation

:. Creating a Strategy "ap5


Knowledge

Management

System

Strategic

Alignment

System

Performance

Measurement

System

Employees wo are

strategically focused

!e "irm#s capacity to

implement te Strategy

!e $%erall performance

of te &rmA 'ig

Performance (or)

System



&'e irst t+o steps clari t'e irm@s strateg &'is paves t'e +a or t'e

implementation process >ut3 ,eore t'is is %one3 t'e irm must get a clear

un%erstan%ing o its value c'ain &'e value c'ain is t'e comple5 cumulative set o

interactions an% com,inatorial eects t'at create t'e customer value in t'e

pro%ucts an% services o t'e irm 4t is important t'at t'e irm@s perormance

management sstem must account or eac' o t'e lins an% %epen%encies in t'e

value c'ain &'e >alance% scorecar% rame+or reers to t'is process an%

creating a strateg map &'ese are ,asicall %iagrams t'at s'o+ t'e lins in t'e

value c'ain 4t s'o+s 'o+ %ierent components in %ierent laers interact 4t is

+'at provi%es managers an% emploees t'e ,ig picture o 'o+ t'eir tass aect

t'e ot'er elements in t'e irm an% 'o+ it aects overall strateg &'is process

s'oul% involve managers rom all over t'e organisation3 not ust /R &'e ,roa%

participation is re2uire% to improve t'e 2ualit o t'e strateg map 4t also allo+s

eac' mem,er o t'e team +'o is an e5pert in 'is or 'er %omain to provi%e 'is or

'er o+n insig'ts into +'at is accomplis'a,le




'earning and *rot4

#nternalGBusiness

Processes

Custo6er

inancial

igure =5 Si6ple Strategy "ap

The following /uestions ha$e been identified as the 0ey ones to be as0ed during

the strategy map creation process%1

! 4%enti t'e critical strategic goals rom t'e generic ones

" 4%enti t'e perormance %rivers or eac' goal

< &'in a,out 'o+ one can measure progress to+ar%s t'ese goals

? 4%enti ,arriers to t'e ac'ievement o eac' goal

A Recognise t'e emploee ,e'aviours nee%e% to ensure t'at t'e

compan ac'ieves its goals

B 4%enti missing emploee competencies an% c'ec i /R is provi%ing t'e necessar competencies


Customer Loyalty

$n*time +eli%ery

,eturn on te capital

employed in te -usiness

Process

uality

Process

cycle time

Employee s)ills



C 9inall3 %eci%e +'at nee%s to c'ange

&'ese ,asic 2uestions generate a +ealt' o inormation a,out 'o+ +ell a irm@s

/R 'as ,een contri,uting to t'e success o t'e organisation $long +it' t'ese

%iscussions3 it is useul or t'e compan to con%uct surves +it'in t'e

organisation to i%enti t'e e5tent to +'ic' eac' emploee un%erstan%s t'e

organisational goals 1nce t'e +'ole picture o t'e irm@s value c'ain is

'ig'lig'te%3 t'e irm can t'en translate t'e inormation into a conceptual mo%el

using language an% grap'ics t'at mae sense to t'e mem,ers o t'e organisation

&'e mo%el s'oul% t'en ,e teste% or un%erstan%ing an% acceptance amongst t'e

lea%ers an% t'e emploees

&'e strateg map essentiall contains pre%ictions a,out +'ic' organisational

processes %rive irm perormance &'e compan can vali%ate t'ese 'pot'eses

onl ater ac'ieving t'e goals set or eac' o t'e perormance %rivers an% t'en

measuring t'eir impact on overall irm perormance &'e grap'ical nature o t'e

strateg map 'elps t'e senior management as +ell as t'e emploees 'ave more

coni%ence in t'e strateg implementation plan

;. #dentifying HR deli+era,les it4in t4e strategy 6ap5

/R creates muc' o its value at t'e points o intersection ,et+een t'e /R sstem

an% t'e overall strateg implementation sstem o t'e organisation &'us3 to

leverage t'is to t'e ma5imum possi,le e5tent it is important t'at t'ere is a clear

un%erstan%ing o ,ot' si%es o t'is intersection

4n t'e past3 /R managers lace% t'e re2uire% amounts o no+le%ge a,out t'e

,usiness si%e an% general managers %i% not ull un%erstan% t'e /R si%e 4t is

/R@s responsi,ilit to %epict /R %elivera,les inclu%ing perormance %rivers as

+ell as /R ena,lers in t'e strateg map o t'e irm Perormance %rivers suc' as

emploee competence3 motivation an% availa,ilit are ver un%amental an% so it

mig't ,e %iicult to locate t'ese precisel on t'e strateg map 4t is important to

i%enti t'ose /R %elivera,les t'at support t'e irm-level perormance %rivers ont'e strateg map &'e ocus s'oul% ,e on t'e in% o strategic ,e'aviours t'at








4n t'e inal stages3 t'e /R measurement sstem +ill ena,le t'e irm to estimate

impacts o /R policies on irm perormance 4 t'e value c'ain is s'ort an% t'e

strateg map is relativel simple3 t'e complete impact o /R on t'e overall

perormance can ,e measure% 9or more comple5 value c'ains3 t'e impact can ,e

more accuratel measure% on local segments or sectors o t'e strateg map &'ese

local impacts can t'en ,e assimilate% to give a goo% measure o t'e total impact

on t'e irm@s perormance &'us3 eac' level o sop'istication o t'e measurement

sstem a%%s value to t'e non-inancial measures an% orces in t'e irm an%

ena,les a ,etter perormance appraisal

@. #6ple6enting t4e strategy ,y using t4e 6easures5

&'e previous step completes t'e /R scorecar% %evelopment process &'e ne5t

step is to use t'is po+erul ne+ management tool in t'e rig't +a &'is tool not

onl 'elps t'e irm measure /R@s impact on irm perormance3 ,ut also 'elps /R

proessionals 'ave ne+ insig'ts into +'at steps must ,e taen to maintain /R as a

strategic asset 4t 'elps t'e /R proessionals %ig %eeper into t'e causes o success

an% ailure an% 'elps t'em promote t'e ormer an% avoi% t'e latter 4mplementing

t'e strateg using t'e /R scorecar% re2uires c'ange an% le5i,ilit as +ell as

constant monitoring an% re-t'ining &'e process is not a one-time event /R

proessionals must regularl revie+ t'e measures an% t'eir impacts &'e must

revie+ t'e /R %elivera,les i%entiie% as important an% see to it t'at t'e %rivers

an% ena,lers an% internall as +ell as e5ternall aligne% Special revie+s o t'e

/R ena,lers must ,e con%ucte% as t'ese 'ave t'e ma5imum %irect impact on

speciic ,usiness o,ectives ;na,lers t'at %o not ten% to pla a positive role

s'oul% ,e replace%




1. B%)%#$S O $H% D%V%'OP#)* HR SCOR%CARD

&'e /R Scorecar% oers t'e ollo+ing ,eneits:

3. 4t reinforces t!e distinction 8et3een HR do+a8les and deli2era8les:

&'e /R measurement sstem must clearl %istinguis' ,et+een t'e

%elivera,les t'at inluence strateg implementation an% %o-a,les t'at %o

not Polic implementation is not a %elivera,le until it 'as a positive eect

on t'e /R arc'itecture an% creates t'e rig't emploee ,e'aviours t'at

%rive strateg implementation $n appropriate /R measurement sstem

+ill encourage /R proessionals to t'in ,ot' strategicall as +ell as

operationall

/. 4t ena8les cost control and 2alue creation:

/R is al+as e5pecte% to control costs or t'e irm $t t'e same time3 /R

'as to ulill its strategic goal3 +'ic' is to create value &'e /R scorecar%

'elps /R proessionals ,alance t'e t+o an% in% t'e optimal solution 4t

allo+s /R proessionals to %rive out costs +'ere appropriate3 ,ut at t'e

same time %een% investments in intangi,les an% /R , outlining t'e

,eneits in concrete terms

:. 4t easures leading indicators:

Hust as t'ere are lea%ing an% lagging in%icators in t'e overall ,alance%

perormance measurement sstem3 t'ere are %rivers an% outcomes in t'e

/R value c'ain as +ell 4t is t'us important to monitor t'e alignment o

t'e /R %ecisions an% sstems t'at %rive t'e /R %elivera,les $ssessing

t'is alignment provi%es ee%,ac on /R@s progress to+ar%s t'ese

%elivera,les an% las t'e oun%ation or /R@s strategic inluence

;. 4t assesses HR;s contri8ution to strategy i1leentation:

&'e cumulative eect o t'e /R Scorecar%@s %elivera,le measures

provi%es t'e ans+er to t'e 2uestion regar%ing /R@s contri,ution to irm

perormance $ll measures 'ave a cre%i,le an% strategic rationale Line

managers can use t'ese measures as solutions to ,usiness pro,lems




>. 4t lets HR 1rofessionals effecti2ely anage t!eir strategic

res1onsi8ilities:

&'e scorecar% encourages /R managers to ocus on e5actl 'o+ t'eir

%ecisions aect t'e successul implementation o t'e irm@s strateg &'is

is %ue to t'e sstemic nature o t'e scorecar% 4t provi%es a clear

rame+or to t'in in a sstemic manner

=. 4t encourages fle%i8ility and c!ange:

&'e ,asic nature o t'e scorecar% +it' its causal emp'asis an% ee%,ac

loops 'elps ig't against measurement sstems getting too stan%ar%ise%

Stan%ar%isation is goo% or t'ings t'at %on@t ten% to 'ave a %namic nature

,ut irm perormance is a %namic p'enomenon ;ver %ecision nee%s to

,e taen ,ase% on t'e past an% uture scenarios 1ne o t'e common

pro,lems o measurement sstems is t'at managers ten% to get sille% to

o,tain t'e rig't num,ers once t'e get use% to a particular measurement

sstem &'e /R scorecar% engen%ers le5i,ilit an% c'ange ,ecause it

ocuses on t'e irm@s strateg implementation3 +'ic' constantl %eman%s

c'ange 7it' t'is rame+or3 measures simpl ,ecome in%icators o t'e

un%erling logic t'at managers accept as legitimate 4t 'elps t'em loo at

t'e ,igger picture an% since t'ere are no perect num,ers it maes it easier

or managers to c'ange %irection +'en nee%e%

“"e see talent as the emerging single sustainable competiti$e ad$antage in the

future. To capitali(e on this opportunity, 23 must e$ol$e from a 4usiness )artner

to a critical 5asset manager6 for human capital within the business. The 23 scorecard is designed to translate business strategy directly to 23 objecti$es and

actions. "e communicate strategic intent while moti$ating and trac0ing

performance against 23 and business goals. This allows each 23 employee to be

aligned with business strategy and lin0 e$eryday actions with business

outcomes.”

Garrett 7aler3 Director /R Strategic

Perormance Measurement3 G&;




?. CAS% S$!D95 V%R#O)

&o clari t'e /R Scorecar% rame+or it is important to summarise a case stu%

&'is section e5plains t'e %etails o t'e /R scorecar% %evelope% , EeriIon3 a

lea%ing telecommunications provi%er in t'e nite% States

?.3.#ntroduction5 Verizon

EeriIon /R 'as eectivel %esigne% an% implemente% a strategic management

sstem3 +'ic' is ,ase% upon t'e ,alance% scorecar% mo%el o Dr Davi% Norton

an% Dr Ro,ert =aplan o /arvar% >usiness Sc'ool &'e /R >alance% Scorecar%

+as conceive% +it' ne+ econom organisational %namics in min% &'e

scorecar% uses a ,roa% range o lea%ing an% lagging in%icators +'ic' inclu%e

overall strateg3 operational processes3 customer perceptions3 an% inancials to

evaluate t'e eectiveness o /R initiatives to t'e ,ottom line &'e /R >alance%

Scorecar% provi%es t'e means to monitor +ororce in%icators3 analse +ororce

statistics3 %iagnose +ororce issues3 calculate t'e negative inancial impact3

prescri,e solutions3 an% trac improvements EeriIon ,elieve% t'at in t'e coming

ears t'e primar source o competitive a%vantage or t'eir ,usiness +oul%

continue to increasingl ocus on t'e talent +it'in t'e organisation3 +'ic' meant

t'at t'e a,ilit to eectivel manage t'e emploee talent +it'in t'e organisation

+as critical

7'ile management ten%s to mae %ecisions a,out 'o+ to invest in 'uman capital3

e+ companies 'ave an eective process to measure t'e value create% , t'is

most valua,le asset 4n EeriIon3 t'e ,elieve% t'at /R coul% eectivel manage

t'e value create% , t'oroug' investments in emploees Managers ne+ +as

'o+ muc' +as pai% to re+ar%3 'ire3 train3 %evelop3 an% provi%e ,eneits to

emploees 7'at managers nee%e% to no+3 'o+ever3 +as +'ere t'e investments

+ere most eective an% valua,le Some o t'e 2uestions t'at %i% not 'ave

ans+ers at t'at time +ere:




! S'oul% t'e ,usiness e5pan% t'e incentive pa program

" S'oul% t'e outsource saet a%ministration

< 7'at is t'e most eective use o training %ollars

? /o+ muc' s'oul% ,e spent on recruitment

A S'oul% emploee services ,e in-source%3 out-source%3 or co-source%

B S'oul% e5ecutive ,enc' strengt' ,e ,uilt or ,oug't

C 7'at is t'e cost in 'uman capital terms to ,rea into a ne+ maret

8 4s t'e ac2uisition target a goo% it an% %oes it a%% or %ilute t'e

competitive a%vantage in terms o talent

F Do t'e current investments in emploees matc' t'e strategic

o,ectives o t'e ,usiness

!0 4s t'e /R organisation a partner +it' t'e ,usiness to manage our

emploees as assets

&o ans+er t'ese 2uestions3 management nee%e% more inormation not ust simple

cost igures Management nee%e% to trac t'e inancial results +'ile monitoring

progress in %eveloping 'uman capital an% ac2uiring t'e talent an% capa,ilities

nee%e% or ,usiness success &'e >alance% Scorecar% +as %evelope% , =aplan

6 Norton3 !FFB an% provi%e% t'e i%eal sstem t'at leverages t'e tra%itional

inancial an% eicienc measures t'at +ere availa,le or /uman Resources +it'

metrics o perormance rom t'ree a%%itional perspectives namel3 customers3

internal ,usiness processes3 an% learning an% gro+t'

4n !FFB3 H Ran%all MacDonal%3 ;5ecutive Eice Presi%ent/uman Resources o

G&; #orporation (no+ no+n as EeriIon)3 +as acing t'e ,iggest c'allenge o

'is careerto create t'e /R strateg an% plans to support G&;@s +ororce

t'roug' a maor ,usiness transormation &'e &elecommunications $ct +as

transorming t'e regulate% +orl% o protecte% marets an% esta,lis'e% proit

margins into a 'ig'l competitive ,usiness environment or t'e

telecommunications giant /istoricall3 G&; 'a% emp'asise% a ocus on

inrastructure 2ualit an% customer service G&;@s senior ,usiness lea%ers +ere

preparing to transorm t'e compan into a maret-ocuse% organisation t'at

+oul% ,e t'e communications provi%er o c'oice to targete% customer marets

Signiicant emp'asis on ne+ marets an% a%%itional services +as part o t'e

strateg &'e telecommunications +orl% ollo+ing %eregulation +as tur,ulent

&ec'nolog acceleration3 emerging customer nee%s3 an% %ata an% vi%eo

transmissions +ere c'anging 'o+ ,usiness operate% G&;@s customers +ere




,ecoming price sensitive an% coul% no+ %eman% superior service an% a%vance%

support &'e competition +as in price3 pro%ucts3 an% tec'nolog Ne+ mergers

an% partners'ips +ere ,eginning to occur ,ran% preerences an% aggressive

tactics rom non-tra%itional competitors +ere all part o t'e mi5 G&; >usiness

Strategies +ere glo,al in scope an% translate% %irectl to clearl communicate

targete% ,usiness results $%%itionall3 t'e +ororce environment +as

%ramaticall %ierent an% 'ig'l competitive G&; ace% t'e lo+est nite%

States@ unemploment in "? ears &'e emploeremploee relations'ip 'a%

c'ange% emploees +ere less liel to remain +it' a single emploer

specialise% talent +as 'ar% to in% emploees e5pecte% more +orlie ,alance

an% t'e %iverse talent pool most soug't 'a% %iering interests an% nee%s #reating

t'e value proposition to ac2uire t'e talent to %rive t'e ,usiness +as more %iicult

to %eine an% c'ange% rapi%l

?./.HR C4allenge Strategy

&'e /uman Resource #'allenge +as to translate t'e ne+ ,usiness strategies an%

targete% ,usiness results into 'uman capital nee%s Recognising t'at G&;@s

emploees +ere a critical component in ac'ieving t'e ,usiness goals3 G&; /R

lea%ers inventorie% t'e current sills an% a,ilities t'at +oul% provi%e value ,ot' in

t'e s'ort-term an% into t'e uture /R proessionals t'en i%entiie% t'e critical

people imperatives necessar to gro+ t'at talent to increase t'e value %elivere% ,

t'e +ororce G&; +oul% nee% ne+ ,e'aviours3 actions3 an% capa,ilities to %rive

t'e ,usiness results &o ocus t'e /R organisation on t'e ac'ievement o t'ese

people imperatives3 G&; %evelope% a ne+ /R strateg to support t'e speciic

people re2uirements o t'e ,usiness strateg

$4is HR strategy as defined in fi+e strategic t4rusts5

3. &alent:

enlarge t'e talent pool

invest in emploees@ %evelopment

ensure %iversit

/. Lea%ers'ip:

esta,lis' a sstem to assess 'ig'-potential emploees

provi%e coac'ing an% %evelopment

esta,lis' accounta,ilit an% re+ar%s or lea%ers'ip ,e'aviour:. #ustomer Service 6 Support:




create an environment t'at osters emploee engagement

increase ,usiness intelligence +it'in t'e +ororce

provi%e solutions to retention issues

;. 1rganisational 4ntegration:

create ,etter sstems or no+le%ge management

en'ance union partners'ips

>. /R #apa,ilit:

%evelop core /R competencies

i%enti e talent or gro+t' an% %evelopment

invest in tec'nolog

invest in emploee sel-service

,etter un%erstan% t'e relations'ip o /R actions to ,usiness

outcomes

&'e ,iggest pro,lem +as communicating an% reinorcing t'e linage ,et+een /R

actions an% ,usiness results &'e ,usiness 'a% a clear strateg an% targete%

,usiness results &'e /R Strateg +as %irectl line% to t'e nee%s o t'e ,usiness

an% e5presse% in terms o /R strategic t'rusts &'e prime o,ective +as to

eectivel communicate an% e5ecute on strategic intent3 motivate an% trac

perormance against organisation an% ,usiness goals3 an% to align /R actions

+it' ,usiness results

?.:.$4e $ea6

$ ne+l orme% /R Planning3 Measurement3 an% $nalsis team +as create% to

%esign an% implement a tool t'at +oul% 2uanti /R@s contri,ution to t'e

,usiness &'e >alance% Scorecar% mo%el3 +'ic' +as at t'e time a lea%ing e%ge

corporate perormance assessment tool3 +as selecte% as t'e rame+or to a%apt

an% ,uil% an /R Measurement mo%el H Ran%all MacDonal% serve% as t'e senior

e5ecutive or t'e /R measurement initiative &'is role +as critical to t'e success

o t'e proect Ran% MacDonal% activel inluence% 'is senior lea%ers'ip team

+it'in /R to secure t'eir ,u-in an% to 'ol% t'em accounta,le or supporting t'e

proect &'e ne+l orme% Planning3 Measurement3 an% $nalsis team inclu%e% a

%irector an% our emploees solel %e%icate% to t'e %esign3 %evelopment3

implementation3 an% operation o t'e /R Measurement Sstem $n /R




Measurement core team inclu%e% eig't su,ect matter e5perts representing eac' o

t'e unctions +it'in /R an% t'e ,usiness units &'e core team mem,ers +ere

instrumental in assuring alignment o t'e measurement mo%el an% communicating

an% training /R %epartments on t'e applications an% uses o t'e /R Scorecar%

&'e >alance% scorecar% mo%el complements inancial measures o past

perormance +it' measures o %rivers o uture perormance nlie ot'er

accounting mo%els3 t'e >alance% Scorecar% incorporates valuation o

organisations@ intangi,le an% intellectual assets suc' as 'ig'-2ualit pro%ucts an%

services3 motivate% an% sille% emploees3 responsive internal processes an%

innovation an% pro%uctivit &'e /R Scorecar% approac' use% slig'tl mo%iie%

t'e initial >alance% Scorecar% mo%el3 +'ic' at t'e time +as most commonl use%

at t'e corporate level &'e approac'3 'o+ever3 remaine% ocuse% on long-term

strategies an% clear connections to ,usiness outcomes

$4e core tea6 6e6,ers ere selected on t4e folloing criteria5

#ommon lin: Selecte% , unctional EP

=no+le%gea,le on e processes +it'in our /R unctional area

De%icate% to ,uil%ing a+areness an% accounta,ilit to+ar% ac'ieving

,etter outcomes

9ocuse% on measuring +'at matters to ena,le ,etter %ecision maing an%

resource allocation

$4eir 8ey responsi,ilities included

$tten% #ore &eam meetings

#ommunicating to our unction t'e message o +' +e are measuring

/R

;sta,lis' SM;s +it'in our unction

4%enti e processes +it'in our unction

;sta,lis' e perormance in%icatorsmeasures relecting e processes

Su,mit %ata +it'in %esignate% timerame

Responsi,le or overseeing target setting process or our unctional area

$4e HR Balanced Scorecard includes four perspecti+es5




+. #trategic )erspecti$e

Measures success in ac'ieving t'e ive strategic t'rusts Since t'e ,asis or

t'e /R >alance% Scorecar% is ac'ieving ,usiness goals3 t'e aligne% /R

Strategic o,ectives are t'e %rivers or t'e entire mo%el

" 'perations )erspecti$e

Measures /R@s success in operational e5cellence &'e ocus +as primaril

in t'ree areas: staing3 tec'nolog3 an% /R processes an% transactions

< ustomer )erspecti$e

4nclu%es measures o 'o+ /R is vie+e% , t'e e customer segments

Surve results +ere use% to trac customer perceptions o service as +ell

as assess overall emploee engagement3 competitive capa,ilit3 an% lins

to pro%uctivit

7. 8inancial )erspecti$e

$%%resses 'o+ /R a%%s measura,le inancial value to t'e

organisation3inclu%ing measures o R14 in training3 tec'nolog3 staing3

ris management3 an% cost o service %eliver

?.;.$4e Process

$ %eli,erate approac' to t'e proect +as clearl %eine% an% communicate% to

eac' mem,er o t'e team an% to t'e /R organisation &'e proect +as esta,lis'e%

an% organise% into our maor components: Planning an% $lignment3 $ssessment3

Development3 an% 4mplementation

! Planning an% $lignment set t'e oun%ation or t'e proect Proect plan

o,ectives3 an% milestones +ere esta,lis'e% &eam e%ucation an% training

+as imparte% on ,usiness perormance management3 t'e ,alance%

scorecar% met'o%olog3 an% its application to /R measurement

" $ssessment ocuse% on un%erstan%ing +'at +as use% at t'at time as

measure to evaluate /R perormance an% to assess t'e relative value to t'e

,usiness

< Development ,egan t'e actual process o %esigning t'e /R measurement

mo%el Deining t'e measurement criteria an% scorecar% measures3esta,lis'ing targets3 %eining t'e process or collecting an% tracing




results3 an% creating t'e communications strateg +ere t'e e

%elivera,les in t'is p'ase

? 4mplementation operationalise% t'e /R Scorecar% rom t'e %ra+ing ,oar%

to a management tool or /R to assess perormance an% value a%%e% to

t'e ,usiness Data collection3 results reporting3 evaluation3 an% analsis all

came toget'er as t'e scorecar% +as implemente% #ommunications an%

training +ere %elivere% to t'e /R organisation as t'e /R Scorecar% rolls

out 1nce t'e team +as selecte%3 an% t'e mission an% o,ectives +ere

esta,lis'e% an% communicate%3 t'e +or to lin >usiness Strateg to /R

Strateg ,egan 8ig.- illustrates t'e initial mo%el use% to align >usiness

Strateg to /R Strateg an% $ctions an% lists t'e speciic outputs +it'in

eac' step




igure @52 #nitial 6odel used to align HR strategy to ,usiness strategy

>eginning +it' a clear un%erstan%ing o t'e ,usiness strateg an% goals3 t'e /R

team +ore% +it' t'e ,usiness lea%ers an% /R lea%ers to %etermine t'e e

2uestions to ,e ans+ere% or t'e ,usiness an% to %etermine +'at e %rivers o

t'e ,usiness +oul% translate into clear people re2uirements &'e outcome +as an


Une!"an#ng "$e %&!#ne!!

Output

Clearly de&ned -usiness

goals

Ien"#'(#ng )e"a#*e

Me"+#,!

Output

Metrics Model

Metrics Map

Clearly de&ned -usinessgoals

)e"e+-#n#ng .R )e*#/e+a*e!

Output

Competiti%e Capa-ility

,e/uiremnents

T+an!*a"#ng .R )e*#/e+a*e!

#n" .R S"+a"eg(

Output

Clearly de&ned -usiness

goals



un%erstan%ing o +'at 2uestions nee% to ,e ans+ere% an% o t'e competitive

capa,ilities re2uire% or current an% uture ,usiness success &'is provi%e% t'e

%etail to ,uil% a strateg map3 +'ic' +oul% support t'e %esign an% %evelopment

o t'e /R >alance% Scorecar%

&'e people re2uirements %eine% t'e /R Strateg t'at t'en translate% into speciic

/R initiatives t'at s'oul% %irectl support t'e attainment o /R Strateg /aving

t'is alignment allo+e% EeriIon to %evelop a strateg map3 +'ic' illustrate% t'e

cause an% eect linage ,et+een /R Strateg an% ,usiness o,ectives sing t'e

strateg map as t'e gui%e3 t'e +ere t'en a,le to evaluate t'e strategic o,ectives

in terms o measures an% outcomes (9ig F) &'e coul% t'en urt'er reine t'ese

into lagging measures (+'ic' tell 'o+ +ell a compan 'as alrea% %one) an%

lea%ing measures (+'ic' are in%icators o uture perormance)


Understanding the Business

HR puts together a business strategy document capturing the major insights and points

gathered during the acquisition of business intelligence



igure 152 $4e People ReJuire6ent and Business Dri+er Deter6ination

Process


Result: List of HR Deliverables

HR draws up list of total people and

services requirement that provide the

basis for the measurement model

Comparison and Consolidation of HR and

Line Input

HR checks for overlaps and

contradictions between its own and the

line’s input

HR conducts “reality check”: do the

required outcomes deliverables map

back to business strategy!

HR brainstorming Session

“"hat people outcomes must be

produce to help the business deliver

against its strategy and goals!”

Line Survey

HR conducts a survey of line

e#ecutives$ asking “"hat kind of

people$ skills and services do you

need from HR!”

List of HR Outomes

HR draws up a list of the skills

needed in the organi%ation now and

in future&

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1nce t'e 'a% %eine% t'e lin rom t'e inancial o,ectives3 /R ocuse% on t'e

critical 'uman capital re2uirements %eine% , t'e ,usiness Previousl3 /R

Perormance measurement at EeriIon 'a% ocuse% solel on improvement o

a%ministrative an% transactional eicienc suc' as t'e error rate in emploee

,eneit processing an% t'e num,er o training 'ours %elivere% per mont' &'e

ocus +as e5pan%ing to inclu%e ne+ processes or t'e /R organisation to %evelop

e5ceptional service %eliver an% increase% emploee value +'ile ensuring a ocus

on cost an% value

$s t'e measurement mo%el +as ,eing %evelope% to support t'e ,usiness@s people

re2uirements3 t'e o,ectives ,ecame clearer /R recognise% t'at t'e emploees

+oul% nee% to e5pan% t'eir sills an% increase t'eir pro%uctivit to provi%e t'e

ne+ pro%ucts an% services t'at ,usiness +oul% provi%e

! Sales representatives nee%e% to ,e a,le to serve as t'e customers@

telecommunications solution provi%er

" &'e customer service representatives also +oul% nee% rea% access to

customer account inormation an% ,e traine% to 2uicl recognise possi,le

customer nee%s an% to communicate optimal mi5es o pro%ucts3 services3

an% price plans to customers

< Ne+ incentive sstems +ere nee%e% to encourage t'e ne+ ,e'aviour an%

sill ac2uisition as +ell as retention plans or critical sill emploees

Provi%ing +ororce solutions an% ensuring alignment an% a strateg-ocuse%

+ororce all contri,ute% to a more capa,le an% sille% emploee population

/istoricall3 /R 'a% a %iicult time communicating to t'e ,usiness an%

maintaining t'eir ocus on t'e investments an% initiatives %esigne% to ,uil%

emploee capa,ilit Strategic sill %evelopment3 lea%ers'ip %evelopment3 an%

emploee %evelopment programs +ere all %iscusse% +it' ,usiness lea%ers an%

generall accepte% as valua,le 7'en inancial pressure +as applie%3 'o+ever3

t'ese tpes o programs usuall +ere t'e irst to go No+ +it' measures3 +'ic'




line% lea%ers'ip %evelopment +it' competitive capa,ilit3 people coul% see t'e

relations'ip ,et+een investing in t'ese programs an% ac'ievement o long-term

,usiness goals

?.>.%arly Results

$n earl ,eneit o t'e /R Scorecar% +or +as t'at it provi%e% a process or t'e

senior /R team to ocus on a clear an% common o,ective: to esta,lis' a common

strateg or /R in support o ,usiness o,ectives &'e 'ig' level strateg +as or

everone to ,e a partner to t'e ,usiness Rarel3 'o+ever3 %i% all o t'e /R

lea%ers'ip agree on 'o+ to implement t'e strateg ,ecause eac' person 'a% a

%ierent opinion a,out +'at ,eing ,usiness partner reall meant an% +'om

e5actl t'e customer +as &aing strateg an% translating it into a measurement

an% management mo%el gave speciic an% operational %einitions or ,eing a

,usiness partner an% targete% ,usiness customers

?.=.Co66unicating t4e HR Scorecard

#ommunicating t'e /R Scorecar% across t'e /R organisation an% t'e ,usiness is

a critical aspect o successul implementation &'e %evelopment process increase%

learning an% un%erstan%ing ,ut +as onl visi,le to t'e top lea%ers +it'in /R an%

t'e ,usiness &o use t'e /R Scorecar% to %rive c'ange t'roug'out t'e

organisation3 t'e Planning3 Measurement3 an% $nalsis team %evelope% a p'ase%

approac' to communicate an% train t'e managers an% t'eir %epartments on t'is

ne+ management tool &'e emp'asis on t'e scorecar% +as on t'e value t'e tool

provi%e% in communicating strateg an% alignment to t'e ,usiness 4t also serve%

as a tool t'at provi%e% proactive solutions to emploee issues or %eterrents ,eore

a negative impact coul% occur to t'e ,ottom line Perormance measurement +as

also an essential component3 an% all in t'e /R organisation 'a% t'eir incentive

compensation tie% to t'e results o t'e /R Scorecar%

&raining an% communication material +as use% e5tensivel to reinorce

un%erstan%ing o t'e ne+ management tool $n interactive teac'ing tool +as

%evelope% to train /R proessionals to use t'e /R Scorecar% results in pro,lem-

solving +ororce issues EeriIon realise% t'at measures %o not manage3 an%

simpl tracing results +as not t'e onl inten%e% use o t'e /R Scorecar% &'e












#)D#)*S O $H% S$!D9

! >alance% Scorecar% is ver useul tool to measure t'e organiIational

perormance

" &'e ocus o t'e organiIations is no+ on 'uman capital an% its eective

alignment +it' t'e overall strateg o organisations

< #ompanies are re2uire% to loo at all aspects o /uman Resource

arc'itecture to in% out t'e /uman Resource@s inluence on t'e overall

strateg o t'e compan

? #ompanies ace c'allenges in aligning t'e /uman Resource +it' t'e

overall strateg o t'e compan




A &o ace t'ese c'allenges3 >alance% Scorecar% is use% to align /uman

Resource unctions3 activit an% investment +it' t'e overall ,usiness

strateg

B >alance% Scorecar% not onl ocus on t'e inancial measures an% ,ut also

on t'e non-inancial measures to measure t'e organiIational perormance

C &o align t'e /uman Resource +it' t'e overall strateg o t'e compan3

seven step mo%el is use% +'ic' is ormulate% on t'e ,asis o t'e >alance%

Scorecar%

8 &o implement t'e >alance% Scorecar% successull to 'uman resource:

&'e o,ectives t'at are to ,e ac'ieve% must ,e +ell %eine% an%

communicate% to all t'e parties involve% in t'e attainment o t'e same

&'e attainment o t'e strateg is possi,le , 'aving a +ell %rate% strateg

map +'ic' contains a set o o,ectives t'at must ,e arrive% at to attain t'e

overall o,ectives o t'e compan $ ,a%l %esigne% strateg map results

in a conusing scorecar%




'#"#$A$#O)S O $H% S$!D9

! &'e primar source coul% not ,e use% to collect t'e %ata ,ecause >alance%Scorecar% concept is not popular among 4n%ian companies

" &'e %ata is collecte% t'roug' t'e secon%ar source so t'e relia,ilit

%epen%s onl upon t'e %ata availa,ilit

< Lastl t'e %uration o t'e stu% is onl < mont's




CO)C'!S#O)

/R >alance% Scorecar% 'as ma%e it possi,le or /R managers to un%erstan% 'o+

to align /R strateg +it' t'e overall ,usiness o,ectives &'e are a,le to e5plain

not onl +'at t'e are tracing ,ut also 'o+ t'e are perorming on essentialstrategies or t'e ,usiness

“"e see talent as the emerging single sustainable competiti$e ad$antage in the

future. To capitali(e on this opportunity, 23 must e$ol$e from a 4usiness )artner

to a critical 5asset manager6 for human capital within the business. The 23

scorecard is designed to translate business strategy directly to 23 objecti$es and

actions. "e communicate strategic intent while moti$ating and trac0ing

performance against 23 and business goals. This allows each 23 employee to be

aligned with business strategy and lin0 e$eryday actions with business

outcomes.” < "arrett =al6er' ,irector HR Strategic' Perforance

5easureent' "$>

>usiness environment an% t'e o,ectives an% strategies +ill continue to evolve3

an% /R managers +ill continue to ,e le5i,le an% creative in supporting t'e

c'anges &'e value o t'e /R Scorecar% as a tool is t'at it can get /R to t'e ne+

goals an% measures an% t'roug' t'e process ensure continue% learning an% c'ange

management

“4uilding an 23 scorecard should not be considered a one1time or e$en an

annual e$ent. To manage by measurement, human resource leaders must stay

attuned to changes in the downstream performance dri$ers that 23 is supporting.

If those dri$ers change, or if the 0ey 23 deli$erables that support them change,

the scorecard must shift accordingly. In building an 23 scorecard for your own

company, you may therefore want to include a component indicating how up to

date the 23 deli$erables are.”

< Brian Bec8er- "ar8 Huselid and Da+e !lric4

/R Scorecar% is not a onl solution to align t'e 'uman resource +it' t'e overall

,usiness strateg 4t cannot solve all t'e pro,lems o /R

“23 scorecards are not panaceas. They will not cure a poorly run 23 function.

2owe$er, they do pro$ide a means by which you can collect rigorous, predictable




and regular data that will help direct your firm6s attention to the most important

elements of the 23 architecture. onstructed thoughtfully, the 23 scorecard will

help your organi(ation deli$er increased $alue to its employees, customers and

in$estors.”

< Brian Bec8er- "ar8 Huselid and Da+e !lric4

R%CO""%)DA$#O)S

&o implement t'e >alance% Scorecar% successull to /uman Resource3 t'e

ollo+ing points s'oul% ,e ept in min%:

1 #ind a c!a1ion or 6ey e%ecuti2e s1onsor: ;nlist t'e ai% o a e

e5ecutive3 an inluential line manager an% t'e 'ea% o /R to c'ampion t'e

implementation o t'e /R scorecar%

2 Create a need: ;it'er ,uil% up t'e potential o a ,usiness t'reat or ocus

on t'e great opportunit t'at can ,e e5ploite% i t'e /R scorecar% is put in

place an% use% +ell &'e more compelling t'e opportunit or t'e greater

t'e t'reat3 t'e more urgenc t'e /R scorecar% +ill 'ave

3 S!a1e a 2ision:. S'o+ t'at +it' a +ell implemente% /R scorecar%3 t'e

irm +ill 'ave a strong an% sustaina,le competitive a%vantage

4 >ncourage coitent and in2ol2eent: 7'en t'e people most closel

involve% 'ave inormation a,out t'e /R scorecar%3 un%erstan% +'at it

+ill %o an% 'ave participate% in s'aping it3 t'e +ill ,ecome committe% to

it Mae it possi,le or as man people as possi,le to generate t'at in% o

commitment

5 Build t!e ena8ling systes: $ goo% /R scorecar% al+as re2uires

inancial investment3 management support an% investment in tec'nolog

Put t'ose ancillar sstems in place an% t'e scorecar% proect +ill ,e a,le

to move or+ar% rapi%l






R%%R%)C%S

! Researc4 papers

2uman 3esource 9epartment !anagement 3eport Hanuar3 "00< *$ >alance%Scorecar% #'anges /R Mgmt 9rom $rt to Science.

Nelson3 Paul <A"00" 4s t'e ,alance% scorecar% /RKs ticet to t'e ,oar%

)ersonnel Today

>ain an% #o F!"00< >ain Stu% Reveals /o+ 9irms $re sing &'ree Main

$naltic &ools $ccesse% rom +++,aincom

Mc=e+en3 Darren "00? /R Perormance Scoring Demonstrates Results areer

*ournal.com $ccesse% rom +e,site

9rangos3 #assan%ra &'e >alance% Scorecar%: #reating a Strateg-9ocuse%

7ororce $ccesse% rom 'ttp:+++accountingnetcom5?0B?"5ml

4#G Researc' "00< *n%erstan%ing t'e >alance% Scorecar%: $n /R

Perspective. ;5ecutive Summar availa,le or %o+nloa% on 'ttp:+++'rcom

/. &e,sites

S/RM Metrics orum: 'ttp:+++s'rmorgmetrics

>alance% Scorecar% #olla,orative@s *Strateg-9ocuse% 1rganiIation. series:

'ttps:+++,scolcom,scQonlinelearningso

+++/Rcom ('as up+ar%s o si5t articles on >S#3 inclu%ing intervie+s +it'

=aplan3 Norton)

>alance% Scorecar% 4nstitute: 'ttp:+++,alance%scorecar%org

:. Boo8

*$c'ieving 9unctional ;5cellence t'roug' >alance% Scorecar%s. e%ite% ,

Eenata Nimees'a Posa Page no ! to <?

http://www.accountingnet.com/x40642.xml

http://www.hr.com/

http://www.shrm.org/metrics/

https://www.bscol.com/bsc_online/learning/sfo/

http://www.accountingnet.com/x40642.xml

http://www.hr.com/

http://www.shrm.org/metrics/

https://www.bscol.com/bsc_online/learning/sfo/

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Dissertation Report on Putting HR on Balanced Scorecard a Case Study of Verizon

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