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Metrics That Matter: 4 Reasons Why the Balanced Scorecard Has Changed to a Blurred Scorecard

 

By Greg Selke

Back in the day, every company and department had a version of a balanced scorecard to measure success, impact, relevance and to tell their value story. The typical four buckets included some variation of 1) customer metrics 2) financial metrics 3) operations and process metrics and 4) people and HR metrics. The days of the balanced scorecard approach are numbered being replaced with analytics dashboards. If your organization is still talking about scorecards vs analytics, it’s time for a change, seriously. Here are 4 reasons why.

#1 Analytics > Reporting

At a recent HR conference, our fantastic team completed a series of personalized focus groups on the topic of HR Metrics That Matter with 33 companies, small and large, in 18 industries. Results will be posted soon on social media. Here were some of the interesting findings with my twist on what it means for HR. Most organizations are still using operational based and reporting type metrics to measure success. Only a handful of firms are using advanced or predictive analytics. The appetite is there to shift from a current state of manual reporting with basic HR data like exit interview and turnover numbers to a desired state of integrated dashboards predicting in advance why employees might leave - i.e. tracking engagement scores after 6 month new hire honeymoon period is over coupled with who hasn’t registered for any internal training plus filtering who is using more sick days or vacation time. These integrated analytics in this case can help retain employees vs. report later how many left and why. What needs to happen to make this shift a reality includes getting more accurate data, reducing the manual spreadsheet dependency, finding the right mix of consistency across the enterprise, and connecting HR dashboards to business strategy in a simple way. As this happens, blurred scorecards with enhanced analytics replace traditional balanced scorecards.

#2 Cause and Effect

Top priority metrics in most organizations are still customer aligned and rightly so. In the traditional scorecard model, each quadrant in the scorecard had its header and here is where the blurred scorecard becomes the here and now. The days of four different buckets and measuring each in their quadrant is being replaced by one set of integrated value drivers determined by each organization, that measures the cause and effect of each quadrant. For instance, what are the analytics on how employees impact customer satisfaction; how do employees drive market share; how do employees influence the success of a company M&A; how do employees bring innovation and research to life? You get the point. The lines are now blurred in a good way with predictive analytics and dashboards that are more integrated, comprehensive and certainly connected to business objectives. As an HR practitioner, am I not worried in the least that HR is the lowest priority on most company’s scorecard metrics as I am seeing HR metrics turn into business metrics.

#3 HR Hot Zones

In our recent focus groups, companies told us that the most difficult and most important HR areas to measure are employee engagement, turnover, recruiting, succession, and diversity. Not that it is difficult to measure each area alone as most organizations have metrics of some sort in each. It gets interesting to integrate across HR areas. In the future, it will be less about turnover statistics or an engagement score or diversity representation numbers for compliance. It will be about combining data insights throughout HR to get better visibility into the workforce and making connections to the business. The balanced scorecard gets blurrier even in the “HR quadrant” as the metrics will continue to shift from time to fill positions and “who’s ready on the succession chart” to more “non silo” driven comprehensive analytics.

#4 New Context

Two current challenges and thus two opportunities for improvement in how to do analytics rest in the skills of HR people and simplicity. HR departments are now hiring at an increasing rate analytics gurus and metrics focused employees to drive deliverables differently than in the past. In addition to new roles being added however, everyone in HR, including HR Business Partners, and of course those in CHRO and VPHR positions, must get upskilled in how to turn data into meaningful information and then learn how to consult with their part of the business to connect HR and business analytics, something that the business cares about. This upskilling is key, happening, and changing how we do scorecard type work. Simple, simple, simple. Everything discussed here does not have to be difficult. How much more difficult can “this” be than doing 45 revisions of a spreadsheet over a three week period to give someone a report only to find out there is a missing field or hear “that’s not exactly what I had in mind.” Not fun. There is a new way, a better way, and a simpler way, to do not metrics but analytics.

It is for these reasons – analytics are here, cause and effect relationships have changed, HR is more integrated than ever, and the mindset is changing driven by business need - that traditional metrics bound balanced scorecard approaches are history replaced by analytics driven blurred scorecards and dashboards. And that is a good thing. If you would like more information on this posting, please reach to me at greg.selke@sap.com.

This article was also published on LinkedIn Pulse.

    About the author

    Greg Selke

    VP of HR Thought Leadership

    Greg supports the SAP SuccessFactors North American HR Cloud Sales team, working directly with senior leadership at both current and prospective customers.