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Description of The Object: What Is A Balanced Scorecard

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Balance Score Card (BSC) is a management system which strategically plans various things to achieve certain goals. Basically, organizations use BSC to communicate to their employees what they want to achieve, so that employees can align daily work with the strategy being applied.Under this, organizations need to prioritize their work – projects, products and services. And then they, measure and monitor their strategic targets. It helps in viewing the bigger picture and connecting the dots between larger goals and operational elements.

The Balanced Score Card approach helps us in examining performances from the following four perspectives:

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  1. The Financial Analysis: It includes measures such as ROI, Sales Growth and Operating Income.
  2. The Customer Analysis: It includes Customer Retention along with their satisfaction.
  3. Internal Analysis: It looks at how the strategic goals and the business processes are interlinked with each other.
  4. The Learning and Growth Analysis: It helps in the assessment of the employee’s satisfaction and retention rates. It also measures the information system’s performance.The major two advantages of the four-pronged balanced score card approach were cited by Kaplan and Norton. Firstly, the competitive agenda’s desperate elements of the company are brought together within a single report. Secondly, Managers are forced to consider the costs of improvements and whether they are done at the cost another. This is achieved by having all the metrics together. Perspective Generic Measurements Financial Return of Capital Employed, Economic Value added, Sales Growth, Cash Flow Customer Customer Satisfaction, Retention, Acquisition, Profitability, Market ShareInternal Business ProcessIncludes measurements along the internal value chain for Innovation measures of how well the company identifies the customers’ future needs, operations measures of quality, cycle time and costs and post sales serives measures for warranty, repair and treatment of defects and returns.Learning and GrowthIncludes measurements for people i.e. employee retention, training, skills and morale. Systems measure of availability of critical real time information needed for front line employees.HR scorecard is based on the principle of balance scorecard. In an HR scorecard, the HR department decides upon the important objectives to focus on and then to decide the performance measures and targets which we need to achieve the objectives. And after this we decide upon the various HR projects that are most important for the organization’s strategy.The aim of an HR department is not of revenue generator. So the most important perspective for an HR department scorecard is meeting internal customer expectations. From an HR perspective,customers are – unions, employees, management etc. So under this the HR department needs to identify the Main concern areas for the customers to meet their expectations. This could be career planning, training and development, compensation etc.After this, comes the financial perspective. If an HR department wants to meet the above mentioned customer expectations, it needs to formulate a proper budget for it. HR department need to identify the key financial objectives to meet customer expectations. It need to measure and monitor whether the internal HR budgets and other investments have yielded results on time.Now, the next step would be to focus on key processes. To meet the above mentioned customer expectations and financial objectives, HR department need to focus on key processes. Redundancy should be eradicated. HR department need to identify important or mission critical projects or areas where the HR should focus. For example, attrition rate is increasing and reason is no career growth. The HR department should focus on training and development of employees first to tackle the problem.Lastly and the most important thing to do would be to find the right human capital framework and technology, so that every system is placed at the right place for the proper execution. It would lead to clarity in the work, roles and responsibilities, compensation structure etc. It would help in automating the HR system which consists of a lot of administrative work.

Key Implementation Success Factors

  1. Obtaining executive sponsorship and commitment.
  2. Involving a broad base of leaders, managers and employees in scorecard development.
  3. Choose the right Scorecard Champion
  4. Beginning interactive (two-way) communication first
  5. Viewing the scorecard as a long term journey rather than a short term project.
  6. Getting outside help if needed.Once all the important process are identified and the framework is in place, we need to identify important performance measures to track and Monitor HR performance. HR scorecard helps in making organizations more performance oriented. It might not able to generate wealth directly but it would definitely help in serving the expectations of its customers which will then work in alignment with organizations strategy.

Scorecard Potential Pitfalls and Criticisms

  1. Lack of a well-defined strategy: The Balanced Scorecard relies on a well-defined strategy and understanding of linkages between strategic objections and metrics. Without this foundation the implementation could fail.
  2. Too much focus on the lagging measures: Focusing on only the lagging measures may cause a lack of priority or opportunity for the leading measures.
  3. Use of Generic Metrics: Don’t just copy metrics from another film. Identify the measures that apply to your strategy and competitive position.
  4. Self-Serving managers: Managers whose goal is to achieve a desired result in order to obtain a bonus or other self-reward.


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