This report is a combination review of the article "Verizon Communications, Inc.: Implementing a Human Resources Balanced Scorecard" and also a review of the process of balanced scorecard. Companies today can only get what they measure. When it comes to Human Resources performance management, how can they be sure they are measuring the right things? Or, are the communicating the right information to the right people? There are new tools to help companies address issues such as these. The tools allow companies to align and support key processes and to translate strategy into operational objectives, measures, targets and initiatives. The report will try to identify and discuss the key issues and problems related to the cohesion between an organization's existing business strategy and its Human Resource Management strategy and practices. This will be done by analyzing how and why an organization creates business missions and strategies. There has been a shift in the assessment and alignment of the business and Human Resource strategies and this report will attempt to identify and resolve some of these key Human Resource Management issues in relation to the new alignment.
The article demonstrated how Human Resource leaders are now continually being placed under increased pressure to clarify and demonstrate through the use of hard data and what the value of their functions can or will deliver to the business as a whole. In other words, soft functions such as Human Resources can no longer simply represent a bottomless pit of costs. This report details how Human Resources Management is implementing new strategic management frameworks such as the Balanced Scorecard to develop and embed the value of the processes from Human Resources Management business-wide. And finally, the report will also attempt to elaborate on two of the HRM component areas that are included in the strategic HRM action plan developed in response to Q2.
As the world becomes a smaller place through the use of new technologies such as the Internet, businesses are requiring more from their Human Resources departments. It is now essential for the success of an entire organization for the company's business and Human resource strategies mesh. Business leaders are also requiring Human Resource management to be able to quantify their departments' positions and costs.
One way of accomplishing this goal of statistical quantification of certain aspects of the Human resource function is accomplished through a process called Balanced Scorecard. Human Resources must conduct audits that reveal existing Human Resources performance compared to the desired performance and therefore enable the identification of initiatives or strategies that can be used to close the gap. It is now critical for Human Resources functions to clearly assess the return on investment of their programmes and by doing so provide clear, demonstrable and meaningful hard financial measures of its value to the company.
The balanced scorecard is simply a management system that acts like a measurement system. Balanced Scorcard permits an organization to identify a clear vision and translate that into an action plan while also providing feedback about the key internal business processes and their external outcomes. Through this process organization's can continuously improve the strategic performance of the company as a whole.
The new approach to the strategic management of non-financial processes was developed in the early 1990's by the Harvard Business School's Drs. Robert Kaplan and David Norton. The two professors obviously recognized apparent weaknesses in other existing management approaches so they offered a way to balance non-financial functions. Human resources is an excellent example of a critical function that in the past was simply considered a cost to companies like GTE. The human resource function rarely if ever was required to provide strategies that were consistent with the overall businesses' strategies.
The inherent problem therfore was that there was no way of measuring if the Human Resource function was successful in the eyes of the financilly driven corprate management teams. Today, because of processes such as the Balanced Scorecard, companies can address key issues or problems that used to be caused by a lack of business strategies and Human Resource Management strategy unity.
To implement the balanced scorecard, it is essential for an organization to first evaluate its current business processes and existing primary and secondary strategies. This can be done through the use of SWOT Analysis. SWOT Analysis is an effective methodology for identifying a company's strengths and weaknesses and also the opportunities or threats the company faces. The SWOT process helps management hone in on areas where they feel the company is strong and pin point greater opportunities for future success. SWOT stands for examining the following areas of a company:
SWOT works by companies addressing issues like: what do we do well; what could we improve upon; what trends or opportunities are presenting themselves in our industry or the world; or, what obstacles are we going to face in the near future? SWOT is an environmental analysis tool that helps identify a company's value proposition, new or existing primary or secondary business objectives, business or individual departmental strategies and it also helps align differing business strategies throughout an organization.
By using a balance scorecard approach, an example of a strategic Human Resource action plan to resolve key issues such as staffing, compensation employee relations and health and safety can be created to demonstrate the power of the management tool.
The approach is to first do a SWOT analysis of the following:
HR Planning Staffing
Training & Development Compensation
Work systems/job design Employee relations
Performance management Health & Safety
When considering the strengths of staffing, compensation employee relations and health and safety one can get more feedback directly from employee interviews than any other source. Both internal and exit interviews usually provide enough feedback to get Human Resource managers up to speed on what is really going on in the trenches. Every organization has some strength and documenting it can be very enlightening. Existing cues can be derived from and eventually measured.
The same can be said for weaknesses. All companies have weaknesses and it is beneficial to identify them. For example, supervisors often fail in providing key leadership requirements to their subordinates for many reasons such as the cost of mentoring, the complexity of goal setting and a lack of available time. A weakness like this can first be identified through the use of SWOT and then monitored through the use of balanced scorecard methodologies.
It is crucial for all companies to recognize their opportunities so they can take advantage of them. Since all organizations have some opportunities that they can gain from, the SWOT analysis should focus in on diversification of the sales operations for clarifying hidden opportunities. No organization is immune to internal or external threats. A prime example can be seen by the recent attempt of Comcast Cable to purchase the Walt Disney organization. Walt Disney has always portrayed itself as a strong self sufficient organization but the threat of a hostile takeover has opened up their eyes to all new realities.
With these assessments in hand, the organization can then establish the necessary internal human resource and business processes that can measure future outcomes. In a staffing example, the organization may want to measure the cost of replacing supervisors to see if new strategies should be formulated to keep supervcisor turnover low. The metrics based on this perspective could allow managerment to know how well their employee relations and retention efforts are working. Other examples include the possilbity of high supervisor turnover being related to on the job health or safty concerns or even payroll probleems.
If a compensation model needed to be established because the compny's pay scales are not proportiuoinate to their industry, measuring the payroll process and then establishing new supervisor payrool strategies could help retian supervisors accordingly. If the Human Resource Managementn team creates the balanced scorecard measures carefully and accurately, the process could easily rectify outstanding Human resource problems in a short time.
Two component areas of the Human Resource Management process have been developed into action plans in response to Q2. The first is of course the balanced scorecard approach to implementing new successful corporate strategies. Many corporations have gained a competitive advantage from the increased efficiency, higher quality, and improved customer relationships delivered by Balanced Scorecard.
As consumers, we often do not realize that we see the results of the balanced scorecard process in products that meet our needs, last longer, are affordably priced and are available where and when we want them. Most of us enjoy the benefits of balanced scorecard when we use our pagers, cars, cell phones, and printers and never even realize it. Today, the world class corporations like Verizon implement the balanced scorecard approach to resolving human resource issues as well as other non-manufacturing or financial processes such as IT management and human resource management. They are doing this because they realize that no matter how good their manufacturing processes are, if the quality of…