The HR Scorecard
Management ultimately judges the HR function and its initiatives based on whether
They create value for the company, where”VALUE CREATION” means contributing in a mea-
suable way to achieving the company’s strategic goals.HR crates value by engaging in
activities that produce the employee behaviors the company needs to achieve these
strategic goals. Managers often use an HR Scorecard to measure the HR function’s
effectiveness and efficiency in producing these employee behaviors and thus in achieving
the company’s strategic goals. The HR Scorecard is a concise measurement system. It
shows the quantitative standards, or “metrics” the firm uses to measure HR activities,
and to measure the employee behaviors from these activities, and to measure
the strategically relevant organizational outcomes of those employee behaviors. In so
doing, it highlights, in a concise but comprehensive way, the causal link between the HR activities, the emergent employee behaviors, and the resulting firm-wide strategic out-
comes and performance. In Chapter 3 we will discuss in detail how to devise and use an
HR Scorecard, and, beginning with that chapter, we’ll use an illustrative HR Scorecard
to show how each chapter’s material relates to supporting a company’s strategic goals.