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Human Resources Essay

4794 words - 20 pages

Human Resources Key Performance Indicators
Gabčanová Iveta

The article brings out a proposed strategy map and respective key performance indicators
(KPIs) in human resources (HR). The article provides an overview of how HR activities are
supported in order to reach the partial goals of HR as defined in the strategic map. Overall the
aim of the paper is to show the possibilities of using the modern Balanced Scorecard method
in human capital.
Key words: key performance indicators, entrepreneurial sector, HR scorecard, performance, Balanced Scorecard

Many companies have implemented tools for measuring their performance in order to stay in
business and ...view middle of the document...

e. operational objectives are transfer into 4 perspectives.
Journal of Competitiveness
Vol. 4, Issue 1, pp. 117-128, March 2012
ISSN 1804-171X (Print), ISSN 1804-1728 (On-line), DOI: 10.7441/joc.2012.01.09

joc_1-2012_v3doi.indd 117


17.4.2012 10:56:22

Based upon the model of BSC introduced by Kaplan and Norton (2007) and consequently its
application in the area of the human resources, a new tool HR Scorecard for the management
and measurement of the human capital was established. Becker, Huselid and Ulrich (2001)
who have outlined HR Scorecard, added that it does two important things:
 manage HR as a strategic asset,
 demonstrate HR´s contribution to firm´s financial success.
Also Ulrich and Brockbank (2005) appended that strategic contribution accounts for almost
half of HR´s total influence on business performance. Norton (2009) made a key point about
what differentiates the scorecard from other business performance measurement frameworks
in the marketplace: “Many people will build a list of measurements that are non-financial and think that they
have a balanced scorecard, but in our view the scorecard has to tell the story of company´s strateg y. The biggest
mistake organizations make is that they think that scorecard is just about measurement.” Huselid, Becker
and Beatty (2005) also confirmed that the HR Scorecard is designed to guide management
of the HR function. The essential part of the HR scorecard is the strategy map. Kaplan and
Norton (1996) called the strategy map to represent the firm´s value chain. These are diagrams
of the value chain, such as those shown in figure 1.

Return of Capital Employed

Customer Loyalty
On – time

Internal/Business Process

Learning and Growth

Process Quality

Process Cycle Time

Employee Skills

Fig.1 – A Simple Illustration of Value Creation. Source: Robert S. Kaplan and David P. Norton,
The Balanced Scorecard.

Huselid, Becker and Beatty (2005) declared that the elements in the HR Scorecard are key
leading indicators for workforce success. Key performance indicators are assigned to each
perspective in strategy map and lately KPIs on HR level became significant benchmark in the
entrepreneurial sector. Bean and Gerathy (2003) presented that according to their experience;
KPIs are valid and effective when applied in a consistent and comprehensive manner. Further,
they declare that financial performance must be respected as the critical measure of the success
for every business but financial KPIs are closely related set of operational metrics i. e. on HR
level, too. Bauer (2005) stated that once KPIs have been indentified, defined and formalized,

Journal of Competitiveness

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business leaders may feel that KPI battle is won. Where possible, KPI targets must be based
on concrete data and non-manipulative formulas. Griffin (2004) pointed out that there...

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