{"id":156,"date":"2015-07-30T00:10:25","date_gmt":"2015-07-30T00:10:25","guid":{"rendered":"https:\/\/courses.candelalearning.com\/intlbusx1xmaster\/?post_type=chapter&p=156"},"modified":"2017-01-09T19:14:38","modified_gmt":"2017-01-09T19:14:38","slug":"tying-it-all-together-using-the-hrm-balanced-scorecard-to-gauge-and-manage-human-capital-including-your-own","status":"publish","type":"chapter","link":"https:\/\/courses.lumenlearning.com\/cerritos-internationalbusiness\/chapter\/tying-it-all-together-using-the-hrm-balanced-scorecard-to-gauge-and-manage-human-capital-including-your-own\/","title":{"raw":"Reading: Tying It All Together\u2014Using the HRM Balanced Scorecard to Gauge and Manage Human Capital, Including Your Own","rendered":"Reading: Tying It All Together\u2014Using the HRM Balanced Scorecard to Gauge and Manage Human Capital, Including Your Own"},"content":{"raw":"
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Learning Objectives<\/h3>\r\n
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  1. Describe the Balanced Scorecard method and how it can be applied to HRM.<\/li>\r\n\t
  2. Discuss what is meant by \u201chuman capital.\u201d<\/li>\r\n\t
  3. Understand why metrics are important to improving company performance.<\/li>\r\n\t
  4. Consider how your human capital might be mapped on an HRM Balanced Scorecard.<\/li>\r\n<\/ol>\r\n<\/div>\r\n
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    Applying the Balanced Scorecard Method to HRM<\/h2>\r\nYou may already be familiar with the Balanced Scorecard, a tool that helps managers measure what matters to a company. Developed by Robert Kaplan and David Norton, the Balanced Scorecard<\/span><\/span> helps managers define the performance categories that relate to the company\u2019s strategy. The managers then translate those categories into metrics and track performance on those metrics. Besides traditional financial and quality measures, companies use employee-performance measures to track their employees\u2019 knowledge, skills, and contributions to the company.[footnote]Robert S. Kaplan and David P. Norton, The Balanced Scorecard<\/em> (Boston: Harvard Business School Press, 1996).[\/footnote]<\/span>\r\n\r\nThe employee-performance aspects of the Balanced Scorecard analyze employee capabilities, satisfaction, retention, and productivity. Companies also track whether employees are motivated (e.g., by tracking the number of suggestions made and implemented by employees) and whether employee performance goals are aligned with company goals.\r\n\r\n<\/div>\r\n
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    Applying the Balanced Scorecard Method to HRM<\/h2>\r\nBecause the Balanced Scorecard focuses on the strategy and metrics of the business, Mark Huselid and his colleagues took this concept a step further and developed the Workforce Scorecard to provide a framework specific to HRM. According to Huselid, the Workforce Scorecard<\/span><\/span> identifies and measures the behaviors, skills, mind-sets, and results required for the workforce to contribute to the company\u2019s success. Specifically, as summarized in the following figure, the Workforce Scorecard has four key sequential elements:[footnote]Mark A. Huselid, Brian E. Becker, and Richard W. Beatty, The Workforce Scorecard: Managing Human Capital to Execute Strategy<\/em> (Boston: Harvard Business School Press, 2005).[\/footnote]<\/span>\r\n
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    1. Workforce mind-set and culture.<\/strong> Does the workforce understand the strategy and embrace it? Does the workforce have the culture needed to support strategy execution?<\/li>\r\n\t
    2. Workforce competencies.<\/strong> Does the workforce, especially in the strategically important or \u201cA\u201d positions, have the skills it needs to execute the strategy? (Remember that \u201cA\u201d positions are those job categories most vital to the company\u2019s success.)<\/li>\r\n\t
    3. Leadership and workforce behaviors.<\/strong> Are the leadership team and workforce consistently behaving in ways that will lead to the attainment of the company\u2019s key strategic objectives?<\/li>\r\n\t
    4. Workforce success.<\/strong> Has the workforce achieved the key strategic objectives for the business? (If the organization can answer yes to the first three elements, then the answer should be yes here as well.)[footnote]Mark A. Huselid, Brian E. Becker, and Richard W. Beatty, \u201c\u2018A Players\u2019 or \u2018A Positions\u2019? The Strategic Logic of Workforce Management,\u201d Harvard Business Review<\/em> 83, no. 12 (December 2005), http:\/\/chrs.rutgers.edu\/pub_documents\/Huselid-Beatty-Becker%20HBR%20Paper.pdf<\/a>.[\/footnote]\u00a0The Workforce Balanced Scorecard bridges HRM best practices and the firm\u2019s comprehensive Balanced Scorecard.<\/span><\/li>\r\n<\/ol>\r\n
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      Human Capital<\/h2>\r\nImplementing the Workforce Scorecard requires a change in perspective, from seeing people as a cost to seeing people as the company\u2019s most important asset to be managed\u2014human capital. As discussed in the section\u00a0\"The Changing Role of Strategic Human Resources Management in International Business,\" human capital is the collective sum of the attributes, life experiences, knowledge, inventiveness, energy, and enthusiasm that a company\u2019s employees choose to invest in their work. Such an asset is difficult to measure because it\u2019s intangible, and factors like \u201cinventiveness\u201d are subjective and open to interpretation. The challenge for managers, then, is to develop measurement systems that are more rigorous and provide a frame of reference. The metrics can range from activity-based (transactional) metrics to strategic ones. Transactional metrics are the easiest to measure and include counting the number of new people hired, fired, transferred, and promoted. The measures associated with these include the cost of each new hire, the length of time and cost associated with transferring an employee, and so forth. Typical ratios associated with transactional metrics include the training cost factor (i.e., the total training cost divided by the number of employees trained) and training cost percentage (i.e., the total training cost divided by the operating expense).[footnote]Leslie A. Weatherly, \u201cThe Value of People: The Challenges and Opportunities of Human Capital Measurement and Reporting,\u201d SHRM Research Quarterly<\/em> 3 (2003): 14\u201325, accessed February 6, 2011, http:\/\/www.shrm.org\/Research\/Articles\/Articles\/Documents\/0303measurement.pdf<\/a>.[\/footnote]<\/span> But these transactional measures don\u2019t get at the strategic issues\u2014namely, whether the right employees are being trained and whether they\u2019re remembering and using what they learned. Measuring training effectiveness requires not only devising metrics but also changing the nature of the training.\r\n
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      Ethics in Action<\/h3>\r\n

      How to Initiate an Ethics Program<\/h4>\r\nThe Balanced Scorecard doesn\u2019t explicitly have a facet on global ethics, but that doesn\u2019t mean you can\u2019t add one. Fostering business-ethics awareness in today\u2019s multicultural workplace and global marketplace is only the beginning. The following initiatives can be implemented to your corporate ethics program:\r\n