The HR Scorecard

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Linking People, Strategy and Performance

THE HRSCORECARDTHE SUMMARY IN BRIEF

Most CEOs and senior line managers are skeptical of the role of humanresources in their companies’ success. While many executives say theybelieve that “people are our most valuable asset,” they don’t understandhow HR functions make that vision a reality. The root of the problem issimple: It’s hard to measure the impact of HR functions on company per-formance and success.

The performance measures that most HR departments use don’t meas-ure HR contributions to company success. For example, as an HR manager,you may believe that having a capable and committed work force and atraining system that helps your employees learn faster than the competitionare true competitive advantages and part of the company’s strategic plan.Yet, you most likely measure items such as total compensation, employeeturnover, cost per hire and the percentage of workers who were evaluated inthe last 12 months. None of these measures relate directly to employeecommitment or learning — the competitive advantages you identified.

A new approach is necessary. Rather than concentrate on a bottom-upperspective emphasizing compliance and traditional HR, you must move to atop-down perspective emphasizing the implementation of strategy. You mustthen develop an innovative assessment system that measures HR’s contribu-tion to what matters most to CEOs: firm profitability and shareholder value.

This summary shows you how. In the following pages, you will:✓ Learn about a seven-step process that will lay the foundation

for your HR department’s strategic influence company-wide.✓ Understand how to move from the seven steps to an HR

Scorecard that identifies and measures the HR “deliverables”needed to make the corporate strategy work.

The most potent action HR managers can take to ensure their strategiccontribution is to develop a measurement system that convincingly show-cases HR’s impact on business performance.

That system is the HR Scorecard.

Concentrated Knowledge™ for the Busy Executive • www.summary.com Vol. 23, No. 10 (2 parts) Part 1, October 2001 • Order # 23-24

CONTENTSHR as aStrategic PartnerPage 2

Implementing HR’sStrategic Role:A Seven-Step ModelPages 3, 4

CreatingThe HR ScorecardPages 4, 5, 6

Cost Control vs. Value CreationPage 5

Cost-Benefit Analyses For HR InterventionsPages 6, 7

CompetenciesFor HR ProfessionalsPages 7, 8

ImplementingThe HR ScorecardPage 8

By Brian E. Becker,Mark A. Huselid and Dave Ulrich

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HR As A Strategic PartnerAfter struggles with a lack of focus and billions of

dollars in losses in the early 1990s, Sears’ managementteam developed a strategy to turn the company around:For Sears to be a compelling company for investors, ithad to be a compelling place to shop; for it to becomea compelling place to shop, it had to become a com-pelling place to work.

Sears then went about validating this vision withhard data. The company developed objective measuresfor each “compelling” goal. For example:

● Support for ideas and innovations helped makeSears a compelling place to work.

● Focusing on becoming a fun place to workhelped make Sears a compelling place to shop.Sears then developed a series of competencies and

behavioral objectives designed to reach each goal.These competencies became the foundation on whichto build recruiting, training, performance and compen-sation structures.

So precise were the measures Sears developed thatmanagers could say with confidence that a 5 pointimprovement in employee attitude drove a 1.3 pointimprovement in customer satisfaction, which in turndrove a .5 percent improvement in revenue growth.

HR DeliverablesThe human resources function has traditionally been

seen as overhead — a cost center rather than a value-creating function. However, human resources canbecome a valuable strategic partner that helps the com-pany achieve its goals. The key is to identify and meas-ure the HR “deliverables” that support corporate strate-gy — and the HR systems that create those deliverables.For Sears, the deliverable was making Sears a com-pelling place to work. The HR systems behind the trans-formation were recruiting, training, performance andcompensation structures — for example, a reward struc-ture that recognized employee ideas and innovations.

The HR Architecture as a Strategic AssetIf the focus of corporate strategy is to create a sus-

tained competitive advantage, the focus of HR is tomaximize its contribution to that advantage through itsarchitecture. HR’s architecture is really three dimen-

sions that make up the value chain:

● the HR function — made up of HR professionalswith strategic competencies;

● the HR system — the company’s high-perform-ance, strategical-ly aligned poli-cies and prac-tices; and

● employeebehaviors —strategicallyfocused compe-tencies, motiva-tions and associ-ated behaviors.

The HR system isthe linchpin of HR’s strategic influence. The mosteffective model is a High-Performance Work System(HPWS). In an HPWS, each element of the HR systemis designed to maximize the overall quality of humancapital throughout the organization. Specifically, theHPWS:

● links its selection and promotion decisions tovalidated competency models;

● develops strategies that provide timely and effec-tive support for the skills demanded by the firm’sstrategy;

● enacts compensation and performance manage-ment policies that attract, retain and motivatehigh-performance employees. ■

2

THE HR SCORECARDby Brian E. Becker, Mark A. Huselid and Dave Ulrich

— THE COMPLETE SUMMARY

The authors: Brian E. Becker is a Professor andDepartment Chair of Organizations and HumanResources at the State University of New York atBuffalo. Mark A. Huselid is an Associate Professor ofHuman Resource Strategy at Rutgers University. DaveUlrich is a Professor at the University of MichiganSchool of Business and the best-selling author of HumanResource Champions and co-author of Results-BasedLeadership.

Copyright© 2001 by President and Fellows of HarvardCollege. Summarized by permission of the publisher,Harvard Business School Press, 300 North BeaconStreet, Watertown, MA 02472. 234 pages. $29.95. 1-57851-136-4.

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If the focus of corporatestrategy is to create

a sustained competitiveadvantage, the focus of

HR is to maximizeits contribution to that

advantage throughits architecture.

Implementing HR’s StrategicRole: A Seven-Step Model

For human resources to make the maximum contribu-tion toward establishing value for your company and itsshareholders, your executives and HR department man-agers must take the seven steps outlined below.

Step 1: Clearly Define Business StrategyBusiness strategies tend to be very generic. They

might be to “maximize operational efficiency” or“increase presence in international markets” or“improve productivity.” Unfortunately, these goals areso vague that employees don’t know what they are sup-posed to do to implement them. Here’s where HRexperts step in. Once you know your company’s busi-ness strategy, focus on how to implement it. The key isto state the company’s goals in such a way that employ-ees understand their roles, and the organization knowshow to measure its success in achieving them.

Step 2: Build a Business Case for HRAs a Strategic Asset

Human resource professionals need to build a clearbusiness case for why and how HR can support thestrategy. That business case must include a recommen-dation for the implementation or expansion of a High-Performance Work System (HPWS).

Step 3: Create a Strategy MapDevelop a strategy map that illustrates how the com-

pany creates customer value — essentially a diagram ofthe value chain. To draw the diagram, you need to ask aseries of questions about your company’s strategicobjectives, including:

● Which strategic objectives/goals/outcomes arecritical?

● What are the performance drivers for each goal?● How do we measure progress toward these goals?● How do employees need to behave to achieve

these goals?● Does HR provide employees with the necessary

competencies and behaviors?Once you think you have a picture of the company’s

value chain, translate the information into a conceptual

model using language and graphics that make sense inyour organization. Test for understanding and accept-ance in small groups of opinion and thought leadersthroughout the firm. The strategy map you create con-tains hypotheses about which organizational processesdrive firm performance. The map might show, for exam-ple, that a short research and development cycle is keyto the performance and success of your company.

Step 4: Identify HR DeliverablesWithin the Strategy Map

Think in terms of identifying strategic behaviors HRcan deliver. For example, if your firm decides that achiev-ing a short research and development cycle requiresemployee stability (in other words, low turnover), youwill want to design HR policies that encourage stability.

Step 5: Align HR ArchitectureWith HR Deliverables

Your company’s HR architecture must be designed toallow HR to deliver the training, recruiting and reten-tion goals necessary for the company as a whole toachieve its strategic goals.

For example, in step 3, you identified R&D cycle timeas an important performance driver. In step 4, you identi-fied employee stability as the HR deliverable that enablesthat performance driver. In step 5, you might identifymarket rewards and career opportunities as HR systemelements that ensure employee stability and thus improve

R&D cycle time. Thisintersection of the HR sys-tem and the company’sstrategy (represented by thestrategic performance driv-er) is illustrated at left.

3

The HR Scorecard — SUMMARY


How HR Destroyed ValueWhat HR should not do is illustrated by the

actions of a banking business that attempted to cutcosts by moving to a part-time teller staffing model.When the company let go its full-time tellers andhired part-time ones, it looked as if it were savingmoney. But after a short time, it became obviousthat something was wrong. When full-time manage-ment positions opened, there were few interestedtellers. Hiring had to take place from the outside.The reason is that tellers attracted to part-time posi-tions aren’t interested in management positions; bycutting its full-time staff, the company lost its mostpromising pool of promotion candidates.

(continued on page 4)

Intersection of HR with Strategy Map

HR Deliverable(enabler)

Single Performance DriverFocus of HR SystemAlignment

• Market rewards• Career opportunities

Senior staffemployment stability R & D cycle time

Step 6: Design the StrategicHR Measurement System

After you have laid the groundwork, it’s time todesign your HR measurement system. Develop validmeasures of the HR deliverables required to meet yourstrategic objectives. Take the example of employee sta-bility. There are several ways stability can be measured.You will have to define who is a senior staffer (perhapsthose with more than five years of professional experi-ence) and what you mean by stability (perhaps allturnover or only voluntary turnover, but not promo-tions). The HR measurement system you develop willbecome your HR Scorecard.

Step 7: Implement Management by MeasurementOnce the HR Scorecard is developed, you will have a

powerful new management tool. A good example is whathappened at GTE when it implemented an HR Scorecardsystem. GTE had always measured turnover rates, buthadn’t really related those rates to the company’s overallprofitability. Once the Scorecard was implemented, GTEsaw exactly where turnover rates were up. HR interven-tions were then developed to stem turnover, with dramat-ic improvement in overall business unit performance. ■

Creating the HR ScorecardThe HR Scorecard is a strategic HR measurement

system that will help you measure, manage andimprove the strategic role of your HR department.

The Scorecard consists of measurements of:1. HR deliverables.2. HR policies, processes and practices.3. HR system alignment.4. HR efficiency.To introduce these four dimensions of the HR Score-

card, we’ll use the case of a company we’ll call HiTech.

HR DeliverablesHiTech wants to focus on its R&D function and

explore HR’s potential role in the company’s strategicplan. The R&D unit has profitability goals for both rev-enue growth and productivity improvement. These arethe two important performance drivers of its strategy.

HiTech’s revenue growth derives from increasedcustomer satisfaction, which is boosted by productinnovation and reliable delivery schedules. Productinnovation depends on experienced, talented staff inresearch and development. Reliable delivery depends

on optimal staffing levels in the manufacturing units. HiTech’s productivity improvement results from

optimal production schedules — which also depend onoptimal staffing levels in the manufacturing units.

Thus, the two HR deliverables that will support thecompany’s strategic goals of revenue growth and pro-ductivity improvement are:

● experienced, talented staff in R&D, and ● optimal staffing levels in the manufacturing units.

HR Policies, Processes and PracticesThe next question to ask yourself is, “What are the

high-performing policies, processes and practices thatwill help generate the HR deliverables required to sup-port my company’s strategy?” The authors call the setof policies, processes and practices that specificallyhelp to generate strategic HR deliverables a High-Performance Work System (HPWS).

To develop and keep an experienced, talented staff inR&D at HiTech, human resources must create compe-tency-based selection methods and retention programsfor prospective and current employees. This allowsonly talented employees to be hired. Regular perform-ance appraisals are also important to ensure thatemployees are maintaining the required talent andexperience level.

A short recruiting cycle — that is, the length of time

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Implementing HR’s Strategic Role:A Seven-Step Model(continued from page 3)

Cause and Effect at GTEA good performance measurement system allows

you to draw causal inferences about the relationshipbetween a decision and a result. For example, youmight need to know whether a change in the incentivesystem will produce a change in employee perform-ance and if so, how much. The most commonly usedmeasure of a statistical relationship between causeand effect is the correlation coefficient. Correlationcoefficients describe the extent to which two variableschange together and range from -1.00 to +1.00.

GTE’s Network Services Unit hypothesized thatmarket share was driven by customer valuation of itsservice, which in turn was driven by customer serv-ice quality, brand advertising and inflation. The driverfor customer service was assumed to be a set ofemployee behaviors focusing broadly on employeeengagement. Thus, GTE created an “employeeengagement index” or EEI, based on seven questionsfrom a GTE employee survey. When the data wasanalyzed, GTE found that a 1 percent increase in theEEI resulted in a 1/2 percent increase in customersatisfaction.

it takes for HR to fill vacancies — will maintain stafflevels at optimal levels, the second HR deliverable.

HR System AlignmentHere is where you focus on the specific elements of

the system that must reinforce each other to producethe HR deliverables. For example, competency-basedrecruiting is essential to HiTech’s strategic priorities.Therefore, HiTech can measure how well its HR systemis aligned to its strategic goals by monitoring howmany new employees were selected based on the com-petency model — and how many of those employeescame in at the highest quality level.

The HR department must also provide the types ofbenefits that will retain R&D staff (thus allowingHiTech to meets it product innovation needs). Andsince the recruiting cycle time for the manufacturingdivision affects optimal staffing levels, HR mustattempt to keep this cycle as short as possible.

HR Efficiency MeasuresThe final step in developing the measures for an HR

Scorecard is to identify the exact tasks at which HRmust be efficient to support the company’s strategic

goals. HiTech, for example, could identify cost per hireas a strategic measure. While cost per hire might behigher than average, this cost represents a strategicinvestment in the company — because the benefits ofthe company’s hiring processes will also be higher thanaverage.

Which Measures Go into the Scorecard?To transform the four dimensions into an HR

Scorecard, you need to determine the right measuresfor each dimension.

The High-Performance Work System, which is key tomaximizing employees’ performance, is the foundationfor building HR into a strategic asset. Questions thatwill create High-Performance Work System meas-ures to use in the Scorecard include the following:

● How many exceptional candidates did we recruitfor each strategic job opening?

● To what extent has the company developed validat-ed models for hiring, developing, managing andrewarding employees?

● How many new hires were selected based on thosemodels?

● How many hours of training do new employees get?● How many employees get formal performance

feedback from multiple sources?

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Creating the HR Scorecard(continued from page 4) Cost Control vs. Value Creation

Traditionally, HR efficiency was measured by theinternal costs it saved. Reducing HR costs, howev-er, does not create long-term value to the organiza-tion. One reason is that the cost savings are notsubstantial enough to affect shareholder value. Andany competitive advantage gained from an efficientHR function will be quickly lost as competitorsadopt the same practices.

However, if HR helps the company’s line opera-tions to reduce costs, it is significantly contributingto the company’s success. For example, if HR’s effi-cient recruiting processes create a high-level R&Dstaff, which, in turn, enables the company to leadon innovation, HR has created value.

Of course, human resources can’t focus exclu-sively on creating value while ignoring the need forinternal efficiency. Your HR Scorecard needs toemphasize HR’s value creation, but should be tem-pered by attention to efficiency. Specific, cost con-trol comes through measuring HR deliverables, HRsystem alignment and the High-Performance WorkSystem. Cost control comes through measuring HRefficiency.

HR SYSTEMALIGNMENT

HRDELIVERABLES

HIGHPERFORMANCEWORK SYSTEM

HR Scorecard for HiTech’s R&D Function

• Extent to which a validated competency model serves as the basis for hiring, developing, managing and rewarding employees

• Percentage of the work force that is regularly assessed via a formal performance appraisal

IMPACT

In R&D• Percentage of selection decisions based on competency model

• Percentage of hires made at “elite” level

• Extent to which appropriate retention policies have been developed and implemented

• HR Alignment Index above 80 percent

In Manufacturing• Recruiting cycle time at or below 14 days

• HR Alignment Index above 80 percent

• Percentage of employees who have the requisite technical competencies

• Percentage of turnover among high-performing R&D scientists

• Percentage of open job requisition in manufacturing Lower

R&Dcycletime

HREFFICIENCY

• Cost per hire

● What percentage of employees are eligible forincentive plans and profit sharing?

The HR system alignment measures must be direct-ly linked to the HR deliverables that impact companystrategy. As discussed above, start by identifying thestrategic HR deliverables, then identify and measure thesystem elements that make a significant contribution toparticular HR deliverables (see chart on Page 3).

Because both the HPWS and system alignment meas-ures are intended for internal HR use, you can simplyrepresent the “score” of these measures as toggles onthe scorecard. These toggles would indicate “satisfacto-ry” or “unsatisfactory” in the case of HPWS measuresand “alignment” or “misalignment” for system align-ment measures.

When choosing HR efficiency measures, you mustseparate measures that impact a company’s strategy fromthose that don’t. Core efficiency measures are those HRexpenditures that make no direct contribution to the com-pany’s strategy implementation, but must still be takencare of. Examples include workers’ compensation costper employee and the percent of correct entries made tothe HR information system. Strategic efficiency measuresassess the efficiency of HR activities the produce HRdeliverables. Although it is important to know the costsof workers’ compensation benefits and the accuracy ofinternal data entry, these items don’t add to the overallstrategic value of HR to the company. However, strategicefficiency measures, such as the cost per hire, cost per

training hour and HR expense per employee, can yieldconsiderable strategic value.

Finally, many HR managers are tempted to think ofHR deliverables only in terms of organizational capa-bilities, such as corporate leadership. However, the HRdeliverables in the Scorecard can have a more concrete,measurable impact on the success of the company’sstrategy. HR enablers (such as employee stability) thatare tied to specific performance drivers (such as R&Dcycle time) make a more compelling case for HR’sstrategic importance. ■

Cost-Benefit Analyses For HR Interventions

A complementary process to the HR Scorecard is an HRcost benefit analysis. While the Scorecard identifies whereyour company’s HR department wants to be to achievestrategic goals, HR cost benefit analysis helps your com-pany choose how it will get there by looking at the ReturnOn Investment (ROI) of HR programs and policies.

Determining the ROI of a particular HR policy orpractice isn’t complicated. Essentially, you need toassess the total costs and total benefits associated withthe investment and then calculate benefits less costs. Thechallenge lies in collecting or estimating data. Costs areborne today, but benefits are most likely going to showup in the future. Come up with plausible estimates.

What to Count, What to IgnoreTo generate estimates, you need to know what to count

as cost and what to ignore. There are two major types ofcost — fixed and variable. Fixed costs are those thatdon’t vary with the level of production. For example, ifyour company has a training center, some costs associat-ed with the building are fixed — they don’t changewhether you have one class a week or ten in the facility.But other costs are variable — they increase or decreasedepending on how many classes use the building. It takesmore electricity to run the computers and the restroomsrequire more supplies when usage goes up.

Again using the training center as an example, howwould you estimate the cost of providing a new trainingprogram for mid-level managers? Suppose the trainingcenter is operating at 60 percent capacity and your pro-posed program would boost that to 80 percent? Do youtake the fixed costs of running and maintaining the cen-ter and add them to your cost estimate? Using conven-tional accounting principles, you would. But that willincrease the costs of your project and decrease the ROI.Instead, it may make more sense to just add in the addi-tional variable costs.

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How One Company MadeHR Central to Its Strategy

When a major international consumer-productsfirm wanted to dramatically restructure its leader-ship capabilities it took four steps. First, it deter-mined that leadership talent was a strategic require-ment: The company with the best leadership talentwould win in the marketplace. It then developed itsown proprietary leadership competency model. Thenext step was to take the executive search processin-house. Finally, in support of the process, it addeda powerful staffing information system that let man-agers rapidly and effectively identify available mana-gerial talent. While HR departments traditionallysupport the search for corporate staff, this depart-ment’s detailed, strategic-driven and measurableleadership search process transformed a traditionalHR activity into a corporate strategic asset.

Creating the HR Scorecard(continued from page 5)

Employee PerformanceYou also have to understand the financial impact of

employee performance. Determining the ROI in peoplerequires comprehending the impact of high- and low-performing employees on the firm. The question iswhether, on average, employees in a particular job con-tribute a little or a lot to the firm’s success.

Assuming employees in a category contribute to prof-itability, you next need to gauge the variability of theimpact of employee performance on firm financial per-formance. For example, if the very best employees in ajob category only contribute a little more than the averageemployee, there is no need to invest additional resourcesin attracting, selecting and developing people like thebest employee. But if the difference on the bottom line isgreat, you will want to consider making the investment.

Net Present ValueAssuming you have determined that training will make

an average worker into an excellent worker, you can fin-ish calculating the ROI of your proposed training pro-gram. The hardest part of the calculation is that much ofthe benefit you will reap won’t occur immediately. Youwill need to calculate the Net Present Value (NPV) ofthe benefit the company will reap over the years. NPVanalysis draws together costs and benefits over multipletime periods, and compensation for uncertainty, lostopportunity costs, and costs of capital to assess the over-all potential value of a proposed HR program.

To calculate net present value, you need to restate theprogram’s costs and benefits (both present and future)in today’s dollars. Then, subtract the present value ofcosts from the present value of benefits, to yield the netpresent value for the program you are proposing.

For example, assume that you are planning a newintegrated performance management and incentivecompensation program. The total program cost will be$250,000. You estimate that the program will increaseannual profits $270,000 per year for five years.Because the program involves incentive pay, it will alsoincrease wages by $130,000 per year. Should you rollout the program, assuming your company’s marginalcost of capital is 14 percent?

The answer is yes, since, as the calculation belowshows, the net present value is $280,620. (Note: Thefactors used in the calculation can be found in anyintroductory financial analysis textbook.) ■

CompetenciesFor HR Professionals

How do you make sure you have the skills to imple-ment the changes to your company’s HR system andbecome a strategic asset? Doing so may require compe-tencies that are new to you. Indeed, this approach toHR requires transforming the profession.

The past decade has seen the professionalization ofHR. For example, the National Association for HumanResource Management now boasts more than 150,000members. There is a certification assessment sponsoredby that association, as well as graduate degrees inhuman resources. Underlying this movement towardprofessionalism are a body of knowledge, a set ofexpected behaviors and specific outcomes for thosedoing HR work. These are the core competencies HRprofessionals need.

Competence refers to an individual’s knowledge,skills, abilities and personality characteristics thatdirectly influence his or her job performance. HR com-petencies can be broadly classified into five categories.

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Cost-Benefit Analyses For HR Interventions(continued from page 6)


Beware of Sunk CostsDon’t be so enamored of projects that you persist

in pouring more assets into them only to get dimin-ishing returns. Suppose you had begun restoring anold car and have invested $25,000 in it. These areyour sunk costs. If you sold it today, it would fetchyou $15,000, a $10,000 loss. If you finish the car, itwill cost an additional $20,000 and be worth$30,000 and your loss would increase to $15,000.The same applies to programs you have begun butwhich are obviously not going to pay off as youexpected. Don’t throw more resources at the proj-ect, only to guarantee that the loss will be greater.

YEAR

1

1-5

1-5

EXPLANATION

Program developmentcost

Increased wages

Increase in annualcash flow fromoperations

AMOUNT x

-$250,000

-$130,000

+$270,000

FACTOR =

1

3.433

3.433

PRESENT VALUE

-$250,000

-$446,290

+$926,910

NET PRESENTVALUE: $280,620

These are:Knowledge of the Business. HR professionals must

understand how the company they work for operates.That understanding lets you adapt HR activities tochanging business conditions. Only by knowing thefinancial, strategic, technological and organizationalcapabilities of your organization can you play a valu-able role in strategic discussions. You don’t have tohave the ability to manage all these business functions,but you must at least understand them.

Delivery of HR Practices. HR professionals at thevery least must be experts in their specialty. Knowingand being able to deliver state-of-the-art, innovative HRpractices builds your credibility and respect. You mustcontinually update your knowledge and skills, andadapt what you learn to your organization’s uniqueneeds and strategy.

Management of Change. Another essential skill forHR professionals is the ability to manage change. Youneed to be able to refocus your organization and the HRdepartment in response to new strategic directions. Toorchestrate change, you must be able to diagnose prob-lems, build relationships, articulate a vision, set a lead-ership agenda, solve problems and implement goals.

Management of Culture. Companies with strongcultures (measured as the extent to which employeesshare the values of the firm) achieve higher perform-ance than those with weak cultures. HR professionalsare keepers of the culture because the systems theyimplement for employee selection, training, promotionand reward determine whether the company’s cultureremains or becomes strong.

Personal Credibility. In addition, HR professionalsmust have personal credibility by living their compa-ny’s values. These values typically include openness,candor, the ability to be a team player, the capacity totreat individuals with respect, a concern for due processand an insistence on the highest performance for HRexecutives and their staffs. In short, you must build ahigh level of trust.

Strategic HR Performance Management:A New HR Competency

A new competency can be added to the five basicones outlines above. That competency is Strategic HRPerformance Management. It is defined as the ability toorchestrate a company’s strategy implementationthrough the use of balanced performance measurementsystems. It is essentially measurement-led management.

To build this competency, human resource managers

must understand strategic measurement along twodimensions. They must know what to measure and howto measure it. The “what” is strategy implementation.The “how” is the technical process of measurements.You will need to:

● Exercise critical causal thinking as you develophypotheses about what creates value for the com-pany.

● Understand principles of good measurement.● Estimate causal relationships between HR and

form performance. ● Communicate HR strategic performance results

to senior line managers.

ImplementingThe HR Scorecard

Developing an HR Scorecard and actually imple-menting one are two different things. You will need tobuild acceptance of the Scorecard within your organiza-tion. Change is difficult to implement in any organiza-tion. Most problems occur not from misunderstandingof what to do, but from a lack of discipline about howto do what needs doing.

Here are seven guidelines for the successful imple-mentation of your Scorecard:

Leading Change. You will need to enlist two spon-sors — a line manager and the head of HR. You willalso need someone on the team who specializes in HRmeasurement and an advisory team to supervise thework.

Creating a Shared Need. You must create a businesscase for the use of the Scorecard. Share this with linemanagement and the HR department and allocatebetween 3 percent and 5 percent of the HR budget tomeasurements.

Shape a Vision. You must articulate the desired out-come of using the Scorecard by preparing the keymeasures to be tracked. Define decisions that will bemade based on the measures, and figure out how youwill collect the data needed for the measurements.

Mobilize Commitment. Identify the key playerswhose support you need and engage them.

Build Enabling Systems. Put the right people on theproject, give them incentives, have them report to theright people, and invest in the technology needed.

Monitor and Demonstrate Progress. Develop aproject plan.

Make It Last. Start with simple measures, makethem visible, post the results and change the measuresas required by changing conditions. ■

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Competencies For HR Professionals(continued from page 7)

The HR Scorecard

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