Kaplan, R., Norton, D. (2006). Aligning the HR organization.

En Alignment:using the
balanced scorecard to create corporate synergies (pp.140-145). Boston : Harvard Business
Press. (C41941)

A Jigning tite H R Organization

Figure 5-8 presents a Strategy Map template for a human resources

unit; Figure 5-9 is the corresponding template fo r a human resources
Bal-a nced Scorecard. j The two templates have provento be effective
starting points that HR organizations can customize to their actual
situations.
The financia! perspective of the HR scorecard has two components:
HR efficiency and HR efl"ectiveness. Efficicncy generally deals with
oper-ational issues related to thc relative cost of services. Benchmarks
relative to extern a} norms are frequently used here. For example, to
rnaintain a focus on productivity, " benefits management cost per
employee'' can be com pared to proposals from externa] providers.
HR effectivcness can be meas ured through the linkage scorecard- a
small set of measures taken directly from the enterprise scorccard that
the HR organization can influence although not directly control. For
exam-ple, if the corporate stratcgy is growth through acquisition, the
HR link-age scorecard might meas ure "key statT rctention," "sales
created through cross-selling," or "merger benefits achieved."
A human resources organization has two kinds of customers: the
line business units ttat HR partners with to deliver its services, a nd the
em-ployees themselves, who are the direct recipients of a full array of
HR services. Business units look to HR to provide a professional
partnership of knowledgeable support. Sorne companies, reflecting this
professional partnership, rename the customer perspective the client
perspective.
The HR organization, in turn, delivers and is held accountable for
the solutions negotiated in ifs strategic services portfolio. Scorecard
measures for the business unit partnerships indude feedback relative to
deliverables in the jointly developed plan (the deliverables are often
described in ser-vice agreements between a support unit and its
business unit customers), and the business unit managers' assessments
of the professional capabili-ties and service orientation of the HR
employees they work with directly. HR's relationship with its other set
of customers- employees- can be measured by a survey of employee
satisfaction with the programs and services provided by HR.

The interna! process perspective generally is built around thrce

themes. Theme 1, " achieve operational excellence," focu es on the
cfficiency with

Figure 5-8 HR Organization Strategy Map Template

..
Financia!
Perspectiva

HR Efficiency

HR Effectiveness

__ _ _ ________ _______ _ _____ _______ __

,..

____ ___ _______ ___ ___________ _ _ _____ _ _ ___________ _

Employees

Business Partners
Customer
Perspectiv
a

Posltive Work

Achleve Oprational , r
Excellence

D.evelop Business Unlt

Partnerships

Compensation and
Benefits
Staffing and Talent

Relationship Managers
lntegrated Planning
Service Agreements

Management
Learning and Oevelopment
Communications

Client Feedback
Show the Value

Linkage
Scorecard

Strategic Competencias
for HR

Strategic Technology
for HR

Provide Strategic Support

to Business

Competency Development
Leadership and Culture
Performance Management

Ctimate for HR Actlon

Interna!
(Process)
Perspectiv
a

Learning
and Growth
Perspectiva

Figure 5-9 HR OrganzatonBalanced Scorecard

Template

Strateglc Objectlves
<ll

M1 . Create Shareholder Value

Objectives on
M2. }

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(1)

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C7)

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<ll

M3.

Enterprise Scorecard

Strateglc Measures

Targets

Stock Prce Multiple

Measures on

Strateglc lnitiatives

Budget

Competitiva
Norms

Enterprise Scorecard

co..J

M4.

10

F1 .

Impactad by HR
lmprove HR Efticiency

e
10

Impactad by HR

Budget Cost vs. Actual

100%

HR CosVEmployee

90% ol Norm

u:
G;

C1 . Create a Posrtive Work Environment

Employee Satislaction Survey

80% Rating

Employee Survey

sccc

C2. Buld Strateglc Partnership

Service Agreement Feedback

85% Rating

Accounl Review Program

$888

Human Capital Readiness

Cost per Transaction
Cycle Time

75%
S% Reductlon
21 Days

Human Capital Readiness Report

ActlvityBased Costing
Process Reengineering

SAAA
$NNN
$000

-------- ---- --

-- -- --- -- ----- ----- ---- ------- -

-- - -- ---

Service Agreements Program

SKKK
$lll
SMMM

:J

C3. Ensure Human Capital Readiness

11 . Achieve HR Operational Excellence

---- ---- -... -..... ---.. -- ----- ---- -12.

Oevelop Busrness Unit

Partnerships

--- ----- ------ ------- -- -- --- -(ij

13.

Error Rate/Complaints

-- -- --------- --------- ----- -

Service Agreements in Place (%)

HR Strategic Plans in Place (%)
Time with Customer

Human Capital Aeadlness

-- ------ --- --- --- -- --- ----- --

50% Reduction

Business

(a)

90%
90%
10 Hrs/Week

--------- - ----

-- -- --- -- ----- ----- ---- --- -----

--- --- --

Build Strategic Staff

100%

St rateglc Job Family ldentiflcation

SDDD

Competency Proflles

SEEE

$FFF

Competeneles
--- --- ------------------- -----

(b)

--

(e)

--- ---- ----- --- ---- --------

Develop leaders and

Leadership Alignment

Supportive Culture

Cultural Alignment

Staff Alignment

--- ---- -- ---- ------- ---- -- ----

'O

Create a High-Performance
Organlzation

--- ---- --- ----- ------- ---- ---

l1 .

Prov1de Strategic HR lnlo

HR Application System Readiness

l3.

Flll HA Leadership Pipeline

L2.

Develop Strategic HA Competencias

HA Competencies: Readiness

-- ------ ----- --

lncrease BestPractice Sharing

LS. Ensure Strategc Alignment

Key Posrtion Depth Chart

Best Practicas Translerred
(Number)
Personal Goals linked lo 8SC (%)

l6.

Strategc Awareness (%)

(ij<!> l 4.
<l>

..J

TOM lor HR Processes

HR Strategic Planning Process

Relationship Management Program

Create Shared Vision and Culture

Tralnlng and Oevelopment

SPPP

------ ------------- --.. ... --- .. -- .. -

100%

Leadershlp Development

100%

Mission, Vsion, Values

--- ------- ---- -

100%

Strateglc Communications

------ -- -

SGGG
SHHH
-- -------- -------- -- ----- - --- ---

Performance Management Program

-- -- -----

Slll
SJJJ

100% (vs. Plan)

HR Systems Plan

HA Competency Plan

$000

80%

HA Leadership Oevelopment Program

ssss

50%
80%

Knowledge Management Program

BSC Cascada

$1TT

80%

Strategic Education and

$VVV

100% (vs. Plan)

IOJ::

f~

Provide Strategic Support to

$RRR

su uu

Communication
Total

$XYZ

ALIGNlNG SUP PORT FUNCT IONS

143

which the many enterprise-level HR programs a re delivered. It

influences HR's fina ncia} objective to stay within budget while
delivering the ex-pected mix and quality of services. This genera lly
ineans measuring the cost per transaction a nd the quality and
timeliness of HR services, such as compensation and benefits programs,
recruiting, training, and annual per-formance reviews.
Theme 2, "develop business unit partnerships," is often overlooked
in pnictice. It involves developing a formal process for managing
relation-ships with business units. H R should adopt the same kinds of
formal cus-tomer management processes (planning, account
management, and feedback and reviews) that business units use with
their externa! cus-tomers. Scorecard measures fo r this theme might
include a status indica-ter of the level of professional relationships, such
as percentage of business units with HR strategic support plans, as well
asan account de-velopment measure, such as time spent consulting with
customers.
Theme 3, "strategic suppo rt of business units," links the HR organization to its strategic services portfolio. Objectives are generally fou nd
for the three major a reas shown in Figure 5-8: building strategic staff
competencies; developing leaders and improving organizational cul ture;
and instilling a commitment to performance management. Responding
to the specific requirements to deliver the HR portfolio of strategic services, the HR organization defines specific programs and initiatives to
satisfy business strategy requirements (including a budget for initiatives)
and a service agreement that defines the specifics of schedules, deliverables, a nd staffing.
The learning and growth perspective of the HR Strategy Map
corrects a typical problem in many HR organizations: the shoemaker's
children going barefoot. Human resources professionals, like all other
employees, have specific needs for training, information systems,
alignment, and per-formance management. Pa rticularly as the HR
organization shifts its value proposition to providing customized
consulting relationships with business units, HR employees must acquire
entirely new skill sets. In tern a} programs for the HR staff should be
subjected to the same standa rds of excellence as those for its business
unit customers. HR employees should be viewed as customers of the HR
organization for these services, includ - ing strategic plans, relationship
managers, and feedback processes.
The fourth column in the HR Balanced Scorecard (Figure 5-9) shows
the strategic initiatives that support the HR unit's strategic objectives,

measures, and targets. These initiatives a re the actions and

interventions that lead to successful strategy execution. The initiatives
must be budgeted

144

ALIGNMENT

so that informed economic trade-offs can be made. Although most of the

initiativcs shown in Figure 5-9 support the internal management of the HR
orga nizatio n, those associated with internal processes (I3) comprise the
stratcgic support for business units. This proccss a nd associated initiatives produce the deliverables to HR 's customers. The business units must
approve the budget for these initiatives as part of the annual plan for the
HR unit.

C ASE STUDY: H UMAN R ESOURC ES AT INGE RS OLL-RAND

We introduced the Ingersoll-Rand (IR) enterprise strategy and Strategy M
ap in Chapter 3 (recall Figure 3-4). IR's corporate-level strategy was to
move from being a highly diversified company o rganized in numerous
stand-alone product d ivisions to becoming a mo re in tegrated solutions
compa ny that would go to market as a team, integrating the products of
severa! business units to meet a customer's un ique needs. The implications
for o rganization and cultural change were profound. lts strategic theme, "
leverage the power of our nterprise through dua l citizenship," spoke to
the nced for new competencies, new values, the sha ring of knowledge, and
the expansion o f emp loyees' views beyond the boundaries of their product companies to the I R enterprise as a whole.
I ngersoll's CEO asked the human reso urces organ ization to help im-p
lement the d ual citizenship theme. D on R ice, senior vice president for
h~:man resources and global services, led the effort, startio~g with developing a Strategy Map for this agenda (see F igure 5- 10). T he :first three
process excellence themes- "develop leaders," " drive organization perform a nce," and " build strategic employee competcncies"- specifica lly
ad-dress the corporate strategy agenda. The fourth theme, "achieve HR
process excellence," focuses on the qua li ty and efficiency of HR operational services such as delivery of compensation and benefits.
Collectively, the four process excellence themes deliver the human resources value proposition to its two sets of customers: " enhance leadership effectiveness" of business unit partners and "be the employer of
choice" for Ingersoll's employees. The impact o f the H R strategy on financia l results would yield results reported in the financia} perspective:
Business grow th enabled by better leadership
Acquisition effectiveness enabled by a team -oriented culture

 Tmproved efficiency enabled by bctter management of the H R

processes

Figure 5-10 HR Organization Strategy Map at lngersoiiRand

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Develop
Leaders

Orive Organizational
Performance

Build Strategic
Employee Competencies

Facilitate movement of talent

across businesses
Leverage the OLA process
Develop IR leadership
competencias
Retain employees and
leaders with superior
potential
Recruit and select employees
and leaders with superior
potential

Leverage performance
managemenl systems
Align and leverage reward
systems with the strategy
Develop the organization's
change management

Provde tools that enable

employee development
Develop and implement a
training and development
strategy
Assess critica! competency

capability
Facilitate interna!
communications
Champion enterprise bestpractice sharing

gaps
ldentify strategic employee
competencias

Leverage HR Community to Achieve Functional Excellence

Achieve HR Process
Excellence
Achieve
best-in-class
customer service standards
Provide timely and accurate
administration of
compensation and benefits
delivery
Develop highly efficient
HR processes that are
aligned with business
priorities
Ensure that consisten! and
aligned HR policies,
procedures, and tools are
implementad

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