Does Your HR Scorecard Help Your Organization Win?
Written by Mary Ann Downey from i4cp on December 11, 2009
Although most Americans will abandon their personal resolutions before February 1st, organizations will toil, gnash teeth and soldier on to fulfill their "resolutions" because rewards are often tied to the results.
This helps explain why over the last two months there has been an uptick in two related trends: More i4cp member organizations have been seeking advice on how to best implement new reporting tools or how to maximize the value they get from existing tools. By "reporting tools," I'm referring to scorecards, dashboards, analytics reports and the like. Through assisting these members and from my own corporate experience, I have discovered some common stumbling blocks.
Stumbling Block One: Firms try to solve too many problems with a single tool
You've probably heard this one: "What is a platypus? It's a duck built by committee." Too often, reporting tools are also built by committee, resulting in instruments that lack focus and ease of use. Sometimes they're far too long. In fact, most are pages too long; one I saw was over 50 pages produced monthly!
Of course, the intentions of the committees are good. They want to ensure that there's a single place for managers to find the required data. But this causes other problems, including complexity and a confusion of information. In my experience, a typical HR-related reporting tool contains five distinct but interrelated types of data:
- Employee-activity measures, such as termination or promotion rates.
- Workforce demographic data, such as diversity representation.
- HR functional metrics, such as the ratio of HR staff members to employees.
- HR process metrics, such as "time to fill."
- Qualitative metrics, such as employee engagement findings.
When a single tool has all of these different types of data rolled up into one place, it becomes confusing at best and, at worst, is disregarded by management as useless. I recommend that organizations use more reporting tools but ensure that each has a specific focus and purpose.
Stumbling Block Two: Firms can't measure what they want to, so they measure what they have
I sometimes say to people, "Tell me about this metric - how is it used?" Below are some common responses:
- We really want to know X, but we don't have the data. But we can measure this tangentially related metric.
- We use it because a specific stakeholder wants to see this measurement.
- I'm not sure how it's used. We have always measured it this way.
Organizations should have good reasons for measuring and reporting what they do. Otherwise, they're wasting valuable time collecting low-impact information and they're diluting high-impact information.
Stumbling Block Three: Firms don't always know what kind of tool they need
I've used the term "reporting tool" to describe a range of different types of tools. These names for these tools are too often used interchangeably. This creates the kind of terminology confusion that drives organizations to create just one tool in an attempt to keep it simple. My experience is that it helps to clearly define and distinguish among terms such as "data," "metrics," "HR analytics," "scorecards," "dashboards," and the like. I'll be going into greater detail about these and other tools in an upcoming members-only webinar, but for now let's focus on scorecards and dashboards, two terms that are often confused.
Scorecards are management tools to measure performance, much like a baseball game scorecard. They typically use metrics from different functions to evaluate organization or work processes. They require a target or an objective standard against which scores can be measured. I think high-quality scorecards are limited to 3-7 measurements. The measurements are defined in the scorecard and state the purpose of the instrument.
A dashboard, on the other hand, is more like the speedometer and other gauges in your automobile. Dashboards are typically a source of business intelligence. A dashboard allows the firm to monitor trends and risks, and it may include "thresholds" for acceptable results. It should be limited to 8-12 measurements.
So, what's the major difference between scorecards and dashboards? If the scorecard goal is 10 and you have "scored" 15, you know you are "winning" - at least in regard to that measurement. On the other hand, if you are driving in your car and going 50 mph, is that good or bad? Dashboards have measures that, taken in context, tell a story but on their own are not immediately actionable.
I've found that these kinds of focused tools can be invaluable for helping organizations gauge and then improve their performance levels. As strange as it sounds, when you feel like the organization has become an insatiable data beast, this is a sign that you are on the path to success with your reporting tools!
i4cp's 4-Part Recommendation:
- Conduct an assessment of your reporting tools. Is the purpose of all your tools clear? How effective is any given tool in terms of achieving its purpose?
- Solicit feedback from the intended beneficiaries of the reporting tool via interviews or focus groups to ensure their needs are being addressed. Document their needs, concerns and hypotheses and review them on a regular basis (at least once a year).
- Determine if your reporting tool is in sync with the tools of other organizational functions such as finance and marketing. Rather than compete with other staff functions for management's time and attention, partner to improve their reports by including employee-related data.
- Identify a central coordinator for reporting tools. This resource should not be responsible for producing all of the reports but should be tasked with understanding the reports and implications, aggregating information, reviewing reports for consistency and distributing needed information.
