Organizations need tools that measure the effectiveness of their people management strategies and their performance models. Researchers have developed tools like the balance scorecard that monitors organizational growth and productivity and measures the effectiveness of their practices. According to Kaplan and Norton, the brains behind balance scorecard concept, “The balanced scorecard is a strategic management system that channels the energies and abilities held by people in the organization towards achieving organizational goals”.

The reason for the scorecard’s ascendance are many and varied, but principally the tool’s longevity can be traced to an ability to solve several fundamental business issues that major organizations are facing today. Undoubtedly, the following four issues affecting the business are: (a) A traditional reliance on financial measures; (2) the rise of the intangible assets; (3) the emerging pattern of reputation risk; and (4) the difficulty most organizations face is execution of strategy. Concept of HR Scorecard In most organizations HR is no more just a cost centre, it is a strategic business partner. To succeed in this attempt, HR has to justify its strategic importance and establish itself as an asset. Most leaders ignore HR, as its contribution to business cannot be quantified.

The advent of HR scorecard (a concept similar to the balanced scorecard) has shattered this myth. HR scorecard relates business, people and their contribution to organizational success. It measures HR functions and outcomes. Moreover, it provides a systematic analysis of the effect of HR outcomes on business performance. It aligns HR systems with the company’s overall strategy and links HR results to financial measures like profitability and shareholder value. Utility of The HR scorecard establishes a direct relation between the capabilities of the workforce and results. It, thus, communicates the effectiveness of people management strategies. With an HR scorecard companies can align their business strategies and compute their HR operations better.