1. Balanced Scorecard in Human Resource Management
March 6th, 2010
They say that it is impossible to evaluate something without measuring it. In business
terms, performance is measured in different values, often by money to time ratio. Thus, to
analyze performance of your business, you need to find aspects of the work to be
measured. Almost all businesses use IT support. Moreover, many firms use special
software to evaluate performance of the company to find out what needs to be improved.
Of course, in tiny companies this software is not very popular since it is possible to
evaluate everything without automated tools. But why do extra work which can be done
by computer?
All business professionals would admit that Human Resource Department is an important
part of any business structure. You may have the best technologies, output capacities and
equipment but you may be not getting proper profits because you personnel is poorly
managed. When HR management works at its best you will immediately see positive
results. However, the work of HR department also needs to be evaluated. HR managers
should always get better and improve performance.
When it concerns companies and departments with 200+ employees it is not so easy to
find out who or what makes the company perform worse than expected. Employee A is
responsible for negotiations, employee B does the calculations, employee C goes through
paperwork. If one of them fails, the entire chain fails. This influences the company’s
overall revenue. Businesses must always get better, otherwise they will be wiped out by
smarter competitors. In terms of HRM, one should always get better way of dealing with
people and streaming their skills in the right direction.
For the purposes of performance evaluation thousands of companies are using Balanced
Scorecard (BSC). What is a BSC? This is a mechanism of making personnel familiar
with strategic success factors which are reached through key performance indicators
(KPI). Different business and occupations have different KPIs. If we are talking about
HR, KPIs mostly concern how efficiently personnel is managed in terms of finance and
performance.
These days, many companies are using BSC metrics to evaluate performance of their HR
department by key performance factors. So, let’s analyze how BSC metrics can help HR
managers and HR departments. In order to perform an overall analysis we need to
analyze KPIs, i.e. those factors influencing performance of HR department.
Cost per Hire. By evaluating this factor you will be able to see how expensive the
recruiting process is. This process starts from posting job offer to the moment when a
new person is officially employed in the company. Logically, the shorter this process is,
the least expensive is cost per hire. This is a very important value, especially if the
company counts hundreds and thousands of employees. This amount includes expenses

2. related to advertising, agent’s fees, recruiter pay, relocation etc. to lover the average cost,
a new person must be employed as quickly as possible.
Turnover Cost. These are the costs related to termination, new hire and learning. In
other words, these are expenses related to integrating a new person into the company.
Turnover Rate. This value represents the situation in your company related to leaving
and hiring new employees. Many people would agree that it is not good to change
personnel too often. If the turnover rate is very high, then maybe you are treating your
personnel wrong? Or is it something wrong with your business in general? Find out.
Time to Fill. Basically, this is the time needed to fill a vacant position in the company.
Of course, this time depends on how well HR managers are working with recruiters,
advertising and people in general. The shorter this time, the better performance of your
HR department.
Length of Employment. This indicator is very easy to understand. It is possible to
calculate an average value. For instance, in average an employee works 5 years for your
company. Of course, everything depends on the position. If you are changing couriers or
secretaries, this is not a big problem. But if chief managers work for your company less
than a year, this is definitely not good.
Training and Development. Even if you hire the best specialist you need to integrate
him into your company and train. Of course, you bear costs, related to training. If you
manage to cut this cost without harming quality of training, then your HR department is
doing a great job.
Salaries, compensation, bonuses. It is very important to know that you are not
overpaying and allocating recourses wisely. This also concerns HR department of any
company. With Balanced Scorecard you will be able to see how effectively company’s
funds are being used in HR branch.
Cost Effectiveness. It all comes to cost effectiveness after all. All above-mentioned
factors influence performance of HR department which has one goal – minimize costs
and boost performance. If you HR department manages to cut costs and at the same time
increase effectiveness, you can be proud of your HR specialists who know how to keep
pace with the modern bsuiness.
Balanced Scoreboard will help you evaluate performance of HR managers and find
solutions to problems. Once you enter all data, you will see graphs and values in percents
which will indicate how well HR department is performing. Sometimes, it is difficult to
find what takes the department down or what causes losses. With Balanced Scorecard
you will be able to evaluate all KPI to see what needs to be improved.

3. Use specialized software to measure your business performance
HR metrics is important for large HR deparments
As to psychological aspect, BSC metrics will make managers and employees more
enthusiastic. If they know where they need to work harder they will do that to improve
overall performance of the company. In other words, they will channel their energy,
knowledge and experience in the right direction. It is very important to know own weak
points. Using Balanced Scorecard, heads of HR departments will know weaknesses of
their employees. It may be not a problem if the department consists of 2 people, but what
if we are talking about 200? If people working for you are self-assured and confident,
your company will surely benefit.

4. HR metrics is a must have tool for heard of companies and departments. How can you
achieve your goals if you are not performing the way you expected to perform? Besides,
sometimes it is very difficult to find the problem or the factor which takes the whole
department down.
It may happen that your HR department works in dissonance with other department and
branches. For example, managerial braches need more employees and HR department
cannot find them on time. It is possible that costs for training one employee are so high
that the company suffers losses for the first two or three months of his employment. It is
very difficult to find the root of the problem. Balanced Scoreboard is the tool which
makes it possible to detect the problem and offer solutions. If you neglect problem you
will be simply wiped out by competitors. Of course, this is not something you want to
happen to your business, is it?
Many managers never think of organization climate. Indeed, why should they? The
company seems to be doing OK. The work is being done. So, what else do you need?
Well, this is not true. You company would perform better if employees have a loyal
attitude towards the company management. Do not disregard emotional state of your
colleagues. It is very important to measure organization climate. With the help of
anonymous questionnaires you will be able to get basic info on climate in the office and
use it in BSC. HR Scorecard metrics is a very useful tool in this sense. What is there is a
negative climate in your company? What if something makes people disagree with the
company policy? Why not change this little thing and perform better? BSC will surely
help you out here.
If the curve of emotional state goes down, then something bothers people. There is only
one way to learn it. All indicators can seem perfect but the work is not done the way it
should be done. Again, the answer might be found in emotional climate.
Balanced Scorecard is the best tool to improve performance of HR department within a
short period of time. You do not need any meetings and seminars to get information. Of
course, personal meeting will also let you know what is wrong in the company and what
needs to be improved, but with specialized software you will do that faster and more
efficiently.
To sum it up, it needs saying that HR metrics tool is a MUST HAVE instrument in a top
manager’s toolbox. This software will save you much money as well as let your earn
more. This is the ultimate goal in business, isn’t it? So, take advantage of IT progress to
become a true leader. As a true leader armed with HR metrics tool you will always know
what needs to be improved in your company. Thus, you will have all chances of staying
on the business Olympus.

5. Balanced Scoracard will help evaluate business performance

6. Improve performance of your HR deparment with Balanced Scorecard
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