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Role of Balanced Scorecard in Strategic HR

A Case Study

A. Ajaya Shankar Gupta


Dr. V. Sita
School of Management Studies
Hyderabad Central University

Role of Balanced Scorecard in Strategic HR


A Case Study
A.
Ajaya Shankar Gupta
Research Scholar in the School of Management Studies, University of
Hyderabad. He is a Mining Engineer with MBA in Technology
Management. He has 19 years experience in Tata Steel, 1 years
with Tata Projects, 1 years with Abhijeet Group and 10 years with
Ainapur Institute of Management, Hyderabad as Management
Consultant in the areas of TQM, Balanced Scorecard, Business
Excellence Models etc.
Dr. V. Sita
Dr Sita Vanka is currently Dean, School of Management Studies, University
of Hyderabad, Hyderabad, India. She is a teacher, trainer, consultant
and researcher in the areas of Management HRM, Educational
Management, Public Policy Management and Womens Studies.

Why Continuous Improvement

Earlier organizations used to think- Today's performance


will ensure future success.

TQM approach says- Today's excellence is tomorrows


mediocrity

So, we have to benchmark ourselves with best in the


world (now it is more true after globalization / open market)
and

Continuously improve (at the rate higher than our


competitors/potential competitors).

Performance Measurement For


Continual Improvement
A General rule :
You get what you measure
What does not get measured cannot be Recorded.
What does not get recorded cannot be Monitored.
What cannot get monitored cannot be Controlled
What cannot get controlled cannot be Improved.

Performance Management For


Continual Improvement

Therefore , an organization must measure the critical few parameters


that represent its strategy for long-term value creation.
Many times measures are to measure workload rather than results
Measures focused in one area may yield unintended consequences in
other areas
Measurement is a powerful motivator, so Be careful what you wish for
(measure), you might get it

PERFORMANCE MEASUREMENT FOR PMS :

Role of HR & Strategy Deployment


The role of HR in the contemporary business environment had
shifted from Personnel to HRD and then to SHRM.
The practice of SHRM has outpaced the academic work
leaving a clear black box between HR and firm performance.
The integration of HR with strategy implementation needs
different architecture for SHRM
(Becker and Huselid, 1999)
Dave Ulrich (1998) says that Successful organizations will be
those that are able to quickly turn strategy into action;
to manage processes intelligently and efficiently;
to maximize employee contribution and commitment; and
to create the conditions for seamless change.
Here We suggest Balanced Scorecard as an Architecture/Tool.

Need of Balanced Scorecard Concept for SHRM:


The strategic alignment and execution at the firm level is significant, which
automatically becomes a challenge for HR. A tool that is available for the
organizations is the Balanced Scorecard Concept.
The balanced scorecard is a strategic planning and management system that
is used extensively in business and industry, government, and nonprofit
organizations worldwide to align business activities to the vision and strategy of
the organization, improve internal and external communications, and monitor
organization performance against strategic goals (Robert S. Kaplan and David
Norton, 1996).
Balanced Scorecards highlights the knowledge, skills and systems that the
employees would need (learning and growth) to innovate and build the right
strategic capabilities and efficiencies (internal processes) that deliver specific
value to the market (customer) which will eventually lead to higher shareholder
value (financial) (Kaplan and Norton, 2001).

Harvard Business School Professor, Robert Kaplan and Management


Consultant, David Norton conceived the concept of Balanced Score
Card (BSC) in 1991.
The Balanced Score Card is one of the most important management
practices of the past 75 years-Harvard Business Review.

What is a Balanced Score Card

The scorecard provides a framework to communicate mission and


strategy.
It uses measurement to inform employees about the drivers of current
and future success.
By Controlling the outcomes the organization desires and drivers of
those outcomes, senior executives would be able to mobilize their
energies, abilities and the specific knowledge of people throughout
the organization towards achieving the long term goals

Logistics of a Balanced Score Card

Strategy Maps:
Strategy Map is a Logical and Comprehensive
Architecture for describing strategy.
It provides the visual framework for integrating
the organizations objectives in the four
perspectives of a Balanced Scorecard.
It provides a single-page view of the strategy.
A properly constructed BSC should tell the story
of the business units strategy.
It should identify and make explicit the
sequence of hypothesis about the cause-andeffect relationships between outcome
measures and the performance drivers of those
outcomes.

Cause & Effect Relationship


ROCE
Financial

Customer

Internal/
Business
Process

Learning and
Growth

Custom
er
Loyalty
On-time
Delivery
Process
Quality
Employe
e Skills

Process Cycle
Time

Organisation level Strategy Map:

STRATEGY MAP

Financial

Increase Turnover & Profits


Increasing Revenue generation
though trading

Cost & Inventory


Reduction
Customer

Develop new
customers and increase
market share

Internal Process

Effective asset
Utilization

Improve Customer
Satisfaction

Penetration into
Niche Market

Developing Processes &


People for Trading

Process Improvement
Implementing
Risk Management

Cost Rationalisation Measures


Impl. Good QEHS &
5S Prog
Backward Integration

Realization from by product,


Scrap etc.

Foster high performance work culture


through multi skilling

Enhancing Empl. Engagement

Learning &
Growth
Suggestion , Reward
Recognition System Implementation

Improving Industrial
Relations.

Developing competency based Talent Mangt.

Translating Organisational Strategy Map into Balanced


Scorecard of CEO

Translating Organisational Strategy Map into Balanced


Scorecard of CEO
Development of
new customer and
C1
increase Market
Share
Customer

Penetration into
Niche Market
C2

Internal
Perspective

Improve Customer
Satisfaction

C1.1 Sales to New Customers


C1.2 Total Sales Volume

MT & Nos
MT

C2.1 Sales to New Markets


C3.1 Customer's Complaints
P1.1
P1.2
P1.3
P1.4
P1.5
P1.6

Manganese Recovery (SiMn)


Manganese Recovery (Fe. Mn)
Specific Power Consumption - SIMn
Specific Power Consumption - FeMn
Fixed Carbon Consumption [Fe Mn]
Fixed Carbon Consumption Si Mn]

Nos.

%
%
KWH/MT
KWH/MT
Kgs/ MT
Kgs/ MT
Days
Compliance to Sinter Plant Project
P2.1
behind
Schedule
Schedule
P2.2 Compliance to Mines Acquisition Plan
%
P3.1 Manpower in Trading

P1

Process
Improvement

P2

Backward
Integration

P3

Developing
Processes &
P3.2 Processes developed for Trading
People for Trading

Translating Organisational Strategy Map into Balanced


Scorecard of CEO
Effective asset
P4 Utilization

P4.1
P4.2
P4.3

Furnace Availablity
Production
Capacity Utilization

P4.4

Power Availability [Million Units]

Kvah

P5.1
P5.2

Nos.
%

P6.1

Mandays Lost due to Accidents


Compliance to Env. Norms
Compliance to EMS & OHSAS
Implementation Plan
Compliance to NABL
Implementation Plan
NCRs Raised in ISO9001:2008
Audits (external & Internal)
Disposal Slag

P6.2

Scrap Sale

P7.1

Compliance to Risk Mitigation Plan

P5.2
P5 Good QHSE & 5S
P5.3
Internal
Perspective

P5.4
Realization
from/by
P6
Product/scrap
etc.,
Implementing
Risk
P7
Management
Cost
Rationalisation
P8
Measures

P8.1

Savings through PIPs

%
MT
%

Nos
MT
MT

Rs
Lakhs

Translating Organisational Strategy Map into Balanced


Scorecard of CEO

Aligning HR to Organisational Strategy (Sample)

Customer Perspective Deployment in HR

Internal Processes Perspective Deployment in HR

L & G Perspective Deployment in HR

L & G Perspective Deployment in HR