Academic journal article Indian Journal of Industrial Relations

Competency Based Balanced Scorecard Model: An Integrative Perspective

Academic journal article Indian Journal of Industrial Relations

Competency Based Balanced Scorecard Model: An Integrative Perspective

Article excerpt

In the current globalization induced abrupt changes in business environment human resource has become the source of successful corporate strategy. This study emphasizes that human resource and HR practices are the foundation for achieving business excellence in terms of ROI, market share, employee satisfaction and customer delight. The paper explains the implementation of Balanced Scorecard by developing competencies in relation to values of the organization necessary for achieving business excellence.


In today's dynamic world, companies are adopting newer approaches for facing competition and achieving business excellence. The new economic paradigm is characterized by speed, innovation, quality and customer satisfaction. The essence of the competitive advantage has shifted from tangible assets to intangible ones. Earlier HR was concerned with activities such as payroll, staffing and employee welfare but rules of game have started to change completely as today organizations have to reckon with global competition and match international requirements in terms of product design, process technology, quality standards and on time delivery.

It is said today that endeavours succeed or fail because of people involved and only by attracting the best people and making them perform their best will lead to accomplish deeds. Based on various studies (Pfeffer & Jeffrey 1994) it can be concluded that firms with more effective HR management systems consistently outperform the competition. However, evidence that HR can contribute to a firm's success doesn't mean it is now effectively contributing to success in business. It is a challenge for managers to make HR a strategic asset. This paper justifies that there is a connection between human resource and business success in terms of tangible and intangible measures and establishes a framework which could assist HR professionals to make human resource a strategic asset. Based on Balanced Scorecard (Kaplan & Norton 1996) and through competency framework evident from corporate practices, the author has established a Competency Based Balanced Scorecard model.

Balanced Scorecard

Developed in the early 1990's by Kaplan and Norton (1992), the Balanced Scorecard is a management system that enables organizations to clarify their vision and strategy and translate them into action. The Balanced Scorecard has become the prominent strategic tool for the management. The success of its implementation is attributable to its focus on strategy and the future. By the help of this the managers are able to translate broad mission statements into tactical action plans. The Balanced Scorecard paves the way for the managers to exploit the firm's resources and ultimately produce economic results while directing the firm towards the achievement of its goals. The Balanced Scorecard emphasizes the importance of measuring business performance from the perspective of strategic implementation, rather than relying solely on financial results. Senior managers tend to pay far too much attention to the financial dimensions of performance and not enough attention to the driving forces behind those results. Financial measures are normally designed to rectify or change past results. Performance drivers on the other hand are within the control of the management in the present and the Balanced Scorecard methodology encourages management to look at these leading indicators as well. By specifying the important process measures, assessing them, and communicating the firm's performance based on these criteria to the employees, the managers can ensure that the entire organization participates actively in the strategy implementation process. It is a unifying tool in strategy implementation. The Balanced Scorecard (available at www. suggests that we view the organization from four perspectives, and to develop metrics, collect data and analyze it relative to each of these perspectives. …

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