Effect of Human Capital Management on Firm Performance via Balanced Scorecard

Abstract

Nowadays, there is an increasing reliance on intangible assets as important determinants of firm value. Research was focused on the influence of human capital as an intangible asset on the organizations’ performance. This paper makes insights by exploring the concept of human capital management HCM and the impact of the balanced scorecard BSC on it and the effect of both on firm performance. The model was developed to include HCM indicators, deducted from resource-based and motivation theories, “competence” and “motivation & commitment”. The model also includes the four areas of the BSC: learning & growth, internal business, customer and financial performance; in addition to firm performance as research dependent variable. Data was collected from the 4 telecommunication organizations in Jordan, using 65 questionnaires. The hypotheses were tested using Amos analysis to determine the impact of using Balanced Scorecard BSC on Human Capital Management HCM, and the impact of both variables on Firm performance. The results revealed that the BSC has significant impact of effective human capital management; and both have positive effect on firm performance. They also revealed the primordial inter-functional strategic role of BSC and how important is the investment on commitment & motivation and competencies that would certainly lead to increase firm performance.

Keywords

• Human Capital Management
• Balanced Scorecard
• Firm Performance