Verizon Communications, Inc.: Implementing a Human Resources Balanced Scorecard
Overview
This study discusses the four "Perspectives" specified in Kaplan's and Norton's Balanced Scorecard framework, focusing on their implementation at GTE4). Subsequently the efficiency of Garret Walker's and Randall MacDonald's internal communication strategy is evaluated and in the final chapter a summarizing conclusion is provided.
Introduction
In 1996, J. Randall MacDonald, Executive Vice President of Human Resources at the GTE Corporation was facing the challenge to create an HR strategy supporting GTE's workforce through a major business transformation. Moreover Charles R. Lee, GTE's CEO wanted to know what the company was actually getting back for the money spent on various HR related activities.
The main problems for GTE and other American based telecommunication companies were high employee and customer turnover rates and the declining quality of customer service. A tight labor market made it difficult to find qualified people. There was no system in place at GTE to measure employee's performance and MacDonald realized that a quantitative model was needed, showing whether the HR department's activities contributed to the company's financial goals. Balanced Scorecard, a conceptual framework to measure a company's performance, utilizing financial and non-financial measures was selected as a method to quantify "intangible realities" at GTE. The Balanced Scorecard Perspectives
One of the main challenges for GTE's Planning, Measurement and Analysis (PMA) group, the project team responsible for the implementation of Balanced Scorecard, was defining the right measures to evaluate the performance of GTE's human capital. Using feedback from the business presidents, the PMA group and the HR measurement core team defined 118 measures, organized into four "Perspectives", (i) a strategic perspective, (ii) a customer perspective, (iii) an operations perspective and (iv) a financial perspective.
The Learning and Growth Perspective
The "Four Perspectives"
This study discusses the four "Perspectives" specified in Kaplan's and Norton's Balanced Scorecard framework, focusing on their implementation at GTE4). Subsequently the efficiency of Garret Walker's and Randall MacDonald's internal communication strategy is evaluated and in the final chapter a summarizing conclusion is provided.
Introduction
In 1996, J. Randall MacDonald, Executive Vice President of Human Resources at the GTE Corporation was facing the challenge to create an HR strategy supporting GTE's workforce through a major business transformation. Moreover Charles R. Lee, GTE's CEO wanted to know what the company was actually getting back for the money spent on various HR related activities.
The main problems for GTE and other American based telecommunication companies were high employee and customer turnover rates and the declining quality of customer service. A tight labor market made it difficult to find qualified people. There was no system in place at GTE to measure employee's performance and MacDonald realized that a quantitative model was needed, showing whether the HR department's activities contributed to the company's financial goals. Balanced Scorecard, a conceptual framework to measure a company's performance, utilizing financial and non-financial measures was selected as a method to quantify "intangible realities" at GTE. The Balanced Scorecard Perspectives
One of the main challenges for GTE's Planning, Measurement and Analysis (PMA) group, the project team responsible for the implementation of Balanced Scorecard, was defining the right measures to evaluate the performance of GTE's human capital. Using feedback from the business presidents, the PMA group and the HR measurement core team defined 118 measures, organized into four "Perspectives", (i) a strategic perspective, (ii) a customer perspective, (iii) an operations perspective and (iv) a financial perspective.
The Learning and Growth Perspective
The "Four Perspectives"
References: 1. Verizon Communications, Inc.: Implementing a Human Resources balanced Scorecard, Jeremy Scott, 2001, [HBS 9-101-102] 2. Ulrich & Brockbank (2005). The HR Value Proposition 3. The Workforce Scorecard, Mark A. Huselid, Brian E. Becker, HBS Press, 2005, ISBN 1-59130-245-4 4. The Strategy Focused Organization – How Balanced Scorecard companies thrive in the new business environment, Robert S. Kaplan, David P. Norton, 2001, HBS Press, ISBN: 1-57851-250-6 5. Designing and Implementing an HR Scorecard, Garrett Walker and J. Randall MacDonald, Human Resource Management, Winter 2001, 2001 John Wiley & Sons, Inc. 6. Fundamentals of Corporate Finance, Ross-Wester-Jordan, McGraw Hill, ISBN 0-390-5799-7 7. Data Analysis and Decision Making, Albright, Winston, Zappe, Thomson Brooks/Cole 2003, ISBN 0-534-38367-X