Review: The HR Scorecard: Linking People, Strategy, and Performance [Free PDF]

Ngoc Anh Luong
Ngoc Anh Luong
Head of Digital Marketing at traicie - The best AI-powered talent sourcing tool for recruiters
Table of contents

The HR Scorecard Book Description

Three experts in Human Resources present a measurement system that persuasively illustrates how HR influences business performance. This book describes a seven-step process for integrating HR systems into a company’s overall strategy—what the authors call an “HR Scorecard”—and measuring its activities in terms that will be compelling to line managers and CEOs.

This critical book heralds the emergence of HR as a strategic force in modern organizations by analyzing how each component of the HR system can be designed to improve company performance and maximize the overall quality of human capital.

The HR Scorecard: Linking People, Strategy and Performance Review

This comprehensive summary of the concepts from the book “The Human Resources Scorecard” by Brian Becker, Mark Huselid, and Dave Ulrich introduces a measurement system demonstrating how HR impacts business performance.

The “Human Resources Scorecard” compares business strategy to HR deliverables and objectives with the goal to provide a statistical basis for measuring HR efficiency and contribution to strategy execution. In their book, the authors offer a seven-step model for integrating HR systems into an organization’s overall strategy. This summary will instruct you on how to maximize the overall quality of human capital in your organization by utilizing this resource.

This summary’s added value is as follows:

• Save time

• Understand key concepts

• Increase your knowledge

Let’s find out how to maximize the performance of your employees using this strategy.

BEFORE YOU BEGIN READING THIS BOOK, TAKE SOME TIME TO REFLECT ON YOUR COMPANY’S “HUMAN RESOURCES ARCHITECTURE” – the sum of the HR function, the broader HR system, and the employee behaviours that result from these factors. Why are these three characteristics significant? How does the HR architecture contribute to your company’s market dominance?

The HR Scorecard: Linking People, Strategy, and Performance

In a typical organization, you’re likely to struggle with answering these questions. Many HR management teams have a well-developed vision of their department’s strategic value (at least from the perspective of HR). In contrast, at best, the CEO and senior line managers are sceptical of HR’s contribution to the organisation’s success. Worse, in many organizations, executives want to believe that “people are our most valuable asset,” but they do not comprehend how the HR department makes this vision a reality.

We believe these issues have the same root cause: the difficulty in measuring HR’s impact on business performance. Therefore, consider the elements and outcomes of your company’s human resources architecture if they are regularly monitored.

You could have also included employee attitudes such as job satisfaction. Consider the Human Resources characteristics that you believe are essential for successfully implementing your company’s competitive strategy. You could mention a capable and dedicated workforce, the development of crucial employee competencies, or a training system that enables your employees to learn more quickly than your competitors.

What are your Strategic HR Drivers?

How well do your existing HR measurements capture the “strategic HR drivers” you identified in your second list? There won’t be a close match for the majority of businesses. Even in organizations where HR professionals believe there is a close match, senior executives frequently disagree that the second list accurately describes how HR creates value. In either case, there is a mismatch between what is measured and what is significant.

These questions are fundamental because new economic realities are putting pressure on human resources to broaden its focus from the administrative role it has traditionally played to a strategic role. As the primary production source in our economy has shifted from physical to intellectual capital, senior HR managers are under increasing pressure to demonstrate how they add value to their organizations. Moreover, they have played a more prominent role as strategic partners in business operations.

What does it mean, however, to be a strategic asset? Literature defines it as “the collection of difficult pain points to trade and imitate, scarce, appropriable, and specialized resources and capabilities that confer a competitive advantage on a business.”

Summary

Consider the distinction between the ability to align every employee’s efforts with the company’s overall vision and an innovative policy like 360-degree performance evaluations.

The first is a strategic capability whose underlying cause is mainly invisible to competitors.

In contrast, the second is a policy that is visible to competitors despite being initially innovative and could be quickly imitated.

Simply put, strategic assets maintain a company’s competitive advantage over the long term but are difficult to replicate by definition.

Do you know that traicie’s sourcing tools for recruiters can help the Recruiting Team with culture-based hiring but also increases the strategic, operational value of the recruiting process :

  1. Cost of a job board – Reduce annual spending on job boards
  2. Cost of HR tools – Reduce the cost of surveys and assessment tools
  3. Recruitment costs – Reduce selection costs
  4. Internal mobility – Fill more skilled jobs with internal staff
  5. Time to hire – Reduce the number of days a role goes unfilled
  6. Salary costs – Reduce overall salary costs
  7. Attrition – Reduce the rate of turnover
  8. Recruitment cost – Reduce the general recruitment cost

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