Integrating HR Analytics with the Balanced Scorecard to Improve Strategic Decision-Making and Organizational Performance

Abstract

The digital era is welcoming the utilization of data-driven methods to support decision making and performance within organizations. Balanced Scorecard (BSC) is a powerful performance management strategy and Human Resources (HR) analytics is one of the approaches to using the information about the workforce. This is however not used in isolation which brings about a lack of connection between HR insights and strategy. This study bridges this knowledge gap because it suggests and empirically supports a combined method bridging HR analytics use and the Balanced Scorecard to improve strategic decision-making and performance. This was a quantitative research study design, using a survey-data collection technique, which surveyed 162 respondents, HR managers, and business leaders. The relationships were tested using structural equation modeling (SEM) and regression. The results indicate that HR analytics is very important in the balanced scorecard (r = 0.62, p < 0.001) and that the balanced scorecard has a powerful influence on strategic decision-making (r = 0.68, p < 0.001). Also, strategic decision-making has a positive influence on performance (r = 0.72, p < 0.001). Also find that the Balanced Scorecard mediates the relationship between HR analytics and performance. This study contributes to theory and practice by validating the relationship that should exist between HR analytics and a strategy for strategic performance. It provides a model helping businesses to combine HR data with their strategic objectives and enhance decision-making and performance.