Your human resources department, or HR, is a vital part of your business. These professionals should act as intermediaries between the business and the employees. They should keep the staff satisfied without hurting the bottom line.
How do you know if your HR department is doing the right things? A balanced scorecard in human resource management can help. These visual representations ensure that the HR department meets its goals.
What is an HR Scorecard?
Like rubrics in school, scorecards give HR professionals defined goals and metrics for measuring success. A successful scorecard should be easy to read and understand. Great communication can help your HR team understand the expectations you have and stay on track to meet those objectives.
On the scorecard, be sure to include goals for any part of HR that impacts the business as a whole. While this certainly includes financial aspects, you should also use other metrics. For example, you may have a section of the scorecard meant for hiring. You may include information such as the costs per new hire as well as time spent with vacancies.
The Parts of a Balanced Scorecard
Each section of your people scorecard should include four distinct parts: the objective, description, actions and measures. The objective should concisely state the goal of the section. In the description, you can expand on the objective. Explain what success looks like and what the HR team's role is in meeting the expectation.
The actions further expand on what you expect the HR team to do as they work toward the objective. These should be specific and measurable actions. You should not include vague ideas like, "make our company a better place to work." That example would be an objective, not an action.
Finally, you should include ways that you will measure the success of the initiatives. While you should include cost-associated metrics, you should also consider other measurements. This is where the balance comes in.
You can organize these parts in any way that makes sense for your business. The important thing is to communicate each of these pieces for each goal succinctly.
A Scorecard Example
Objective: To reduce workers' compensation spending.
Description: Develop worker safety programs to decrease workplace injuries and costs from compensation settlements.
Actions: Identify the most common causes of workplace injuries.
Develop training programs that directly address these dangers.
Ensure each employee and new hire receives proper training.
Measures: Reduce annual worker compensation spending to $X,XXX.
Limit workplace injuries to X per year.
Include the Right Objectives
There's more to creating an effective HR scorecard than completing each section. Leaders should first ensure that each objective works toward an overarching business goal. Do not give your HR team 'busy work' or accidentally have them work against your plan.
Remember that meeting objectives in one area may hurt another area. For example, you may want to decrease turnover. However, without the right strategy and data, this could negatively impact your customer relations. If customers seem to dislike or react poorly to a team member, it's probably not worth it to keep him around for the sake of reducing turnover.
While reducing turnover should be a part of your scorecard, ensure that the actions and measures are reasonable. If it is significant to your business plan, include it in the scorecard, but do so wisely.
Use the data you have on your business, customers, employees and industry to determine what objectives you should include. Data is helpful to guide your business, and an HR objective can help you create specialized plans. Furthermore, this fact-based approach gives you more credibility with your HR team.
When you think about the objectives you want to set, focus on several areas of your business. Think about your company's finances, internal relations, reputation with customers and overall growth.
Mackenzie Maxwell is a small business owner. She has two businesses, including a martial arts gym in Texas. Prior to building her own, Mackenzie worked with small businesses and organizations to create effective marketing - from churches to insurance companies. She enjoys helping businesses with the startup spirit grow. Mackenzie has been writing in this field for six years and shows no signs of slowing.