Strategic Human Resource Management

Section Six

Balanced Scorecard Perspective

Another perspective on measures is presented in the balanced
scorecard approach developed by Robert Kaplan and David P.
Norton. Kaplan and Norton’s work on evaluation concluded that
companies commonly use three measures in human resource
evaluation: employee satisfaction, retention, and productivity.
Kaplan and Norton explain that satisfaction is a prerequisite for
improvements in productivity, quality, responsiveness, and
customer service. They note that the relation-ship with
customer service is straightforward, as satisfied employees tend
to have more satisfied customers. They also endorse annual
surveys of employee satisfaction or monthly rolling surveys of
samples of the workforce. Similarly, they endorse the
measurement of employee retention for its importance in
preserving the organization’s investments in intellectual
capital.^19

Their most pointed advice is reserved for measurements
of employee productivity. While ratios such as revenue per
employee are commonly used, there are problems with such
measures. More specifically, the preferable approaches to
improving productivity ratios involve actions directed at
increasing the numerator (output or revenues). However, the
same improvement in productivity ratios can be obtained by
less preferred actions. Actions directed at reducing the