HR strategy forum: Using a balanced scorecard

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The dilemma
Using a balanced scorecard

I am the HR director for an UK-based global technology company employing
about 7,000 people. The company was formed as the result of the merger of two
similar sized companies, one of which had acquired a company about a third of
its size the year before.

As part of building the new company, the chief executive wants to introduce
a balanced scorecard. He has commissioned the strategic planning director to
set it up.

She has formed a steering group made up of the finance director, the
internal IT director and me. We have had a presentation from a specialist
consultant, who is expected to work with the committee on applying the balanced

My experience of scorecards is limited to an aborted initiative in my former

The plan is to introduce the scorecard at board level and the two management
levels below. I am required to recommend items for inclusion in the ‘People,
Learning and Innovation’ perspective. The challenge is not only to choose the
factors to be used, but to ensure they can be measured.

Each company had its own performance indicator system and there is little
crossover in how people are classified. One company used to do regular employee
surveys, but the other two did not.

Our aim as an HR team is to be seen as a credible business partner, so how
can we maximise HR’s contribution to the group?

Solution 1
By Marie Gill, head of organisational development, Asda

The balanced scorecard is a
management system – not only a measurement system – which enables organisations
to clarify their vision and strategy, and translate them into action. You view
your organisation from four perspectives, each of which needs objectives,
measures, targets, and underpinning initiatives. These are: learning and
growth; business process; the customer; and the financial perspective, ie, how
you appear to your shareholders.

Step 1 Clarify your vision and
business strategy. Identify the ‘five to drive’ within the combined
organisation for the next year or so. Integration of key business processes
would be one, maximising sales opportunities internationally another, but there
will be more. When compiling the list, ensure agreement to it from all business

Step 2 Define the HR strategy
which supports delivery of this vision. This will include integration of people
issues, management style, morale, employee understanding of business objectives
and how the organisation will work. Articulate what the world will look like at
various stages along your timeline. Ensure other business leaders can see how
your strategy supports the business plan.

Step 3 Develop your
measurement processes and targets. Take account of the different mechanisms
within each of the merged businesses as it may be necessary to compromise on
accuracy in order to get common data as you are looking for trends. Consider
reinventing your attitude survey across the business for targeted feedback on
morale, style, training, and communication matters. Also consider:

– People – absence, payroll, system conversion programmes and
attendance at organisational integration workshops

– Learning – training completion, succession planning, internal
promotions, mentors

– Innovation – good-ideas scheme, speed to market of new
products, shared process improvements.

Step 4 Link achievement of the
business priorities into the performance management system. Your senior
managers should reflect the ‘five to drive’. For each area of the business
these can be translated into department, team, and individual performance indicators
and targets. Use behavioural measures as well as hard measures. Your strategy
needs to develop these in conjunction with business leaders and end users.

Step 5 Engage those who will have influence. Set a plan
to communicate the scorecard philosophy and what will be measured to those who
will manage achievement. Until the system is bedded in and robust, it may be
that only the top layers of the organisation are briefed – but have a plan to
roll this out provided that the measures and targets are relevant to your

Solution 2
By Andrew Mayo, director, MLI

HR needs to be seen as a serious
business partner – not just to co-operate with the business, but to provide
some kind of lead. However, you should be wary of the pitfalls arising from
picking measures just to complete the boxes, and the problem of getting
credible indicators measured in a standardised way.

Step 1 The first priority would be to demonstrate a
broader interest in performance management than just the ‘people’ perspective
of the scorecard. The rationale is that the end result is likely to be
reflected in incentive schemes and your concern should be that it all hangs
together. You would need to influence the steering group to establish
cause-and-effect relationships between the overall business goals and the
measures to be chosen, so that measures are fully integrated.

Step 2 The fact there are
three performance indicator systems is a problem that other measurement areas
will have – except for finance, which is usually integrated first. So each
director will have the same problem of getting a consistent approach across the
new company. However, do not go just for what is easy to collect – the chosen
measures must be useful and be critical in the strategic chain of cause and

Step 3 Do not feel you should
have all the same measures for each level in the project, or for each business
unit. The object is to effectively manage performance towards strategic goals –
what affects performance at level 3 may not be the same as level 1; what
matters in one business area may be less important in another. It is specifics
that make a difference, not generalisations.

Step 4 Across HR, survey and
audit the data you do have, business unit by business unit. Based on the chosen
measures agreed with the steering group, what can you build on? What do you
need to create? How long will it take? This may lead to a phased introduction
of the scorecard. Make sure the consultant does not lead the group into his/her
pet solutions – and works only to support the agenda of the steering group.

How the forum works

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marked ‘strategic dilemmas’, to [email protected]

Duncan Brown, Assistant director general, CIPD

Paul Kearns, Director, PWL

Jim Matthewma,n Worldwide partner,
Mercer Human Resource Consulting

Andrew Mayo, Director,MLI

Louise Allen, Director, LAPartners

Penny Davis, Head of HR operations,

Marie Gill, Head of organisational
development, Asda

Neil Roden, HR director, Royal Bank
of Scotland

Ralph Tribe, Vice-president of HR,
Getty Images

Dilys Winn, HR director,
Gloucestershire County Council

Margaret Savage, Head of HR strategy,

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