How Using the HR Scorecard Can Address Organizational Dysfunction

The Causes and Reasons for Organizational Dysfunction and the People Factor

Organizational Dysfunction can manifest due to a variety of reasons. It can be the result of poor strategic planning and more importantly, strategic execution and implementation failing because of lack of cohesion and coordination between the team members entrusted with the task of execution.

It can be the result of a sense of atrophy due to the organizational arteries being clogged as a result of inertia and apathy. It can also be due to the lack of the senior leadership and the rank and file employees “not being on the same page” as far as coordination and communication are concerned.

A common thread that runs all these factors and causes of organizational dysfunction is the people equation wherein the human resources in the organization are failing in their duty to discharge their responsibilities.

Indeed, when the organizational parameters start failing the test of success and when different functions of the organization pull it in different directions, there is something seriously wrong about the way in which the people in the organization are interacting with each other.

The obvious solution here would be to then recruit the right people and train them according to the organizational needs and more importantly, put in place measures that would capture how much value the people are creating for the organization.

How the HR Function Needs to Address People Dysfunction

Thus, this calls for an HR (Human Resources) strategy that is in tune with the overall organizational objectives. To actualize such a strategy, it is important to note that the HR function and the other functions in the organization must “talk to each other” instead of operating in silos.

In addition, it is also important for the HR Strategies to be “tied into” the overall organizational goals and objectives.

How this works in practice would be first to recruit the people that are needed for such objectives and goals and then train them according to the needs of the various functions for which they have been recruited.

Also, it is important to measure how much value is being created by such resources and whether they are contributing to the organizational value creation. All these measures and steps must be data-driven, and this is where the HR Scorecard has an important role to play in tying the HR Function to the overall organizational imperatives.

Using the HR Scorecard

This means that the HR Scorecard can indeed help organizations to “hone in” on the specific instances of dysfunction wherein measures such as how much the HR Function is helping the other functions and enabling the drivers of organizational excellence are used to arrive at strategies to reduce or even eliminate organizational dysfunction.

For instance, there can be measures of how each employee in different functions are performing and whether the costs of recruitment and training are paying off.

In addition, there can be financial indicators of the usefulness or otherwise of the efficacy of the HR Function wherein the costs incurred by it are compared to the benefits that accrue to the organization.

To take an example, if the HR Function spends a Hundred Thousand Dollars on Recruitment and Training as well as Retention strategies, the benefits in terms of how much sales each employee has generated or the number of billable hours that they have worked on can be used in the HR Scorecard to tabulate and arrive at measures to reduce any dysfunction in the way the organization as a whole is performing.

Indeed, the fact that if you can measure it, it works means that the HR Scorecard provides organizations a key data-driven tool with which they can evaluate the usefulness of the HR Function to the organization.

Measuring Data Isn’t Easy, but it can be done

A common practice in this regard is the treatment of the HR Function as a Separate Cost Center wherein it operates on the basis of a Profit and Loss Principle. Thus, once the costs of the various HR activities are computed, the next step would be to measure the benefits in terms of the various parameters that have been described earlier.

It needs to be mentioned that the P&L Accounting, in this case, is not as easy or straightforward as it seems since computing the benefits and apportioning them to the costs calls for advanced data gathering and analytics based calculations.

In this context, it would be worthwhile to note that the HR Scorecard can help in this regard since it uses such measures as required under the P&L Accounting and with using software and technical tools that are part of the HR Scorecard Toolkit, organizations can have a better grip on how well the HR Function is contributing to the organization.

In short, the HR Scorecard “brings together” the organizational goals and the HR strategies so that the decision makers know what to target in case of dysfunction due to people issues.

Conclusion

Lastly, organizational dysfunction can be addressed by first analyzing the causes and then finding the solutions. The specific aspect of people contributing to such dysfunction can be addressed using the HR Scorecard as discussed so far and this is where the Integration of the HR Function with the other P&L Centers can be quite useful. In times when human resources are the main asset in most organizations, the HR Scorecard is indeed valuable and useful to understand how successful the HR Function has been as far as meeting the organizational goals are concerned. To conclude, using data-driven measures, the HR Scorecard can be invaluable to decision makers to address people dysfunction that is causing organizational dysfunction.


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The article is Written By “Prachi Juneja” and Reviewed By Management Study Guide Content Team. MSG Content Team comprises experienced Faculty Member, Professionals and Subject Matter Experts. To Know more, click on About Us. The use of this material is free for learning and education purpose. Please reference authorship of content used, including link(s) to ManagementStudyGuide.com and the content page url.


Human Resource Management