Looking to know more about the HR scorecard? You're at the right place then.
HR scorecard is a valuable HR tool that is used by many HR professionals. This article provides detailed guidance on what an HR scorecard is, how to create an HR scorecard, and its benefits. Let's start.
What is an HR Scorecard?
The HR balanced scorecard is a tool that allows you to track the performance of your human resources team.
HR scorecard provides the HR department with a comprehensive overview of all HR metrics at one glance. It makes it very easy for you to compare departments or even individual employees. And since it's based on accurate data, it will give you valuable insight into how any department or employee is performing, when compared to management's strategic goals, objectives, and benchmarks.
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So whether you're looking to assess the overall performance of your HR organization or want to evaluate each department's performance against its own goal and benchmark, this tool is part of a strategic HR measurement system that can help you make informed decisions about where to allocate more time and resources. It also offers an accurate understanding of the strengths and weaknesses of your department and identifies areas where improvement is most needed.
When Would You Use an HR Scorecard?
HR managers and human resource management can use the tool to:
- Evaluate and measure the effectiveness of human resource function and allocate budget towards HR initiatives
- Give clear insights into which human resources initiatives should be prioritized, and set realistic human resources targets
- Determine who needs support from HR and make informed decisions regarding resource allocation
In the best HR practices, this tool is also used to identify individuals who need extra attention. Provide feedback & development opportunities to manage HR activities better. Moreover, it is used to conduct annual reviews to Identify talent gaps.
Human resource Scorecards are available in two formats: Excel-based Scorecards and PDF-based Scorecards. Both versions offer the same functionality. You also have the option to choose between a monthly, quarterly, or yearly update frequency.
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How Do I Make an HR Scorecard?
For those new to creating HR Scorecards, we've provided detailed step-by-step instructions below.
Depending on which format you'd like to use, they may vary on a lighter note, but they follow these general steps:
1. Define Goals and Objectives
Goals may differ depending on what type of HR scorecard you're using. However, these goals must reflect company strategy and core business values.
For example, suppose your company has adopted lean principles as part of its transformation efforts. In that case, you could use the following HR deliverables and goals for your scorecard:
- Increase operational efficiency
- Improve customer service standards
- Reduce inventory levels
- Minimize costs
- Avoid unnecessary expenses to enhance business success
2. Determine Benchmarks
Once you've defined your goals, it's important to benchmark your department against them. The benchmarks must be specific and measurable. They shouldn't refer to "best practices" or "industry standards." Instead, they should be quantifiable measures that highlight vital results. For example, you would define six benchmarks to achieve a 10% reduction in cost per unit sold over the next 12 months. These might include: Achieving $5,000 savings over last year through improved quality and reduced waste Eliminating overtime hours for specific staff members Improving delivery times for outside and human resource customers from five days to three days.
3. Create Spreadsheets
Once you've defined goals, objectives, and benchmarks, it's time to start collecting data. For this, you could use any spreadsheet tool such as Microsoft Excel, Google Sheets, or Apache OpenOffice Calc. In most cases, your HR team will need to input all relevant data into the scorecard to ensure accuracy. For best results, prepare a draft first. This way, you can check for errors before entering the final version. It's also easier to correct mistakes at this stage.
If you want to know how to set up each section of your HR Scorecard, follow these simple instructions below:
- Goal Section. This section enables you to define goals, including whether to make changes based on previous data. Whether or not you decide to do this depends on what kind of HR scorecard you're setting up.
- Include Goal Definitions. A goal definition is a short statement describing the overarching outcomes associated with achieving that particular objective. Your HR team should keep track of the overall performance indicators for this purpose. You can do this by listing out the various activities involved in attaining those objectives, followed by when the training is done. If you choose to change these goals based on previous data, you'll find the data saved under the 'Change data' button in the 'Goal' section. It allows your organization to get back on track if something went wrong earlier. Use the same HR processes whenever you create new goals by defining objectives and measurements.
- Measurement Sections. You can break down the measurement sections according to the different types of analysis you wish to perform.
- Include Measurement in the Following Categories. For some companies, the best business strategy is to measure things in terms of financial returns, whereas others focus more on operational improvements. When creating a scorecard, we recommend that you pick one measurement approach and stick to it. That way, you don't end up wasting time trying to analyze trends based on mixed data. Once you've done this, you'll receive trend reports every quarter.
4. Aligning HR Systems
For some organizations, an effective strategy includes aligning their employee management system. EIS is a central repository where all information about employees — including payroll, attendance records, leave requests, etc. — is stored. In simple words, we can say that it's like your personal database. But there's no point in having an excellent EIS unless it supports your organizational goals. Therefore, design the systems so they are in sync with each other and are easy to utilize. You can try implementing the following steps to help you align your EIS:
- Gather Employee Data and Put it Into the System. When you sign up for a free account on HR software platforms such as PeopleSoft, SuccessFactors, or Workday, you can upload current personnel records to enable better visibility into data and processes. However, before you begin uploading employee data, you may want to think about how much you wish to reveal about your workforce to managers and supervisors. There are two ways to do that. On the one hand, you can allow managers and supervisors to see everything about their employees — even confidential details like bank statements and medical diagnoses. On the other hand, you can restrict access to only necessary parts of the information.
- Generate Employee Reports. You will agree on which types of reports you should provide. For example, many departments will insist on getting specific, detailed information while others won't care much about these reports. As long as your organization receives the raw data, everybody is happy. The good thing about centralized HR systems is that you can share the data among stakeholders via email or upload them onto an online portal.
5. Implementing HR Analytics
HR analytics refers to tools used to calculate statistics. The idea behind this decision is to give managers insight without giving away too many personal privacy details at the same time.
Once you've decided what access people will have to data, you can upload current personnel files. Remember, though, that HR professionals must review all contents before they're made available to anyone else. To do it in an efficient way, you should do the following:
- Implement Standardized Reporting. We know it is hard to make everyone happy. While most managers would love to see detailed employee data, they also prefer simple reporting formats not to spend hours analyzing figures. It's important to note that not everybody has the same preferences. Some departments — like HR — require detailed information while others — like marketing — need general statistics.
That being said, when you create a report, you can set different levels of detail so that everyone gets what he needs. If you're struggling with this step, check out our guide on standardized reporting in HR systems.
6. Taking Advantage of External Applications & Integrations
Integration is another crucial element of modern business technology in HR functions. Unfortunately, it hasn't always been straightforward to establish connections between HR tools and external applications. Today, however, integrating HR solutions is almost effortless. It means that your entire team can stay connected with critical information from outside sources.
For instance, if you belong to an industry that relies on CRM, you can add integrated data from your HR platform into the CRM without entering data by hand. Another advantage of integrating data from multiple tools is that your managers won't miss essential information. They'll get alerts whenever a new lead comes into play and gain valuable insights right away. As a result, they can optimize their decisions in accordance with that.
7. Using Big Data Analytics
Big Data is one of the hottest trends in today's tech market. After all, it allows companies to store large amounts of unstructured data. However, big data analytics isn't just about storing data; rather, it represents analyzing it. That's why businesses are turning to data scientists to help identify correlations between various factors and ensure optimal performance.
A well-designed system can generate meaningful results within minutes but requires a lot of manual entry work. On the other hand, a poorly designed system can create hundreds of false positives after several hours. It's worth noting that not every employee in the office is equipped for extensive data analysis. Instead, choose those who specialize in specific areas to perform this task. When the human resources management team is looking for qualified candidates, they should keep in mind that experience is more important than skills.
When we talk about the HR function and HR solutions, it doesn't mean that there aren't any viable alternatives. Indeed, there are plenty of platforms with comparable features. The problem is that most organizations find themselves using outdated software because it was the first to come along when they embarked on the best HR initiatives and practices.
HR scorecard is a report that you conduct to calculate the success rate of human resource employees and the overall department. Any HR professional looking to judge and assess the business performance and productivity rate can start making use of this report to get valuable insights into the work progress.
If you are new to Human Resources and are looking to break into any HR Operations position, we recommend taking our HR Certification Courses, where you will learn how to build your skillset in human resources, build your human resources network, craft an excellent HR resume, and create a successful job search strategy that lands you a sought-after HR Operations job.
Josh Fechter is the founder of HR.University. He’s a certified HR professional and has managed global teams across 5 different continents including their benefits and payroll. You can connect with him on LinkedIn here.