The Balanced Score Card Concept

Question:

What is the balanced score card concept and how do I go about implementing balanced scorecard in my organization?

Answer:

For this question we turned to Linda Gravett, PhD, SPHR, CEQC of Gravett and Associates and President/CEO of Just The Basics for her expertise on the subject.

The balanced score card concept has been adopted by several U.S. organizations in the last few years as a methodology to ensure focus on only the most important priorities for the organization’s long-term success. To learn how it is applied in Human Resources, Linda Gravett recommends reading The HR Scorecard: Linking People, Strategy, and Performance, by Brian E. Becker, Mark A. Huselid, and Dave Ulrich. This book is available on amazon.com or through the library at the Society for Human Resource Management (www.shrm.org).

The balanced score card principle suggests that Human Resources (as well as any other divisions within an organization) needs to become a strategic business partner with the top leadership and line managers. In order to accomplish this objective, a division must clarify and measure its contributions to the organization’s success. For instance, a critical Human Resources function is to recruit, develop and retain quality employees. If the HR Department can recruit the right people and put programs in place to keep them productive and happy with the company, there’s a savings in turnover costs that’s quantifiable. In an IT organization, the critical employees are of course those with technical skills in the IT area. HR contributes to the company by recruiting, developing and retaining those key staff.

The focus of the balanced scorecard concept is measurement. For example, HR “deliverables” might be the percentage of employees who have the requisite technical skills and competencies to perform IT consulting activities for clients; the percentage of turnover among high performing employees; and the percentage of open jobs in key organizational departments.

The starting place to establish a balanced score card is the organization’s strategic plan. Each division within the company wants to engage in activities that support and align with the strategic objectives.

If a division is engaging in activities that can’t be directly linked to the strategic plan objectives, they should be either eliminated or moved to a low priority.

Another good resource for additional information is www.balancedscorecard.org.

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