This document discusses strategic human resource management and the HR scorecard. It begins with an outline of the strategic management process and different types of business strategies. It then explains what a strategic human resource management system is and why it is important to link HR with business strategy. The document introduces the HR scorecard approach for creating HR systems aligned with strategy. It discusses developing HR metrics and highlights, discussing topics like the importance of metrics, examples of metrics, data collection, and analyzing metrics. The presentation concludes with an explanation of how to develop an HR scorecard using a 10 step process.

1. Strategic Human Resource Management
and the HR Scorecard
Prof. Abhipsa Mishra

2. SHRM, HR Metrics and HR Scorecard; Prof. Abhipsa Mishra
Session objectives
1. Outline the steps in the strategic management process.
2. Explain and give examples of each type of companywide and
competitive strategy.
3. Explain what a strategy-oriented human resource
management system is and why it is important.
4. Illustrate and explain the HR Scorecard approach to creating
human resource management systems
5. Discuss HR Metrics
6. Elaborate High Performance Work Systems

3. SHRM, HR Metrics and HR Scorecard; Prof. Abhipsa Mishra
Strategic Human Resource Management
 It is the linking of HRM with strategic goals and
objectives in order to improve business
performance and develop organizational cultures
that foster innovation and flexibility.
• It involves formulating and executing HR systems—HR
policies and activities—that produce the employee
competencies and behaviors, that the company needs
to achieve its strategic aims.

4. SHRM, HR Metrics and HR Scorecard; Prof. Abhipsa Mishra
The Strategic Management Process
• Strategic Management
– The process of identifying and executing the organization’s
mission by matching its capabilities with the demands of its
environment.
• Strategy
– A chosen course of action.
• Strategic Plan
– How an organization intends to balance its internal strengths
and weaknesses with its external opportunities and threats to
maintain a competitive advantage over the long-term.

5. SHRM, HR Metrics and HR Scorecard; Prof. Abhipsa Mishra
Business Vision and Mission
• Vision
– A general statement of an organization’s intended
direction that evokes emotional feelings in
organization members.
• Mission
– Spells out who the company is, what it does, and
where it’s headed.

6. SHRM, HR Metrics and HR Audit; Prof. Abhipsa Mishra
Types of Strategies
Diversification
Strategy
Geographic
Expansion
Strategy
Vertical
Integration
Strategy
Corporate-Level
Strategies
Consolidation
Strategy

7. SHRM, HR Metrics and HR Audit; Prof. Abhipsa Mishra
Types of Strategies (cont’d)
Cost Leadership Focus/Niche
Business-Level/
Competitive Strategies
Differentiation

8. SHRM, HR Metrics and HR Scorecard; Prof. Abhipsa Mishra
Porter’s generic strategies
1. Overall cost leadership (McDonalds, Wal-Mart)
• Low-cost-position relative to a firm’s peers
• Manage relationships throughout the entire value chain
2. Differentiation (Harley Davison, Apple)
• Create products and/or services that are unique and valued
• Non-price attributes for which customers will pay a premium
3. Focus strategy (Rolex, Lamborghini)
• Narrow product lines, buyer segments, or targeted geographic
markets
• Attain advantages either through differentiation or cost leadership

9. SHRM, HR Metrics and HR Scorecard; Prof. Abhipsa Mishra
Value Chain

10. SHRM, HR Metrics and HR Scorecard; Prof. Abhipsa Mishra
Porter’s generic strategies

11. SHRM, HR Metrics and HR Scorecard; Prof. Abhipsa Mishra
Achieving Strategic Fit
• The “Fit” Point of View (Porter)
– All of the firm’s activities must be tailored to or fit the
chosen strategy such that the firm’s functional strategies
support its corporate and competitive strategies.
• Leveraging (Hamel and Prahalad)
– “Stretch” in leveraging resources—supplementing what
you have and doing more with what you have—can be
more important than just fitting the strategic plan to
current resources.

12. SHRM, HR Metrics and HR Audit; Prof. Abhipsa Mishra
Strategic Human Resource Challenges
Corporate
productivity &
performance
improvement
efforts
Increased HR
team’s
involvement in
design of
strategic plans
Basic Strategic
Challenges
Expanded role of
employees in the
organization’s
performance
efforts

13. SHRM, HR Metrics and HR Audit; Prof. Abhipsa Mishra
Human Resource Management’s Strategic
Roles
Strategy
Execution Role
Strategic Planning
Roles
Strategy
Formulation Role

14. SHRM, HR Metrics and HR Audit; Prof. Abhipsa Mishra
Creating the Strategic Human Resource
Management System
Human Resource
Professionals
Employee Behaviors
and Competencies
Components of a
Strategic HRM System
Human Resource
Policies and Practices

15. HR Metrics
HR’s role as an Information Analyst

16. SHRM, HR Metrics and HR Scorecard; Prof. Abhipsa Mishra
What are HR Metrics?
• Relating to measures
• Involving or proceeding by measurements
• Method of tracking the effectiveness of HR
• What you value about HR programs and
the equivalent monetary value

17. SHRM, HR Metrics and HR Scorecard; Prof. Abhipsa Mishra
HR Excuses Against Metrics
• “You can’t measure what we do…”
• Lack of clear purpose for measuring
• Lack of cooperation between departments
• Difficulty extracting data from multiple
systems
• Difficulty understanding and analyzing metrics
• Numbers used to draw inaccurate conclusions

18. SHRM, HR Metrics and HR Scorecard; Prof. Abhipsa Mishra
Why Measure?
If you can’t measure it, you can’t understand it.
If you can’t understand it, you can’t control it.
If you can’t control it, you can’t improve it.
The Improvement Process
Understand
Measure
Control
Improve

19. SHRM, HR Metrics and HR Scorecard; Prof. Abhipsa Mishra
Importance of HR Metrics
• Quantify the value of HR
• Guide workforce strategies
• Maximize HR’s return on investments
• Provide measurement standards
• Show what HR contributes to business results
• Make the business case for HR’s objectives

20. SHRM, HR Metrics and HR Scorecard; Prof. Abhipsa Mishra
Metrics helps to…
• Communicate performance expectations
• Discover gaps in strategies
• Make better decisions
• Address the trend towards value reporting

21. SHRM, HR Metrics and HR Scorecard; Prof. Abhipsa Mishra
What to Measure?
 Measure outcomes not activity
 Begin with efficiency measures
 Develop metrics geared towards your organization’s
goals and strategies
 Establish metrics to monitor key HR practices proven
to grow human capital
 Use metrics that will encourage change and help us
make better decisions about human capital

22. SHRM, HR Metrics and HR Scorecard; Prof. Abhipsa Mishra
• Creating a measurement team is recommended
• Communicate importance of metrics to team
• Team should select metrics together
• Determine how metrics will be defined
• Obtain leadership buy-in
• Disseminate the tasks
Collecting Data

23. SHRM, HR Metrics and HR Scorecard; Prof. Abhipsa Mishra
Strategic Relationships
• Process must be owned by Executives, Managers, HR,
Finance, and IT
• Takes time and will power
• May require an investment in information technology
support services to support human capital measurement
and reporting opportunities
• Requires the fostering of key strategic relationships to
ensure favorable outcomes

24. SHRM, HR Metrics and HR Scorecard; Prof. Abhipsa Mishra
Getting Started
Assess
your data
Build your
metrics
Create
meaningful
measures

25. SHRM, HR Metrics and HR Scorecard; Prof. Abhipsa Mishra
• What do you already track?
• Where should you focus?
• What metrics would be useful?
Assessing Your Data

26. SHRM, HR Metrics and HR Scorecard; Prof. Abhipsa Mishra
• Determine your measures
• Select benchmarks for comparison
 Similar services
 Same size
 Similar organizational structure
 Similar budget
• Compare your results
Building Your Measures

27. SHRM, HR Metrics and HR Scorecard; Prof. Abhipsa Mishra
Data Integrity
• Quality of data is critical
• Garbage in….garbage out
• So…..
 Check the math
 Watch out for zeros
 Compare results to each other
 Conduct a sanity test

28. SHRM, HR Metrics and HR Scorecard; Prof. Abhipsa Mishra
Data Sources
• HRIS (PeopleSoft, SAP, CostPoint, etc.)
• Surveys
• Interviews
• SHRM
• Watson-Wyatt
• WorldatWork
• Mercer
• Saratoga Institute
• IPMA

29. SHRM, HR Metrics and HR Scorecard; Prof. Abhipsa Mishra
What Can Be Measured?
Staffing and Hiring Work Processes Competent Employees
Turnover Rates
Reduced Time-to-Fill for
Vacancies
Training Costs
Number of Employees
Trained
Cost per Hire Voluntary Separations

30. SHRM, HR Metrics and HR Scorecard; Prof. Abhipsa Mishra
Formula:
Total Voluntary Separations / Regular Headcount
Purpose:
• Voluntary Separation Rate looks at the percentage of regular
headcount that voluntarily left the organization.
• This metric is an excellent indicator of problems within the
organization, including but not limited to inadequate
compensation and/or benefits, lack of opportunities for
promotion, low employee morale, inadequate training,
and/or improper assessment of employee's qualifications
(over or under qualified).
Voluntary Separation Rate

31. SHRM, HR Metrics and HR Scorecard; Prof. Abhipsa Mishra
Voluntary Separation Rate
Calculation:
13,894 / 141,277 = 9.8%
Total Voluntary Separations / Regular Headcount

32. SHRM, HR Metrics and HR Scorecard; Prof. Abhipsa Mishra
Formula:
The number of business days to fill a vacant position. This is
counted from the day the position becomes vacant to the date
a new employee starts in the job.
Date of Hire - Date of Vacancy
Purpose:
• Time to Hire shows length of time it takes to fill vacant
positions.
• This metric is an indicator of organization's ability to recruit
and hire new employees.
Time to Hire - Definition

33. SHRM, HR Metrics and HR Scorecard; Prof. Abhipsa Mishra
Time to Hire - Calculation
1/6/2006 - 5/10/2006
Date of Hire - Date of Vacancy
=
44 business days

34. SHRM, HR Metrics and HR Scorecard; Prof. Abhipsa Mishra
Formula:
Total Training Cost / Regular Headcount Trained
Purpose:
• Training Cost Factor - average rupees spent on
training for each regular employee receiving training
• This metric is an indicator of the organization's investment in
training and can also be used to
monitor training costs and the organization's
return on investment.
Training Cost Factor - Definition

35. SHRM, HR Metrics and HR Scorecard; Prof. Abhipsa Mishra
Training Cost Factor - Calculation
Rs. 31,131,631 / 249,700
Total Training Cost / Regular Headcount Trained
=
Rs. 124.68

36. SHRM, HR Metrics and HR Scorecard; Prof. Abhipsa Mishra
Analyzing Data
Microsoft Excel
• Formulas
 Sum
 Average & Median
 Time Calculations
• Charts & Graphs
 Pie
 Bar
 Scatter
Reporting Data
Microsoft Word
• Reports
 Tables
 Graphs
 Charts
Microsoft Access
• Database
 Tables
 Queries
 Reports

37. Powerpoint
Inserting graphs
Exit Salaries vs. Years Exp.
$20,000.00
$25,000.00
$30,000.00
$35,000.00
$40,000.00
$45,000.00
$50,000.00
$55,000.00
$60,000.00
$65,000.00
$70,000.00
0.00 2.00 4.00 6.00 8.00 10.00 12.00 14.00 16.00 18.00 20.00
Years Experience
ExitSalary
Strategic Human Resource Management and HR Scorecard

38. SHRM, HR Metrics and HR Audit; Prof. Abhipsa Mishra
Shining the Light on the Real Value of HR
via the Human Resources Scorecard

39. SHRM, HR Metrics and HR Audit; Prof. Abhipsa Mishra
Creating an HR Scorecard
1
2
3
4
5
Outline value chain activities
Define the business strategy
Outline a strategy map
Identify strategically required
outcomes
Identify required workforce
competencies and behaviors
6
7
8
9
10
Create HR Scorecard
Identify required HR policies and
activities
Choose HR Scorecard measures
Summarize Scorecard measures
on digital dashboard
Monitor, predict, evaluate
The 10-Step HR Scorecard Process

40. SHRM, HR Metrics and HR Scorecard; Prof. Abhipsa Mishra
What is (balanced) scorecard?
• A set of measures/indicators (usually 16 – 36 max) that
directly reflect or represent the strategy/strategic
objectives
• Their prime purpose is to measure that the desired
change or development defined by the strategic
objectives actually takes place
• In short, strategic indicators allow you to measure and
manage strategy execution and achievement progress

41. SHRM, HR Metrics and HR Scorecard; Prof. Abhipsa Mishra
What is it all about…
Scorecard Objectives
 Enable a focus on the “vital few”
 Achieve alignment and focus on
strategy and achievement of our
mission
 Balance short-term, operational
decisions with long-term
strategic decisions more
effectively
 Unlock organizational capacity
by enabling employees to clearly
see where their actions fit into
the bigger picture
 An organizational alignment
& performance management
tool/process
 A communication tool
 A tool for ongoing learning
and refinement of strategy
The scorecard is not
just a set of
indicators …

42. SHRM, HR Metrics and HR Scorecard; Prof. Abhipsa Mishra
A true balanced scorecard…
• Demonstrates alignment with corporate
strategy/objectives (departments & BU’s),
• Contains a limited set of strategic objectives
and indicators,
• Is focused on indicator quality rather than
quantity (focused on measuring what matters
strategically)

43. SHRM, HR Metrics and HR Scorecard; Prof. Abhipsa Mishra
The HR Scorecard Development Process
3. Create Existing
Indicator List
11. Define HR
BSC
Implementation
Plan
6. Detail HR BSC
Indicators
9. HR BSC
Indicator
Review Workshop
10. HR BSC
Indicators
FINALIZED
8. Define HR BSC
Governance
Model
7. Document HR
BSC
Hierarchy
1. Cascade
Corporate Strategy
2. Create HR
Strategy Map
5. HR BSC
Development
Workshop
4. Define HR BSC
Philosophy

44. SHRM, HR Metrics and HR Scorecard; Prof. Abhipsa Mishra
You CANNOT have an HR BSC indicator set without an
HR Strategy Map!
MISSIONMISSION
Strategy Map

45. SHRM, HR Metrics and HR Scorecard; Prof. Abhipsa Mishra
What is a Strategy Map?
 It uses the same framework as the balanced scorecard
 It’s a one page document that describes how your
organization “creates value” and contributes at an
actionable/operational level to the achievement of the
overall strategy
 It provides a “picture” of your strategy
 It provides a uniform & consistent way of describing your
strategy
 A visual representation of the cause & effect relationships
between the components of your strategy (your “theory” of how
everything/everyone works together to achieve results – the story of your
strategy)

46. SHRM, HR Metrics and HR Scorecard; Prof. Abhipsa Mishra
The Strategy Map – Key Elements
Mis s io n : Vis io n :Priv ate Se c to r
Strate g y Map
Fo rm at
CORE VALUES:
Fin a n cia l
Cu s t o m er
In t e r n a l
Pr o cess
Or g a n iz a t io n a l
Ca p a b ilit ie s

47. Strategy Focused Business Solutions Inc.
sandyrichardson_bsc@yahoo.ca
(416) 722-1367
Mission:
Bringing Protection to Life.
Vision 2015:
Be a world class financial services provider, delivering exceptional customer value
through the excellence and integrity of our people.
Group Life &
Health Insurer
CORE
VALUES
Financial
Customer
Internal Process
Organizational
Capabilities
Partnership Entrepreneurship Continuous
Learning
A Factual Approach to
Decision Making
Community
Citizenship
Develop Competencies
in Key Strategic Roles
Foster a Constructive
Culture
Implement One System,
One Overall Process
Focus on Process
Improvement
Become a Long-Term Disability
Industry Leader
Develop Non-Advisor
Distribution Channels
Be Easy to Do Business
With
Focus on Drivers of Customer
Satisfaction
Optimize Advisor
Distribution Channels
Achieve Sustained
Profitable Growth
Improve Cost
Structures
Maintain Existing Profitable Group
Insurance Business
Acquire New Profitable
Group Insurance Business

48. SHRM, HR Metrics and HR Scorecard; Prof. Abhipsa Mishra
The Strategy Map
Mis s io n : Vis io n :Priv ate Se c to r
Strate g y Map
Fo rm at
CORE VALUES:
Fin a n cia l
Cu s t o m er
In t e r n a l
Pr o cess
Or g a n iz a t io n a l
Ca p a b ilit ie s
To deliver the results our shareholders demand and achieve our
mission and vision, how must we perform financially?
To achieve the financial returns we desire, what must we deliver to
our customers so they will reward us with their business & loyalty?
To give our customers what they expect, what business processes
must we focus on and excel at?
To execute our businesses processes at the required level, what skills
and capabilities, culture, and tools and technologies must we have in place?

49. SHRM, HR Metrics and HR Audit; Prof. Abhipsa Mishra
High-Performance Work Systems

50. SHRM, HR Metrics and HR Scorecard; Prof. Abhipsa Mishra
High-Performance Work System (HPWS)
 It is a specific combination of HR practices, work
structures and processes that maximizes employee
knowledge, skill, commitment and flexibility.
 Is composed of many interrelated parts that
complement one another to reach the goals of an
organization, large or small.

51. Developing High-Performance Work Systems

52. Underlying Principles of HPWS

53. SHRM, HR Metrics and HR Scorecard; Prof. Abhipsa Mishra
Principles of HPWS
• Egalitarianism and Engagement
 Egalitarian work environments eliminates status
and power differences and, in the process,
increase collaboration and teamwork.
 When this happens, productivity can improve if
people who once worked in isolation from (or
opposition to) one another begin to work
together.

54. SHRM, HR Metrics and HR Scorecard; Prof. Abhipsa Mishra
• Shared Information
 A shift away from the mentality of command and
control towards more focused on employee
commitment.
 Creating a culture of information sharing where
employees are more willing (and able) to work
towards the goals of the organization.
Principles of HPWS

55. SHRM, HR Metrics and HR Scorecard; Prof. Abhipsa Mishra
• Knowledge Development
 Employees in high-performance work systems
need to learn in “real time,” on-the-job, using
innovative new approaches to solve novel
problems
 Learning organizations
 Technology Enhanced Learning Environments
Principles of HPWS

56. SHRM, HR Metrics and HR Scorecard; Prof. Abhipsa Mishra
• Performance-Reward Linkage
 It is important to align employee and
organizational goals.
 When rewards are connected to performance,
employees will naturally pursue outcomes that are
mutually beneficial to themselves and the
organization.
Principles of HPWS

57. Anatomy of High-Performance Work Systems

58. SHRM, HR Metrics and HR Scorecard; Prof. Abhipsa Mishra
Complementary Human Resources
Policies and Practices
Staffing Practices
Training and
Development
Compensation

59. SHRM, HR Metrics and HR Scorecard; Prof. Abhipsa Mishra
Implementing the System
Ensure that change is owned by senior and line managers
Allocate sufficient resources and support for the change effort
Ensure early and broad communication
Ensure that teams are implemented in a systemic context
Establish methods for measuring the results of change
Ensure continuity of leadership and champions of the initiative
Necessary Actions for a Successful HPWS:

60. SHRM, HR Metrics and HR Scorecard; Prof. Abhipsa Mishra
Benefits of HPWS
• Employee Benefits
 Have more involvement in the organization
 Experience growth and satisfaction, and become more
valuable as contributors
• Organizational Benefits
 High productivity
 Quality
 Flexibility
 Customer satisfaction

61. SHRM, HR Metrics and HR Scorecard; Prof. Abhipsa Mishra
Evaluating the Success of the System
Are employees actually working together, or is the term “team” just a label?
Are employees getting the information they need to make empowered
decisions?
Are training programs developing the knowledge and skills employees need?
Are employees being rewarded for good performance and useful suggestions?
Are employees treated fairly so that power differences are minimal?
Determining whether a high-performance work system has
been implemented as designed:

62. SHRM, HR Metrics and HR Scorecard; Prof. Abhipsa Mishra
Outcomes of High-Performance Work Systems
• Employee Outcomes and Quality of Work Life
 More involved in work
 More satisfied and find that needs for growth are more
fully met
 More informed and empowered, feel that they have a
fuller role to play in the organization and that their
opinions and expertise are valued more
 Have a greater commitment that comes from higher skills
and greater potential for contribution

63. SHRM, HR Metrics and HR Scorecard; Prof. Abhipsa Mishra
Outcomes of High-Performance Work Systems cont’d..
• Organizational Outcomes and Competitive
Advantages
– Higher productivity
– Lower costs
– Better responsiveness to customers
– Greater flexibility
– Higher profitability

64. SHRM, HR Metrics and HR Audit; Prof. Abhipsa Mishra
HR Audit

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97. THANK YOU
This leads to a High Performance Work System