{"id":4855,"date":"2019-07-17T10:12:39","date_gmt":"2019-07-17T10:12:39","guid":{"rendered":"https:\/\/blog.synergita.com\/?p=4855"},"modified":"2019-07-17T10:12:39","modified_gmt":"2019-07-17T10:12:39","slug":"balanced-scorecard-in-hrm","status":"publish","type":"post","link":"https:\/\/newtest.synergita.com\/blog\/balanced-scorecard-in-hrm\/","title":{"rendered":"Balanced Scorecard in HRM \u2013 How to nail it?"},"content":{"rendered":"\n
Organization\u2019s financial performance is not the right indicator of its future growth. Nokia at its peak was a $300bn business. When Steve Jobs pulled a touch phone out of the hat, Nokia, the phone giant has fallen to its obscurity. Nokia didn\u2019t anticipate the tectonic shift of smartphone technology, they missed to innovate and keep bombarding their customers with newness. So, coming to my first sentence, a single metric alone is not enough for your business stability, sustainability and growth. <\/p>\n\n\n\n
A Balanced Scorecard that measures your business performance on Financial, Operational, Customer and Innovation fronts provides a comprehensive multi-disciplinary perspective of your business.<\/p>\n\n\n\n
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What is a Balanced Scorecard?<\/h3>\n\n\n\n
Business is more complex than rocket\nscience. During and after the rocket launch scientists monitor its ignition,\nengine, fuel, airlock, flight path, orbit, safety measures, transmission, etc.\nTo steer the business to its successful orbit you to monitor multiple\nparameters constantly. You need to get a handle on financial growth,\noperational effectiveness, customer satisfaction\/engagement and\nLearning\/innovation.<\/p>\n\n\n\n
Robert S. Kaplan & David P. Norton\ndevised the new Balanced Scorecard approach to overcome the inadequacies of\nperformance management systems that lean heavily on financial measures. According to them, Balanced Scorecard is a\nstrategic planning and performance measurement method that focuses on four key\nareas of business: <\/p>\n\n\n\n
Financial<\/li>
Customers<\/li>
Internal Process<\/li>
Learning & Growth<\/li><\/ol>\n\n\n\n
Balancing these 4 factors is the key to\nsustainable business growth. <\/p>\n\n\n\n
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How do you create a balanced scorecard for your organization?<\/h3>\n\n\n\n
Kaplan & Norton in their balanced\nscorecard method outlines 4 important business aspects that broadly fit for the\nmajority of the business types. Organizations can identify key parameters of\nthe business whose performance measures need to be monitored and analyzed for\nbusiness growth.<\/p>\n\n\n\n
Identify 4 or 5 key parameters to\nmeasure the balanced scorecard<\/li>
Determine strategic objectives\nfor each parameter<\/li>
Choose measures and indicators\nto track performance and milestone<\/li>
Set business goals or targets for\neach objective<\/li>
Ideate action plans and\ninitiatives to achieve the business goals<\/li><\/ol>\n\n\n\n
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Example of Balanced Scorecard<\/h3>\n\n\n\n
\n Balanced\n Scorecard Factors\n <\/td>
\n Strategic\n objectives\n <\/td>
\n Measures\n & Indicators\n <\/td>
\n Business\n Goals\n <\/td>
\n Initiatives\n <\/td><\/tr>
\n Safety\n Risk & Compliance\n <\/td>
\n Reduce\n safety issues\n <\/td>
\n Safety\n incidents\n <\/td>
\n Reduce\n safety issues to < 1%\n <\/td>
\n Identify\n new safety measures and update compliance standards\n <\/td><\/tr>
\n Learning\n & Innovation\n <\/td>
\n Expertise\n in AI\n <\/td>
\n Training\n certification\n <\/td>
\n 100%\n training in Dev team\n <\/td>
\n Partner\n with online courses providers\n \n <\/td><\/tr>
\n Business\n Outcomes\n <\/td>
\n Increase\n Revenue\n <\/td>
\n Financial\n statements\n <\/td>
\n Up\n net revenue by 10%\n <\/td>
\n Discover\n new revenue generating channels\n <\/td><\/tr>
What is a Balanced Scorecard in HRM?<\/h3>\n\n\n\n
In the balanced scorecard approach,\norganizations have to identify four important elements that are critical to the\nbusiness and whose metrics they need to ponder carefully. For each of the four strategic\nelements, companies would derive measures to track performance and targets for\neach measure. <\/p>\n\n\n\n
These business objectives and targets have\nto be decoded as employees\u2019 performance goals and targets, to bring complete\nalignment. Breaking down the business objectives into attainable SMART\ngoals\/OKRs help your employees get clarity on what they need to accomplish. Bringing\nthe balanced scorecard method into HR performance management measures makes it\npractical and achievable. <\/p>\n\n\n\n
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How to practice a balanced scorecard approach in performance management <\/h3>\n\n\n\n
Balanced scorecard based performance management\nprovides a quick and comprehensive view of business performance in all the key\nareas to the top management.<\/p>\n\n\n\n
Your employees\u2019 performance goals should\nreflect the important aspects identified in the balanced scorecard of your\nbusiness. For instance, an aerospace manufacturing company values the following\nas the most important aspects of their business growth.<\/p>\n\n\n\n
Safety Risk & Compliance<\/li>
Learning & Innovation<\/li>
Business Outcomes<\/li>
Operational efficiency<\/li><\/ol>\n\n\n\n
Each employee goals should be mapped to any\none of these perspectives. And employees must have goals covering all the 4 key\npillars of their business. <\/p>\n\n\n\n
Associate weightage for each measure based\non their job level\/position. For example, the VP technology has more weightage\nfor learning & innovation and business outcomes whereas the assembly floor\nengineers have more weightage for safety risk & compliance and operational\nefficiency. <\/p>\n\n\n\n
The weightage standardizes performance\nmeasures across all job positions. Hence we can compare the performance score\nof VP technology with assembly floor engineers as their final score is the\nweighted average of their respective goals.<\/p>\n\n\n\n
The overall employee performance on each of\nthe balanced scorecard measures can be viewed from the goal status summary\nreport.<\/p>\n\n\n\n
Synergita, the continuous employee\nperformance management software supports the balanced scorecard approach and\nlead, on-track and lag status on each of the parameters can be monitored\neffectively.<\/p>\n\n\n\n<\/figure>\n\n\n\n
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What is the advantage of a balanced scorecard in performance management?<\/h3>\n\n\n\n
Balanced scorecard approach provides a\nholistic way to measure, monitor and strategize business growth. Some of the\nadvantages of balanced scorecard in performance management are:<\/p>\n\n\n\n
Balanced scorecard approach provides a robust way to measure employee and business performance. <\/li>
It is easier to align employee performance with strategic objectives. <\/li>
Employee efforts are directed toward all aspects that impact business growth.<\/li>
Performance evaluation is not purely based on business outcomes but also includes other key factors<\/li>
Each employee is aware of his contribution to business success and feels more engaged and committed to their task.<\/li>
Managers have a clear view of how employee performance impacts business performance.<\/li>
It helps to monitor, manage employee performance and aid in decision making.<\/li><\/ol>\n\n\n\n
The success of the balanced scorecard\napproach lies in understanding the concept clearly and identifying the right\nparameters, objectives and action plans that suit your business. With this\napproach, the employees know where they fit in and how productive their efforts\nare in the larger scheme of business. For leaders, it gives a way to connect\nthe dots \u2013 the mission, vision, objectives, employees working on the\nobjectives, measure to track their progress and its success. <\/p>\n\n\n\n
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