HR

SCORECARD

•DINESH CHANDRA KANDWAL

• DIPAYAN PALIT
•RITURAJ
•J.RAJENDER
 HR ROLE

 UNDERWENT A PARADIGM SHIFT IN

THE PAST CENTURY
HR ROLE: TRADITIONAL
PERSPECTIVE

PURELY ADMINISTRATIVE
 HR ROLE: IN 90’s

 STRATEGIC ASSET
HR ROLE: NEW PARADIGM

 HOW PEOPLE CREATE VALUE

WITHIN THE FIRM, THE METRICS BY
WHICH THE CREATION OF VALUE BE
MEASURED & ULTIMATELY
OPTIMISED.
 HR SCORECARD
 HR SCORECARD MATCHES BUSINESS
STRATEGY AGAINST HR
DELIVERABLES AND OBJECTIVES TO
PROVIDE STATISTICAL BASIS BY
WHICH HR EFFICIENCY &
CONTRIBUTION TO STRATEGY
IMPLEMENTATION CAN BE
MEASURED.
 HR SCORECARD
A MANAGEMENT TOOL WHICH ALLOWS THE BUSINESS
TO :

1. MANAGE HR AS A STRATEGIC ASSET & SOURCE OF

COMPETITIVE ADVANTAGE
2. QUANTITATIVELY DEMONSTRATE THE THE HR’s
CONTRIBUTION TO THE FIRMS FINANCIAL RESULTS AND
PROFITABILITY.
3.CREATE & MEASURE THE DEGREE OF ALIGNMENT
BETWEEN THE STRATEGY OF THE BUSINESS AND ITS HR
ARCHITECTURE.
 HR SCORECARD

WHEN USED EFFECTIVELY, HR SCORECARD LINKS THE

THINGS PEOPLE DO WITH THE STRTEGY OF THE COMPANY.
THE HR SCORECARD ALSO ALLOWS A HR ARCHITECTUR
TO EVOLVE WHICH IS MANAGEMENT MANAGED &
SYSTEMATIC. HR SCORECARD ALLOWS THE HR FUNCTION
TO FILLS A STRATEGIC ROLE IN THE BUSINESS.
 THE SEVEN STEP MODEL FOR USING HR A STRATEGIC
BUSINESS ASSET

1. CLARIFY AND ARTICULATE THE BUSINESS STRATEGY

 
2. DEVELOP A BUSINESS CASE FOR HR AS A STRATEGIC ASSET
 
3 CREATE STRATEGY MAP FFOR THE FIRM:
 BUSINESS INDICATORS FOR THE FIRM-LEADING & LAGGING
 RESULTS – TANGIBLE & INTANGIBLE.

4. IDENTIFY HR DELIVERABLES WITHIN THE STRATEGY MAP
 
5. ALLIGN HR ARCHITECHTURE WITH HR DELIVERABLES:
 HR FUNCTION
 HR SYSTEM
 STRTEGIC EMPLOYEE BEHAVIOR
 
6. DESIGN THE STRATEGIC MEASUREMENT SYSTEM:
 HR SCORECARD
 RESULT MEASUREMENT – TANGIBELE & INTANGIBLE
 
7. EXECUTE MANAGEMENT BY MEASUREMENT
 
 CLARIFY AND ARTICULATE THE
BUSINESS STRATEGY
BEFORE FOCUSING ON IMPLEMENTING,
THE BUSINESS STRATEGY MUST BE
STATED CLEARLY, CONCISELY & FREE
OF AMBIGUITIES
FOR THIS HR ARCHITECTURE IS REQUIRED
THAT HAS THREE DIMENSIONS:
1. HR FUNCTION
2. HR MANAGEMENT SYSTEM
3. STRETEGIC EMPLOYEE BEHAVIOR
DEVELOP A BUSINESS CASE FOR HR
AS A STRATEGIC ASSET
 WHY & HOW HR CAN SUPPORT BUSINESS STRATEGY?
 THE OVERRIDING THEME OF THIS BUSINESS CASE SHOULD BE IMPLEMENTATION
OF THE FIRM’s STRATEGY, & HR’S CONTRIBUTION TO IMPLEMENTATION
THROUGH:
 CREATING VALUE THRU GOOD HR ALIGNMENT.
 CONTROLLING COST, THEREBY ENHANCING OPERATIONAL EFFICIENCY.
A GOOD HR BUSINESS CASE WILL TYPICALLY INCLUDE:
 MEASURES WHICH QUANTIFY HR CONTRIBUTION TO AS MANY OF THE FIRM’S
STRAT PERF DRIVERS AS POSSIBLE.
 CAUSAL IUNFERENCES AND LINKAGES (  IN COMETENCY “X”  REV  )
 MULTI LEVEL BUSINESS ANALYSIS
 DISTINCTION BETWEEN LAGGING & LEADING VARIABLES
 NEW MEASURES: DEVELOPED TOP-DOWN RATHER THA BOTT0M-UP.
* EMPHASIS MORE ON STRATEGY IMPLEMENTATION & LESS ON CONTENT. REQUIRE
GOOD STRAT FOCUS THAT INTERN DEPENDS ON
AN EFFECTIVE KNOWLEDGEMENT SYSTEM.
ALIGNMENT OF THE HR ARCHITECTURE
A BALANCE PERFORMANCE MANAGEMENT SYSTEM
 CREATE STRATEGY MAP FOR THE FIRM:
BUSINESS INDICATORS FOR THE FIRM-LEADING & LAGGING
RESULTS – TANGIBLE & INTANGIBLE.

STRATEGY MAP DETAILS WHICH

ORG. PROCESSES AND
CAPABILITIES DRIVE FIRM
PERFORMANCE
INDICATORS ARE SPECIFIED WHICH EITHER DRIVE
PERFORMANCE (LEADING) OR MEASURE RESULTS
(LAGGING)
SPECTRUM OF RESULTS ARE INCORPORATED: BOTH
TANGIBLE & INTANGIBLE
IDENTIFY HR DELIVERABLES WITHIN THE STRATEGY MAP

 IDENTIFY HR DRIVERS, ENABLERS

OR DELIVERABLES WHICH EXIST
WITHIN THE STRAT MAP AND DEV. &
DEPLOY HR POLICIES THAT WILL
ENHANCE THESE FACTORS.
 (BUSINESS UNDERSTANDING IS A
PRE-REQUISITE)
 Typical Strategy Map

Employee Skills
Learning & Growth

Internal/
Business process Process quality Process cycle time

On time delivery
Customer
Customer loyality

Financial Return on capital invested in the business

 ALLIGN HR ARCHITECHTURE WITH HR DELIVERABLES:
HR FUNCTION
HR SYSTEM
STRTEGIC EMPLOYEE BEHAVIOR

 TO ALIGN THE HR SYSTEM WITH THE

FIRMS STRAT IMPLEMENTATION SYSTEM,
A COMPETENCY MODEL AND DP WILL BE
NEEDED TO GENERATE THE REQUISITE HR
DELIVERABLES.
 THIS WILL REQUIRE INTERNAL(THE ABILITY
& POTENTIAL FOR THE FIRM TO USEHR AS A STRAT
ASSET) & EXTERNAL (THE EXTENT TO WHICH THE
HR SYSTEM IS DESIGNED TO IMPLEMENT FIRMS STRAT)
ALIGNMENT
 To illustrate, identifying the HR
deliverables…
HR Deliverables Strategy Map

Higher pay

Employee stability

Promotion opportunities

Improved productivity of the firm

 DESIGN THE STRATEGIC MEASUREMENT SYSTEM:
HR SCORECARD
RESULT MEASUREMENT – TANGIBELE & INTANGIBLE

A VIABLE HR STRAT MEASUREMENT SYSTEM:

MEASURE THE CORRECT HR PERFORMANCE
DRIVERS & ENABLERS
CHOOSES THE CORRECT MEASURES FOR EACH
DELIERABLE.
IDEALLY SCORECARD WILL ACCURATELY
MEASURE THE IMPACT OF OF ALL HR POLICIES
ON THER FIRM PERFORMANCE & CAPTURE THE
FULL IMPACT OF HR. THE MORE SOPHISTICATED
& DETAILED THIS MEASUREMENT IS THE
GREATER AND POTENTIAL BENEFITS ARE.
 A WELL THOUGHT OUT HR SCORECARD
HAS FOUR BASIC DIMENSIONS.

1. HR DELIVERABLES THEASE HELP YOU IDENTIFY THE CAUSAL

RELATIONSHIPS THROUGH WHICH HR GENERATES VALUE IN
THE FIRM, WITH AN EMPHASIS ON HR PERFORMANCE
DRIVERS AND HR ENABLERS. IDEALLY, HR DELIVERABLES
WHOSE ACTUAL IMPACT ON THE FIRM’S PERFORMANCE CAN
BE MEASURED SHOULD BE USED. THE ACID TEST FOR
WHETHER THE HR DELIVERABLE ARE CLEARLY STATED IS
LINE MANGERS WILL UNDERSTAND THEM AND BE WILLING
TO PAY FOR THEM.

2. THE HIGH-PERFORMANCE WORK SYSTEM

HIGH PERFORMANCE WORK SYSTEM (CONSISTING OF HR
POLICIES, CPROCESSES AND PRACTICES) IMPLEMENTS THE
BUSINESS STRATEGY AND GENERATES THE
DELIVERABLES SPECIFIED.
 CONT…..
3. EXTERNAL HR SYSTEM ALIGNMENT
MEASURES THIS DIMENSION
MEASURES HOW WELL THE HR SYSTEM IS
ALIGNED WITH THE FIRM’S KEY
PERFORMANCE DRIVERS. THE HR SYSTEM
SHOULD BE MAKING A DEFINABLE AND
SIGNIFICANT CONTRIBUTION TO THE
VALUE CREATION PROCESS. REGULAR
MEASURES SHOULD BE INCORPORATED, SO
IF ALIGNMENT SLIPS THE APPROPRIATE
ACTION CAN BE TAKEN QUICKLY AND
APPROPRIATELY.
 CONT…..
4. HR EFFICENCY MEASURES
THESE ARE THE METRICS BENCHMARKS AND STANDARDS
BY WHICH THE HR SYSTEM’S PERFORMANCE WILL BE
GAUGED AND EVALUATED MOST HR MANAGERS DIVIDE
THEIR KEY EFFICIENCY METRICS INTO TWO CATEGORIES.
         CORE EFFICIENCY MEASURES- SIGNIFICANT
EXPENDITURE ITEMS, WHICH MAKE NO DIRECT
CONTRIBUTION TO THE FIRM’S STRATEGY IMPLEMENTATION.
EXAMPLES: BENEFIT COSTS, WORKERS COMPENSATION
COSTS AND PERCENTAGE OF CORRECT ENTRIES ON DATA
INPUT SYSTEMS.
         STRATEGIC EFFICIENCY MEASURES- HR ACTIVITIES
AND PROCESSES DESIGNED TO PRODUCE HR
DELIVERABLES FOR DIRECT APPLICATION IN
STRATEGY IMPLEMENTATION.
 CONT…..
THE HR SCORECARD SHOULD, SHOW WHAT
THE ACTUAL IMPACT OF HR
DELIVERABLES IS ON THE FIRM’S
PERFORMANCE. THAT WAY, THE HR
MANAGER SHOULD BE ABLE TO
CONFIDENTLY MAKE STATEMENTS LIKE;
“HR DELIVERABLE -------- INCREASED------- BY 20
–PERCENT WHICH IN TURN REDUCED ------BY
10 –PERCENT; RESULTING IN A 3% INCREASE IN
SHAREHOLDER VALUE FOR THE FIRM IN
THE FINANCIAL YEAR ENDED-----
 SO SPECIFICALLY WHAT ARE THE
BENEFITS OF CONSTRUCTING AND
MAINTANING A GOOD HR SCORECARD?

 IT DISTINGUISHES CLEARLY HR DOABLES FROM HR

DELIVERABLES. HR DELIVERABLES INFLUENCE THE
FIRM’S ABILITY TO IMPLEMENT STRATEGY WHILE HR
DOABLES DO NOT.
 IT EMPOWERS HR MANAGERS TO CONTROL COSTS
AND CREATE VALUE. HR WILL ALWAYS BE
ENCOURAGED TO CONTROL COSTS AS EFFECTIVELY
AS POSSIBLE BUT THE HR SCORECARD ALSO DETAILS
HR’S COMPLEMENTARY STRATEGIC ROLE AS A VALUE
CREATOR. INFACT HR SCORECARD MAKES IT POSSIBLE
FOR THE HR PROFESSIONALS TO BALANCE THE TWO
OBJECTIVES REALISTICALLY.
 CONT…..
 IT MEASURES THE FIRM’S LEADING
INDICATORS. THE HR SCORECARD
LINKS HR DELIVERABLES WITH
IMPLEMENTATION OF THE FIRM’S STRATEGY
THE HR MANAGEMENT SYSTEM WILL HAVE
PERFORMANCE DRIVERS, MEASURES (LEADING &
LAGGING) AND PREFERRED OUTCOMES. THE
HR SCORECARD MEASURES HOW WILL ALL OF
THOSE FACTORS ARE ALIGNED AND
PROVIDES ONGOING FEEDBACK.
 CONT…..
 IT CLARIFIES HR’S CONTRIBUTION TO PROFITABILITY.
HR SCOREBOARD ENABLES A HR MANAGERTO
ANSWER THE QUESTION, “WHAT IS HR’S CONTRI BUTION
TO FIRM PERFORMANCE?”WITH MEASURES THAT ARE
CREDIBLE, RELEVANT AND MEASURABLE
 IT ALLOWS HR PROFESSIONALS TO MANAGE BETTER
HR MANAGERS CAN ASSESS PRECISELY HOW
HR DECISIONS WILL IMPACT ON THE
IMPLEMENTATION OF THE FIRM’S STRATEGY. THE
SCORECARD HEIGHTENS THE HR MANAGER’S
STRATEGIC AWARENESS AND FORCES THEM TO THINK
SYSTEMATICALLY.
 CONT…..
 IT ENCOURAGES FLEXIBILITY AND ONGOING
CHANGE. WHEN A PERFORMANCE
MEASUREMENT SYSTEM BECOMES
INSTITUTIONALIZED. IT IS MORE INHIBITED RATHER
THAN ENCOURAGE ADAPTABILITY AND CHANGE. AS
A FIRM’S STRATEGY EVOLVES IN RESPONSE TO
CHANGING MARKET CONDITIONS, THE MEASURMENT
SYSTEM NEEDS TO MOVE WITH THOSE CHANGES IF IT IS
TO REMAIN RELEVANT. THE HR SCORE CARD ACTUALLY
ENCOURAGES FLEXIBILITY AND CONSTANT EVOLUTION
BECAUSE IT ENCOURAGES PEOPLE TO FOCUS ON UNDER
LYING STRATEGY.
APPLICATION OF HR SCORECARD:
IN DR REDDY’S
 Objective Measures Target Wt.
Manpower cost as a % of Sales 18% 20%
Financial Manpower cost Variable Pay as a % of Total Cost Not Less Than 10%
Number of identified redundant positions > 30 5%
eliminated / positions scaled down in terms
Manpower Rationalization Voluntary Attrition Rate – Overall India < 15% 5%
Proactive HR sensing on people issues Satisfaction of VPs and above Satisfaction index NLT 50% 5%

0
Customer

Offer to acceptance ratio > 90% 5%

Talent Acquisition % of manning within specified lead times > 80% 5%
Industrial Relations Man-days lost due to IR problems < 0.05% 5%
Succession Planning for De-risking Successors identified and developed 90% of critical positions 5%
Business
Building pipeline of Top end talent for Positions filled by external persons NMT 50% 10%
Business Building

de-risking business
Due diligence in M&A, Geographic Business Impact Business Impact 5%
expansions, new plants, closures, etc
Strengthening HR systems, policies Audit Report Favourable Audit report 5%
and processes
SOX compliance
High performance and distinctive OCS TRIM index > 80 5%
Organization and Capability Building

work culture
% attrition of identified critical positions / < 2% 3%
high perfomers (EC)
% employee base identified for PIP and its Coverage to bottom 5% 2%
Performance enhancement consequence management
Strategic Capability Building No. of people covered Pharma Mgt – 40 5%
Programs Effectiveness of program Project Mgt – 30
IPM – 50
Program rating NLT 4 out of 5

Internal Trainers Number of certified internal trainers 15 5%

Improvement in competency baseline % people covered as % of expressed 60% 5%
based on PerfECT training needs in PerfECT process
HR SCORE CARD - API BU - 2005-06

Outcomes Goals Target WTG

Financial Outcomes
Manpower Cost Global API manpower cost as % of sales (with < 7.5%
Variable Pay NLT 10%) of total cost 10
> Ensure all costs are within budget

Manpower Optimization 1) Workmen/unionized employees to be reduced from 30

API 10
> Ensure the process takes by proactively
managing the local union leaders
> Motivate workmen to apply and accept to
work in Generics
2) Number of identified redundant positions Reduction in
eliminated/positions scaled down in terms of skills total CTC by
(2A and above) Rs. 1.00 Cr

Retention Voluntary Attrition Rate < 8%

annualized 5
> Sense proactively and act
> Monitor trends
 Outcomes Goals Target WTG
Customer Outcomes
Proactive HR sensing Proactive HR sensing and actions on people issues 4 out of 5 on 5
up to satisfaction of GBU management & Plant point feedback
Management scale
10
> Open Houses at all locations
> Personal Touch
> Building Informal Networks
> HR Execution Effectiveness
> Dipstick Survey

Recruitment process lead Coordinate with TMT In 90% cases -

time recruitment
within
deadlines 10
> Assist line in manpower planning
> Ensuring smooth relieving and acceptance of
identified internal personnel from other
businesses
> Follow-up with TMT for external candidates

> Support TMT in the selection process

Man days lost due to IR issues

Minimization 0.05% 10
> Completion of wage settlement in Unit VI.
> Workmen's promotion process to be
completed
> Management of external union leaders > No workday
lost due to
unrest
> API IR strategy for the forthcoming wage > Successful
settlements at unit I & II negotiation in
Unit VI
> Definitive
plan for other
units
 Outcomes Goals Target WTG
Business Building
De-Risk Business 1) Succession Planning Successors
identified for
90% of critical
positions 10
> Leadership Identification and Development

2) Building pipeline of top-end talent NMT 50%

positions filled
by external
candidates

Sustainable Results 1) Strengthening HR systems, policies 10

No Critical
> Strengthen the PerfECT process in API
Audit
2) SOX Compliance
Observations
3) Statutory Compliance
 Outcomes Goals Target WTG
Organization & Capability Building

Critical Capability Building Developing Second Line for Critical Positions 80% 10
> Gap Analysis
> Developmental Plan & Execution

Strategic Capability Number of API Employees identified and covered Project

Building Programmes Management -
5, MBA - 10,
IPM - 10 5

Improving Competency % of people covered as % of expressed training needs 60%

Baseline in the PerfECT process 10
 EXECUTE MANAGEMENT BY MEASUREMENT

 IMPLEMENTING THE HR SCORECARD IS

MORE THAN JUST ONE OF EVENT. IT’S ALSO
MORE THAN SIMPLY KEEPING A RUNNING
TOTAL OF HR RESULTS. INSTEAD, A WELL
CONSTRUCTED HR SCORECARD ALLOWS HR
MANAGERS TO MONITOR THEIR INPUT INTO
THE FIRMS RESULTS ON AN ONGOING BASIS
AND MAKE PERIODIC ADJUSTMENTS TO
ENSURE THE HR ARCHITECTURE REMAINS
ALIGNED WITH THE EVOLVING BUSINESS
STRAT OF THE FIRM.