Hr Balanced scorecard

Prepared by : Gihan Aboueleish

* Describe the value and role of the HR
Scorecard/Dashboard.
* Discuss the difference between leading and
lagging indicators as measures of HR
effectiveness.
* Identify the components of the HR Scorecard.
* Identify the key performance drivers and
enablers that constitute the primary HR
deliverables.
* Develop some preliminary HR
Scorecard/Dashboard measures for your HR
department and company.

HR Scorecard - Gihan Aboueleish Saturday, January 21, 2012

* BSC : Balanced Scorecard.
* Effectiveness VS Efficiencies.
* NGOS : Non-profit governmental organization
* Enablers


In a 2002 industry survey by SHRM . . .
* Only 34% of executives view HR as a strategic partner
* Only 44% of respondents indicated that their organization
communicates its strategy well
* Only 22% indicated that general employees understand
* company‘s strategy
* 21% indicated that HR only deals with operational issues
* vs. strategic ones
* Only 23% indicated that HR strategy was tightly integrated
with company strategy
* Only 25% of HR departments use a balanced scorecard on
HR‘s contribution to strategy

[SHRM Research, N=1310, Aligning HR with Organization Strategy Survey]


* To guide decision making — It helps HR staff
in how best to manage the HR system to
support the company.

* To evaluate program/department
effectiveness — It constitutes a “report
card” to guide improvement efforts.


* Identify a clear, consistent, and compelling
connection between the company’s
strategy and the work of each employee.

* Zero in on the critical few measures that
have the greatest impact on the company’s
bottom line.

* Document the effects of HR on company
performance in credible ways that
employees, line supervisors, and managers
can understand.

Long-term Plans
Objectives
Strategies
Enablers
Resources
Also known as L.O.S.E.R.


1. Biggest Threats often come from OUTSIDE your normal
industry
2. Planning from the base of an ‗Existing‘ organization vs.
zero-based
3. Traditional Analysis (e.g. SWOT) based only on known or
existing assumptions or knowledge
4. Spending too much time in market research and analysis
5. Defining the company from a Product/Service perspective
vs. Category vs. JTBD (e.g. Coca-cola)
6. Wrong Benchmark – already successful vs. what made them
successful
7. Implementing BSC and PMS to improve Business Model and
Strategy
8. New strategy, same people


1. Focuses on leading indicators.
2. Identifies the differences between HR
doables and HR deliverables.
3. Demonstrates HR‘s contribution to strategy
implementation and to the company‘s
bottom line.
4. Helps HR managers focus on and manage
their strategic responsibilities.
5. Encourages HR flexibility and change.


Financial Customer
“To satisfy our “Who are our target
stakeholders, what customers?
Financial objectives What is our value
must we accomplish?” proposition?”

Learning & Growth Internal Process
“What capabilities and tools “To satisfy our customers, in
do our employees require to which internal business
help them execute our processes must we excel?"
strategy?


Internal Process Mission

“To satisfy our targets, in “Who are our targets?
which internal processes What is our value
must we excel?" proposition?”

Financial Learning & Growth

“To fulfill the Mission, “What capabilities and tools
what Financial, how do do our staff require to help
we fund Internal them execute our strategy?
Processes?”


1. BSC should be a Thought Process and a Tool not a
Religion (e.g. Excel™ vs. Budgeting)
2. BSC ≠ Appraisal
3. New BSC implementations should start linking with
Budgeting right from the beginning
4. The ‗proper‘ BSC approach should rightly fully be
heavily customized to the organization
5. ‗Strategic Planning‘ trainings should be provided
before ‗BSC‘ trainings
6. Clear definitions for Accountability vs. Impact vs.
Influence vs. Assistance


* HR Performance
Drivers Results

* HR Performance
Enablers Reinforcing
the Drivers


* How do you know if your HR efforts are
successful?

* How do you measure the effects or results
of these HR, training, and OD efforts?

* How will you know that your efforts and
initiatives have paid off?


* Lagging indicators are outcome measures that
help you gauge your HR progress by examining
the final end result or outcomes of your
collective efforts.

* Use of the ―lagging‖ term reflects the delay or
gap between your actions and a change in the
final end result.

* Characteristics
• Outcome measure.
• Indicates the end result of the system.
• Tells you what happened, not what is happening.
• Less effective at measuring the effects of
specific changes made to the system.


Non-HR Examples;
* Health — heart attack, liver failure, stroke, death!
* Automobile — arrived safely at destination (or not),
engine failure, blown tire, citation from traffic
enforcement, etc.
* Economy — GNP growth, national debt,
unemployment rate, etc.

* HR Examples;
* Employee retention.
* Employee performance.
* Organizational performance. Lagging indicators have a
* Customer retention. direct bearing on a company’s
* Employee productivity. bottom line. There is a
business interest in and a
direct financial benefit from
improvement in these areas.


What are some lagging indicators
that you could use to measure the
results of the effectiveness of your
HR efforts?


Characteristics
* Leading indicators are process measures
• Process measure.
that help you gauge incremental progress • Immediate
you are making toward key HR outcome feedback to the
(lagging) measures . system.
• Tells you what is
happening now.
* Since leading indicators measure the • Can be tracked
results from your processes, there is less of over time.
a delay between your actions and a • Provides an ―early
change in the system. warning‖ of emerging
results.
• Very responsive to
* They are the performance drivers — the changes in the
key factors that enable the overall end system
result (outcome) you want to achieve.


Non-HR Examples ;
 Health — Heartbeat, body temperature, blood
sugar levels, cholesterol levels, blood
pressure, etc.
 Automobile — gas gauge, engine temperature,
speedometer, odometer, oil level, indicator
lights, rumble strips on the roadway, GPS
coordinates, etc.
Leading indicators
 Economy — home starts, capital equipment
have an
purchases, layoffs, stock market value, public
confidence, exchange rates, etc. indirect bearing on a
company’s
bottom line. While
HR Examples; there is a
 Increasing retention business interest in
 A reduction in absenteeism in key positions. improvement
in these areas, there
 % increase in internal people
may not be
 expressing interest in position an immediate financial
 Number of positive comments from customers benefit to
the company.


1. Define/Describe Your Business Strategy.

2. Develop a Strategy Map.

3. Identify the High Leverage HR Deliverables.

4. Identify Key Components of the HR
Architecture that Support the HR Deliverables.

5. Develop the HR Scorecard/Dashboard.

Specific actions where a small, well-
focused effort could produce the
most significant and enduring
improvements or changes in the
target outcomes.


HR
Strategic HR Systems
Focus
Balancing value
creation
with cost controls
and efficiencies
HR HR
Deliverable
Competencies s

HR
Practices

Involves identifying both
performance drivers and
enablers to support the
company‘s strategic priorities

Operational efficiency
* High Performance Work System —
knowledge and use of best
HR Competencies

* practices in HR
* Employee relations/advocacy
* Strategy execution
* Change agent


Staff competency model

* Recruitment and selection
* Employee orientation
* Compensation and benefits HR Practices
* Performance measurement
* Labor-management relations
* Effective work design
* Internal customer satisfaction
* Communication
* Training and development
* Succession planning


Internal HR alignment
* HR alignment with company strategy

* Matching HR strategy to the company
culture
HR Practices

* Differentiating HR services to match the
different needs of different
departments/strategic business units


Assessing staff perceptions of the internal
alignment of your HR practices — Are they
internally consistent with one another?

Assessing staff perceptions of the external
alignment of your HR practices:
To what extent do your HR deliverables enable
the company’s performance drivers and strategic
objectives? To what extent do your HR practices
enable/support your HR deliverables?


Measuring the “fit:”
-100 = at cross
purposes
0 = little or no effect
100 = mutually
reinforcing

HR Recruitme Training & Performan Compensat Work Org. HR Control HR Value
Practices nt & Developm ce ion &
Selection ent Manageme Benefits
nt
Recruitmen --- -25 0 -50 -35 +25 -10
t
& Selection
Training & -25 --- +25 0 +75 +45 -20
Dev.
Per. 0 +25 --- +20 -5 +10 +5
Manageme
nt

Comp & -50 0 +20 --- 0 0 -35
Benefits
Work Org. -35 +75 -5 0 --- 0 -15


What is the HR Dashboard?
The Credit Union’s HR Dashboard is a panel of indicators
that present a reading of the relative health/satisfaction
of credit union employees on three dimensions:
QWL Score, Core Values, and Overall Job Satisfaction.


1. HR programs and services.
2. Managerial performance feedback.
3. Variable pay.
4. Lessons learned — What did we do
that worked? Didn‘t work?


5. Relationship to other critical measures:
Member/Customer Satisfaction
Member Retention
Financial Performance
Employee Satisfaction
Internal Customer Service
6. Focus of monthly management meetings.
7. Explore the differences between groups
(retail vs. support).


1. Quarterly Survey;
(a) 20 questions, (b) five
core values, (c) overall satisfaction, and (d)
two open-ended questions.
2. Sample Size — 60 to 65 employees.
3. Validity — accurate +/- 1%.
4. Administration — e-mail link to survey.
5. Confidentiality — external consultant.
6. Reporting Results — Three “instruments”
on the HR Dashboard

* I feel pride and a sense of accomplishment in
the work that I do.
* I have input into how I perform my job.
* I feel appreciated for the good work that I do.
* My direct supervisor gives me clear
performance expectations that enable me to
do quality work.
* The Credit Union’s managers and supervisors
have clearly communicated the future
direction and goals of the Credit Union to me.


•Google
USP
•Air Asia

Market
Profit Model
Discipline


USP

Market
Profit Model
Discipline


Revenue

Assets Cost

Cash
Margin
Flow


Financial
Revenue Cost Margin Cash Flow Asset

Customers

Internal Process

Learning & Growth


Product "They are the most innovative"
Leadership "Constantly renewing and creative"
"Always on the leading edge"
Customer
Operational Intimacy
Excellence
"A great deal!" "Exactly what I need"
Excellent/attractive price Customized products
Minimal acquisition cost and Personalized
hassle communications
Lowest overall cost of "They're very responsive"
ownership Preferential service and
"A no-hassles firm" flexibility
Convenience and speed Recommends what I need
Reliable product and service "I'm very loyal to them"
Helps us to be a success

Product Leadership
(best product)

Operational Excellence Customer Intimacy
(low cost producer) (best total solution)


Operational Product Leadership Customer Intimacy
Excellence
 New, state of the • Management by
• Competitive price art products or Fact
services
• Error free, reliable • Easy to do
 Risk takers business with
• Fast (on demand)
 Meet volatile • Have it your way
• Simple
customer needs (customization)
• Responsive
 Fast concept-to- • Market segments
• Consistent counter of one
information for all
 Never satisfied - • Proactive, flexible
• Transactional obsolete own and
• Relationship and
competitors'
• 'Once and Done' consultative
products
selling
 Learning
• Cross selling
organization

Apple powerful Product Leadership
products, premium (best product)
pricing, limited
range
Still
Doing
HP well-balanced
Acer super lean well in
portfolio, mass
cost 2009
customization
structure, aggressi
ve pricing
Operational Excellence Customer Intimacy
(low cost producer) (best total solution)


What is your Goal?

* Cost Reduction

* Growth

* Both?


“Double-Digit Growth”, Michael Treacy

GROWTH


“Double-Digit Growth”, Michael Treacy •Increase switching cost
•Customize products
•Preempt Defections
•Brand

GROWTH •Neutralize Competitor
advantages
•Superior Value
•Promising Market?
•Buy market share
•Make or Buy?

•Spot growth opportunities
•Organized search

Growth Strategy Why? Growth Rate 
Rate
Fast 1. Market •Maintain market share in strategic
Positioning segments
2. Share Gain •Prepare for market decline
3. Base •Competitors focus too much on
Retention getting new customers
Flat 1. Base •Lose customers slower than
Retention competitors
2. Share Gain •Create scale economics, squeeze
(Acquisitions) costs


Churn Strategy Why?
Rate
Low 1. Share Gain •Buying customer base is
(Acquisitions) cheaper than own efforts
2. Adjacent •New products, old customers
Markets strategy

High 1. Base •Lose customers slower than
Retention competitors
2. Share Gain •Customers are always open to
3. Adjacent the best value and offer
Market •Desperate to gain revenue

Fast Growth, 1.Market Positioning
Low Churn 2.Share Gain
3.Base Retention
4.Adjacent Markets


Financial

Customers Satisfaction

Base Retention Share Gain Positioning Adjacent New
Market Business

Internal
Process

Learning & Growth


Operational Product Leadership Customer Intimacy
Excellence
 New, state of the • Management by
• Competitive price art products or Fact
• services
Error free, reliable • Easy to do
• Fast (on demand)  Risk takers business with

• Simple  Meet volatile • Have it your way
customer needs (customization)
• Responsive
 Fast concept-to- • Market segments
• Consistent counter of one
information for all
 Never satisfied - • Proactive, flexible
• Transactional obsolete own and
• Relationship and
• 'Once and Done' competitors'
consultative
products
selling
 Learning
• Cross selling
organization


* Operational Excellence
* Move know-how from top performing units
to others
* Benchmark against best in class

* Ensure operations training for all
employees
* Use disciplines like TQM for continuous
learning to reduce costs and improve
quality


* Customer Intimacy
* Capture knowledge about customers

* Understand customer needs

* Empower front line employees

* Ensure that everyone knows the customer

* Make company knowledge available to

customers


* Product Leadership
* Reduce time to market

* Commercialize new products fast

* Ensure that ideas flow

* Reuse what other parts of the company

have already learned
* Ensure there are multiple sources of
funding


Financial


Market Business

Internal
Process
Investment
Operational Product Customer
Strategy
Excellence Leadership Intimacy

Learning & Growth


Business
Person
Structure Model
Strategic
Planning
Culture
Leadership

Resources


Culture * Focus point
* Alignment
* Quality
* Innovation & Differentiation
* Risk taking
* Performance Management
* Corporate obsession
* Decision making


Structure * Org Structure
* Job Design
* Policies & procedures
* Decision making
* Job fit
* Management Systems
* BSC and KPIs
* Decentralized & Empower


Leadership * Role modeling
* Vision/Mission/Philosophy
* Leadership Style
* Delegation & Empowerment
* C&B, Promotions
* Sense of Urgency
* Speak regularly about Performance


* Recognition
Person * Recruitment
* Training
* Profit sharing
* Values
* Motivation
* Self Efficacy
* Awareness
* Useful Competencies
* Career aspirations
* Attribution (control)

Enablers
Resources * Technology
* Equipment
* Materials
* Human Intellectual Property
* Partners
* Property


Organization, jobs,
skills

Culture, values,
norms Operational Product Customer
Information and
systems

Management
systems


Operational Excellence

Organization, •Central authority, low level of empowerment
jobs, skills •High skills at the core of the organization

Culture, values, •Disciplined Teamwork
norms •Process, product- driven
•Conformance, 'one size fits all' mindset

Information and •Integrated, low cost transaction systems
systems •The system is the process

Management •Command and control
systems •Quality management

• Product Leadership
Organization, jobs, • Ad hoc, organic and cellular
skills • High skills abound in loose-knit structures

Culture, values, • Concept, future-driven
norms • Experimentation and 'out of the box' mindset

Information and • Person-to-person communications systems
systems • Technologies enabling cooperation

Management • Rewarding individuals' innovative capacity
systems
• Risk and exposure management
• Product Life Cycle profitability

Customer Intimacy

Organization, jobs, •Empowerment close to point of customer contact
skills •High skills in the field and front-line

Culture, values, •Customer-driven
norms •Variation and 'have it your way' mindset

Information and •Strong customer databases, linking internal and
systems external information
•Strong analytical tools

Management •Customer equity measures like life time value
systems •Satisfaction and share management
•Focus on „Share of Wallet‟

Financial


Market Business

Internal
Process
Investment
Strategy

Learning & Growth

Competencies Information Motivation, empower
Systems ment, alignment


Which comes first?
1. Strategies -> KPI?
2. KPI -> Strategies?
•already know our priorities, aware of all
strategy options available
•creating something UNIQUE, INNOVATIVE and
DISRUPTIVE e.g. Air Asia
•conducting a business Turnaround e.g. MAS


Which comes first?
1. Strategies -> KPI?
2. KPI -> Strategies?
•want to find out possible strategies,
•determine our priorities first thru selection
of important KPIs;
•growing through ‗normal‘ business, not a
Turnaround.


•Customer satisfaction •Win rate (sales closed/sales contact)
Customer loyalty •Customer visits to the company
Market share Hours spent with customers
Customer complaints Marketing cost as a percentage of sales
Complaints resolved on first contact Number of ads placed
Return rates Number of proposals made
Response time per customer Brand recognition
request Response rate
Price relative to competition Number of trade shows attended
Total cost to customer Sales volume
Average duration of customer Share of target customer spending
relationship Sales per channel
Customers lost Average customer size
Customer retention Customers per employee
Customer acquisition rates Customer service expense per customer
Percentage of revenue form new Customer profitability
customers Frequency (number of sales
Number of customers transactions)
Annual sales per turnover

“What is the moral of
the story?”


Before: ―Handle Time‖ Per Call
* Motivated Call Centre staff to transfer
callers, getting rid of complainers, making them
someone else‘s problem
* Callers at 45% chance of being transferred
* 7,000 customers each week suffered transfers 7
times or more


After: ―Minutes Per Resolution‖ of a
problem
* Resolution in ONE CALL become the core goal
* Reduced probability of call transfers from 45% to
18%


Financial


Market Business

Internal
Process
Investment
Strategy

Learning & Growth

Competencies Information Motivation,
Systems empowerment,
alignment


Financial Revenue
Market Value Productivity
Growth

Customers /
DistributorsProducts/ Channel Target
Services Strategies Markets

Internal Supplier & Department External
Process Alliances Operations Involvement

Learning & Technology
Growth Human Information &
Resources Systems & Intelligence
Processes

Financial Services Retail Telecommunications

•Maximize ARPU •Understand customer •Anticipate and prevent churn
•Minimize Churn behavior related to customer despite compensation
•Mutichannel customer conversion, acquisition, and •Increase number of products
service retention per customer
•Single view of customer •Turn call center information
•Multichannel customer opportunity to up-sell and
experience cross-sell
•Personalized customer •Increase customer
experience satisfaction and loyalty
Hospitality Travel & Leisure Manufacturing
•Personalized customer •Increase customer loyalty •Single view of customers
experience and preference across supply chain
•Maximize share of wallet •Maximize customer revenue •Zero-error order capture
•Player/customer loyalty •Improve service quality and •Streamline opportunity to
•Multichannel customer efficiency cash processes
service •Capture and close sales •Leverage investment in ERP
opportunities and backoffice systems

Operational Product Customer Intimacy
Excellence Leadership

• Price • Marketing • Customer
• Selection Knowledge
• Functionality
• Convenience • Solutions Offered
• Zero Defects • # of Successes • Penetration
• Growth • # of Failures • Customer Data
• Learn from key • Customer-success
users focus
• Interdisciplinary
teams
• Pipeline


Customer/Client/
Government BSC
Financial

Your BSC
Base Share Gain Positioning Adjacent New
Retention Market Business
Financial

Internal
Process Customers Satisfaction
Investment
Strategy
Excellence Leadership Intimacy Base Share Gain Positioning Adjacent New
Retention Market Business
Learning & Growth

Competencies Information Motivation, Internal
Systems empowerment, Process
Investment
alignment Operational Product Customer
Strategy

Learning & Growth

1. Draw your „customer‟s‟ BSC Competencies Information
Systems
Motivation,
empowerment,
alignment

2. Match their CP/IP with your CP
3. Identify IPs that support/conflict


Business Model

BSC

KPIs

Budgeting + Planning

Performance Management System

Differentiation

Talent Management

Succession Planning (Business
Continuity)

Business Model
BSC
a.k.a. Strategy
KPIs Planning
Budgeting + Planning

Performance Management System
Differentiation

a.k.a. Strategy Talent Management
Implementation
Succession Planning (Business
Continuity)


A Excellent

B Good

C Average

D Poor

E Useless

A Excellent

B Good

C Average Good

D Poor

E Useless

A Excellent Excellent

B Good Very Good

C Average Good

D Poor Not Good

E Useless Commit Suicide

A Excellent Consistently achieved 4 for 3
quarters
B Very Good Higher than planned results

C Good Achieved Planned Results

D Not Good Did not fully meet planned
results

E Commit Unacceptable performance
Suicide

* Pay for Service

* Pay for Job

* Pay for Performance

* Pay for Competency


* Use this if your company:
* Pays for Performance, and
* Pays for Job rates

* Def:
Mid-Point = Mid Point of Pay Grade

Grade E2
Min MID Max
RM2,000 RM2,500 RM3,000


< 0.7 ≥0.7 - >0.9 - ≥1.1 - > 1.3
≤0.9 <1.1 ≤1.3
5 20 15 12 8 5

4 18 12 9 5 3

3 9 7 5% 4 3

2 1 1 1 0 0

1 0 0 0 0 0


„A‟ „B‟ „C‟ „D‟ „E‟
Staff Staff Staff Staff Staff


1. Result Planning schedule. BSC, Budget
2. Quarterly Performance Appraisals
3. Sales performance reviews
4. Non-sales performance reviews
5. Annual Appraisals
6. Specialized KPI committees
7. Internal Audit & process problems
8. HRM & TND – people problems


* How aligned is your HR system?
* Do your HR practices work together or at
cross purposes
* Building from your HR Deliverables . . .
* Identify your key “high leverage” HR
* “doable” and enablers in your;
* HR Competencies
* HR Practices
* HR System


Hr Balanced scorecard

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