An Exploratory Study of Balanced Score Card – Strategic HR Perspective

1. An Exploratory Study of Balanced Score Card – Strategic HR Perspective Swatee Sarangi- Assistant Professor - HR & OB- SIMSR Divya Saluja – HR- SIMSR

2. INTRODUCTION1.1STRATEGIC HRM & ITS IMPLICATIONS • SHRM: • Typically variegated • HR systems and models may be unique at different levels with in an organization • Mostly planned but some of them are emergent in nature

3. INTRODUCTION1.2 BALANCED SCORECARD

4. INTRODUCTION1.2BALANCED SCORECARD Lag: Performance measures focusing on results at the end of a time period Lead: Performance measures that “drive” or lead to the performance of lag measures

5. RESEARCH METHODOLOGY • Objective: • To build a model that integrates SHRM initiatives in the BSC framework. • Data Analysis: • Exploratory and descriptive • Qualitative • Sample: • 3 organizations drawn from different sectors • Data Representation: • Case Study Approach

6. SUCCESS STORIES OF THE PAST“THE INTERNATIONAL GLIMPSES” • Mobil Oil increased cash flow by $1.2 billion and ROI from 6% to 16% between years 2 and 5 after implementing BSC • UPS (United Parcel Service) increased revenues by 9% and net income by 33% within 2 years after BSC implementation • Wells Fargo Bank increased its customer base by 450% after 3 years of BSC implementation • Chemical Bank increased its group company profits 20- fold over a 4-year period after BSC implementation • The world famous advertising firm Saatchi and Saatchi achieved a five-fold increase in market capitalization within 3 years of implementation of BSC • Texaco Refining and Marketing increased profitability by $29 million & 1,500% return on investment from their BSC initiative

7. BANKING SECTOR“ICICI BANK” Implemented BSC in 2001

8. HOSPITALITY SECTOR“THE TAJ HOTELS” • Linked the customer information system and the central reservation system • Expandable • Capable of integrating other standalone warehouses

9. MANUFACTURING SECTOR“PHILIPS” • The initiative to implement the BSC system came from the top management at its headquarters in the Netherlands. • All the subsidiaries were instructed by their quality departments about the implementation. • An interesting concept of traffic light system was adopted by the management of Philips

10. EMERGING PLAYERS“SMEs” • SMEs should also implement BSC • BSC should be in their priority list and not utopian list

11. LINKING STRATEGY & HR • Companies implementing BSC have an underlying essence that employees need to be an integral part of their strategy • Organization needs to communicate its goal, vision and mission to its employees to achieve performance par excellence • Each perspective of the BSC act as a building block for the following • Learning & Development - Base of the building

12. “Just as firms will be faced with inefficiencies when they try to implement new strategies with outmoded structures, so they will also face problems of implementation when they attempt to effect new strategies with inappropriate HR systems. The critical management task is to align the formal structure and the HR systems so that they drive the strategic objectives of the organization” -Fombrum et al (1984)

13. SUGGESTED MODEL

14. THE MODEL • Organization’s culture and structure play a very important role in shaping that strategy • EXTERNALLY -Market factors call for organizations to adapt instantaneously to ever changing environment • INTERNALLY -Organizations need to change and evolve quickly that leads to building employee knowledge, competencies and skills • Employee development has recently received its due importance • Evident with the types of performance measures used: • Number of employees trained • Testing scores • Imbibing Learning culture in organizations is the latest trend

15. HR INITIATIVES

16. CONCLUSION • The suggested model gives a holistic & comprehensive view of the organization and its vision • It can not only build new objectives & targets for the organization but also easily integrates the traditional assessment tools of the organization • Effectively used if its foundation is built on robust HR processes and initiatives that nurture organization’s talent pool NOTE: This exploratory study highlights ‘best practices’ of implementation of BSC. Organizations are advised to ascertain their own ‘best fit’ following the suggested model for successful implementation of BSC.

17. BIBLIOGRAPHY • Anand, M.,Sahay, B.S., & Saha, S. (2005). Balanced Scorecard in Indian Companies. Vikalpa 30(2), 11-25 • Beer, M., Spectar, B., Lawrence, P., Quinn Mills, D., Walton, R. (1984). Managing Human Assets. New York: Free Press  • Beiman, I., & Johnson, C.C. Balanced Scorecard in Developed and Transitional Economies • Boxall, P., & Purcell, J. (2002). Strategy and human resource management. NewYork:Palgrave Macmillan. • Dyer L., 1985. Strategic Human Resources Management and Planning. In K. Rowland & G. Ferris (eds.). Research in Personnel and Human Resources ManagemSuent. Greenwich, CT: JAI Press. 1-30. • Fombrum C., 1984. The External Context of Human Resource Management. Strategic Human Resource Management. New York: Wiley, 3-18. • Mello, J.A. (2002).Strategic human resource management. Ohio:Thomson Learning. • Truss C., Gratton L., 1994. Strategic human resource management: a conceptual approach. The International Journal of Human Resource Management. • Wright P.M., McMahan, G., 1992. Theoretical Perspectives for Strategic Human Resource Management. Journal of Management, 18(2): 295-320.

18. BIBLIOGRAPHY • www.apinstitute.com/Balanced%20scorecard%20and%20the%20small%20business.hml • www.ap-institute.com/downloads/080129%20What%20is%20a%20BSC_0.pdf • www.ap-institute.com/resources_whitepapers.asp • www.ap-institute.com/resources_whitepapers.asp • www.balancedscorecard.org/BSCResources/AbouttheBalancedScorecard/tabid/55/Default.aspx • www.business-standard.com/india/storypage.php?autono=267870 • www.crm2day.com/content/t6_librarynews_1.php?news_id=EpAluVZkAplsbblvIM • www.iba.org.in/ibacdr.asp • www.icmrindia.org/casestudies/catalogue/Business%20Strategy/Balanced%20Scorecard%20Implementation%20at%20Philips.htm • www.nptel.iitm.ac.in/courses/IIT-MADRAS/Management_Science_I/slides/9_5s.pdf • www.papers.ssrn.com/sol3/papers.cfm?abstract_id=629249

19. THANKYOU!