Metrics and Balanced Scorecard:: Driving Human Capital Measurement at Scotiabank

Metrics and Balanced Scorecard:
Driving Human Capital Measurement at Scotiabank
Human Capital Measurement (HCM) is a critical component of strategic planning,

evaluation and measurement. The study of HCM in organizations will invariably involve
a process of data collection, number crunching and recommendations to prove out
strategic alignment. The purpose of this case study is to provide an overview of what
metrics are, how they are being used in organizations, and what lies ahead for the future
of HCM. A conceptual literature review is surmised by a case study of Scotiabank. The
study looks at the method by which the banking institution makes use of HCM to drive
business performance. The case and supporting exhibits will provide data to present the
concepts behind basic HCM, allowing for practice of metric creation and analysis as well
as a discussion in advance of the company assignment.
Introduction
The sun has barely filled the sky before the mass of commuters make their way from Union
Station to Toronto’s financial district. In the mix is Tommy Piribauer, new to the hustle and
bustle of morning commuter traffic. As he follows in synch with the other footsteps, he is trying
to piece together in his mind what he is going to present to his boss on this, deadline day.
Tommy Piribauer is two months into his position with Scotiabank as Manager of Metrics and
Analytics. He was brought on to, along with the Director, help to reestablish a department that
has been vacant for several years. For the meeting, Tommy was asked to take a look at the
current state of affairs for metrics in the organization. He was to evaluate the metrics that are
being used, their feasibility, and recommended improvements. Building from his academic
experience, he was asked to help evaluate the effectiveness of metrics in the organization.
Background
Tommy Piribauer had just completed his Masters in Business Administration at the DeGroote
School of Business, McMaster University. He also received an Undergraduate degree in
Commerce from the same Hamilton based school. He specialized in Strategic Marketing, but
found a particular niche through his experience taking the P727 Knowledge Management
Course. As part of the course, he was able to study the state of Human Capital Management, and
more specifically, the use of metrics and causal models to drive organizational decision making.
It was this experience that allowed Tommy the opportunity to take on the newly created position
at Scotiabank.
Tommy is managed by the Director of Metrics and Analytics. This position was created in
conjunction with his; the Director is therefore new to the organization. The Director is
Metrics and Balanced Scorecard: Human Capital Measurement at Scotiabank Page | 2
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supervised by the Vice-President of Human Resources. All of these positions exist within the
Corporate Human Resource Business Office (CHRBO).
Literature Review
Metrics
Human Capital Measurement can be viewed as a subset of the broader study of Knowledge
Management. Studies show that 85% of the typical corporation’s valuation is derived from its
intangible assets.1 Intellectual assets of a corporation are usually three or four times tangible
book value.2 HCM embraces all facets of knowledge, skills, intellectual property, and experience
that generate wealth for an organization.3 Where organizations used to derive their core
competencies through the effective management of physical assets and resources, the turn of the
century has introduced an opportunity and requirement to base strategy first and foremost on the
management of knowledge assets.4 Jac Fitz-enz is commonly refereed to as the father of human
capital benchmarking and workforce metrics and analytics. The founder of the Saratoga Institute,
he suggests that people, not cash buildings or equipment, are the critical differentiators of
business enterprise.5 In the knowledge era, traditional activity based human resource tasks
represent a mere 1% of a company’s operating expenses; HCM now demands over 60% of
operating expenses.6 It is clear that opportunities exist for using metrics to help drive
organizational decision making.
Value of Metrics
Fitz-ens sees two sources of pressure that are making metrics more relevant: Top management is
demanding that the human resource department become more involved in helping to achieve
business goals. New HR professionals are pushing to make a different for the organization and
an impact on the business.7 In a Conference Board survey, when asked to predict their use of key
performance indicators over the next three years, 84 percent of respondents anticipate they will
increase their application of human capital measures.8 Measuring conditions such as becoming
an employer of choice, having a sought after corporate culture or being a great place to work are
examples of why companies are looking to measure their people practices.9 De Ceri and
Boudreau suggest that HCM creates a logical connection between talent and key organizational
outcomes, just as finance does for monetary resources and marketing does for customer
resources.10
Human Capital Measurement identifies a “cause and effect” relationship between different
operational elements. For example, if you want strong financial results, you must have great
customer service. If you want great customer service, you must have excellent processes in
place. If you want great processes, you must have the right people, knowledge, and systems
(intellectual capital). 11 Leading metrics, like customer satisfaction, based on cause-and-effect
relationships, can alert companies to problems before they adversely affect the bottom line. For
example: declining customer satisfaction can point to an eventual drop in overall revenue or a
loss of market share. 12
The evaluation of HCM can lead to bottom line results. John Boudreau points to evidence that
certain “bundles” of “high performance” work practices are associated with higher
organizational financial performance.13 Mark Huselid has concluded through an examination of
relationships between work practice and firm performance that a one standard deviation increase
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in high performance work practices was linked to $27,044 more in sales, $18,641 more in market
value and $3,814 increase in profits per employee.14
Link to Strategy
HCM does not drive profits in and of itself. It is the framework that it provides to link activities
to strategy that creates an opportunity for increased profits and performance. John Boudreau
suggests that management of people is still primarily a focus on administrative efficiency, rather
than a focus on strategic outcomes.15 Kaplan and Norton suggest that a measurement system
should embody a “theory of the firm” with measures serving as ongoing tests of that theory, and
indicators to show when the theory or the outcome needs to change. 16 According to Conference
Board survey, only 52% of companies tie their people measures and targets to strategic plans and
46% to their annual budgets. Half report that metrics are fully or partially linked to customer
data.17 The same survey showed that 16% of respondents believe HR professionals receive good
or extensive training concerning the strategic use of people measures.18
Leading / Forward Looking Metrics

The new metrics created for organizations today serve not to measure data that can be readily
found on a balance sheet or income statement, but rather seek data for intangible elements that
can be correlated to employee productivity. Kaplan and Norton report that traditional financial
accounting measures like ROI and EPS can give misleading signals for continuous improvement
and innovation.19 Respondents to the Conference Board Survey selected Employee
Satisfaction/Engagement, Leadership and Productivity as the most successful measures for
educating managers about the links between people and strategy and for the impact on enriching
decisions about people that affect strategy.20 According to the survey, Employee
Satisfaction/Engagement and Competencies/Training metrics were found to match a policy of
customer responsiveness. Leadership and Competencies/Training measures were found to have
solid connections to innovation strategies. Remuneration and Leadership measures were found to
emphasize revenue growth.21 Conference Board survey correlations also show that tactical
Diversity measures are an important component of proving HR’s contribution to strategy. They
can provide a basis for broadening the candidate slates and focus attention on increasing
Diversity at all levels of the company.22 Becker and Huselid note the need to “peel back the
onion” and identify immediate relationships that seem to underlie the association between
bundles of high performance work practices and overall success.23 Companies are finding
success in linking people measures to customer data. By correlating metrics around productivity,
quality and service, it is possible to show the connection of HR services such as timely hiring to
levels of customer service or quality of hire to product innovation.24
Historically, companies have relied on financial metrics. These metrics only reveal the effect of
decisions made in the past. Companies need forward looking or “leading” metrics that are tied to
the company’s value drivers. Measures should be linked together in a series of cause (leading
indicators) and effect (lagging indicators) relationships, which ultimately culminate in the
financial perspective. Some measures in a perspective may have cause and-effect linkages
between them but at least one measure in each perspective must be linked to a measure in
another perspective.25 Causal linkages are important because they provide the mechanism to link
the everyday actions of frontline employees to financial results.26 Examples of lagging metrics
include: most financial type measurements (ROE, sales growth, economic value added, etc.) and
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many non-financial type measurements (production breakeven, customer retention, employee

productivity index, etc.). 27 According to Jac Fitz-enz, there are leaders and there are laggards;
leaders use metrics to help their organizations gain competitive advantage over the laggards.28 As
Arthur Schneiderman states, you can not manage lagging indicators…they are inherently after-
the-fact. Only leading metrics are actionable. 29 The future for HCM lies in the ability to create
leading metrics that can be predictive of future results. Schneiderman looks at customer
satisfaction suggesting that it is a poor indicator unless the drivers, such as responsiveness,
quality, delivery, or product feature – those indices that are actionable – are known.30 HCM
provides the opportunity for management to determine the factors which most directly contribute
to their overall strategy. Gertner offers a summary of the benefits that leading non-financial
metrics can have. These include: improved ability to compare actual performance to performance
potential in order to better use resources and manage assets; better identification of new business
opportunities found among untapped skills and processes; improved judgment of the
organization’s capacity to take on new projects; better assessment of personal skills, and
intellectual capital; and the improved schedules and cost quotes through better accounting of
hidden costs.31
Continuous Evaluation
Human Capital Measurement can not be a singular one time project. In order to drive success, it
is essential that managers routinely consult and revisit their measurement systems and the
respective link to strategy. Chris Srgyris refers to it as “double loop learning” – learning that
produces a change in people’s assumptions and theories about cause-and-effect relationships.32
The CEO of an engineering company reported that he continually tests his strategy. It is like
performing real time research. It provides managers the opportunity to know at any time in its
implementation whether the strategy they have formulated is working, and if not, why.33
According to Boudreau, the power of a metrics system is the ability to allow tests of the key
assumptions so that they can be modified, dropped or retained. Over time, the metrics system
should become a real-time test bed for HR innovations and their effects.34 In a Conference Board
Survey, 63% of respondents release their findings to senior leaders on a quarterly basis. 44% of
companies present people measure findings on a monthly basis. Companies with fewer
employees do not report findings as often as larger companies. Only 19% of firms share findings
with business managers, and only 15% share people measures with individuals outside of the
company.35
Developing New Metrics

A major criticism of those who release their Balanced Scorecard asks how much strategy could
actually be present in it if they are willing to share it.36 Moving forward with the goal of creating
forward looking leading metrics, it is necessary to break from the traditional metrics and create
new ones. Matt Evans offers a framework for creating new metrics. 37 It is helpful to use the
following framework to construct each new metric to ensure its alignment and data availability:
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New Metric Framework

Determine Strategic Objective
Describe the Measurement
Define the Ratio or Formula
Define the Unit of Measurement
Define the Frequency of Measurement
Define and Assumptions
Identify Sources
Ensure Availability
Identify Support Required
Balanced Scorecard
Human Capital Measurement can be effective as a stand alone evaluation tool. However, the
process is improved in organizations that make use of the tools to organize the measurement.
Robert Kaplan and David Norton of the Harvard Business School report that no single measure
can give a clear performance target or focus attention on the critical areas of the business.
Managers want a balanced presentation of both financial and operational measures.38 As a result,
the Balanced Scorecard was introduced in 1992 by Kaplan and Norton. 39 The Harvard Business
Review, in 1997, cited the Balanced Scorecard as being one of the most important management
concepts to have been introduced via articles in the magazine.40 According to Kaplan and
Norton, the Balanced Scorecard is used to clarify and update strategy, communicate strategy
throughout the company, align unit and individual goals with the strategy, link strategy
objectives to long-term targets and annual budgets, identify and align strategic objectives, and
conduct periodic reviews to learn about and improve strategy.41
Approach
The Balanced Scorecard approach is a helpful tool for the information and knowledge age. It
allows companies to manage the shift from managing hard assets (buildings and machinery) to
intangible assets. These assets can include customer relationships, employee skills and brand. 42
It combines financial measures with non financial measures to provide managers with richer and
more relevant information about the activities they are managing.43 The name reflects the
balance between short and long term objectives, leading and lagging indicators, and internal and
external factors in an organization.44 The Balanced Scorecard illustrates a company’s key value
drivers and shows how they interact to create value and competitive advantage.45 Many
companies also use the Balanced Scorecard in conjunction with other methodologies such as Six
Sigma, Total Quality Management (TQM), Activity-Based Costing (ABC), and Economic Value
Added (EVA).46
Four Perspectives
The Balanced Scorecard was created to answer four basic questions for an organization: How do
companies see us? What must we excel at? Can we continue to improve and create value? How
do we look to shareholders?47 As the name implies, the scorecard is intended to create an even
focus among the four questions. Though many companies modify the categories to fit their
needs, the standard perspectives include:
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FINANCIAL The financial perspective examines if the company’s implementation and execution of
its strategy are contributing to the bottom-line improvement of the company. It
incorporates the tangible outcomes of the strategy in traditional financial terms. 48
Common measurements include: cash flow, ROI, financial result, return on capital
employed, and ROE.49
The customer perspective defines the value proposition that the organization will apply
CUSTOMER
in order to satisfy customers and thus generate more sales to the most desired (i.e. the
most profitable) customer groups. Customer concerns generally fall into four categories:
time, quality, performance and service, and cost.50
The internal process perspective is concerned with the processes that create and deliver
INTERNAL
the customer value proposition. It focuses on all the activities and key processes
PROCESS
required in order for the company to excel at providing the value expected by the
customers both productively and efficiently. 51 Common measurements include: cycle
time, quality, employee skills and productivity. 52
The learning and growth perspective is concerned with the jobs (human capital), the
LEARNING and
systems (information capital), and the climate (organization capital) of the enterprise.53
GROWTH
Common measurements include a company’s ability to innovate, improve, and learn.54
Adoption of the Balanced Scorecard

The Balanced Scorecard has become widely utilized in corporate Canada. It is estimated that
65% to 70% of organizations have adopted Balanced Scorecards, and their use is increasing.55
The Scorecard assumes that people will adopt whatever behaviours and take whatever actions
necessary to arrive at the goals placed therein.56 Organizations who adopt the Balanced
Scorecard should anticipate a number of benefits, including: Better management understanding
of the linkages between specific organizational decisions and actions, and the chosen strategic
goals; a redefinition of relationships with customers; re-engineering of fundamental business
processes; the emergence of a new corporate culture; and emphasizing team effort among
organizational functions to implement the firm's strategy.57 Salterio and Webb observed that
properly implemented and consistently employed Scorecards may aid some organizations in
better articulating and communicating their strategy, measuring the drivers of their performance,
and detecting the superiority of one strategy over another. They concluded, however, that
scorecards are not yet performing strongly in planning, setting targets and aligning initiatives.
More recently, three professors at the Richard Ivey School of Business at the University of
Western Ontario examined the association between balanced scorecard adoption and a firm’s
performance. They noted that “there has been little examination of the factors associated with the
adoption of the [balanced scorecard], and there still is the need to demonstrate that the adoption
and implementation of the [balanced scorecard] is associated with improved financial
performance.”58
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Criticisms of Metrics and Balanced Scorecard

Though the Balanced Scorecard has been widely adapted for use, its overall effectiveness has
been consistently challenged. Some of the major challenges include:
1. Linkage to strategy: Only 5% of the workforce understands their company strategy.

Only 25% of managers have incentives linked to strategy. 60% of organizations don’t
link budgets to strategy. 86% of executive teams spend less than one hour per month
discussing strategy. 59
2. Choice of Information: The choice of what measures to use is often based on the
information that is most easily obtainable, rather than the most useful.60
3. Scorecard Revision: Questioning the assumptions held about the organization’s strategy,
and of the linkages and measures of the Balanced Scorecard, particularly when the actual
results differ from the expected results is essential. If the strategy is found to be lacking
the organization will need to refine it and may consequently revise some or all of the
measures on the balanced scorecard.61
4. Lagging Metrics: The measurements are referred to as lagging indicators and they
dominate most performance measurement systems. About 70% of all measurements tend
to fall into this category. 62 One of the major challenges in building your balanced
scorecard is to keep the number of measurements to a manageable few.
5. Apples and Oranges: Benchmarking works well when the process being benchmarked is
essentially the same at the multiple units (either internal or external) participating in the
exercise. Benchmarking is not informative when it is used to compare fundamentally
different processes or products. Furthermore, it is not effective when the companies being
compared work from significantly different strategies.
Scotiabank Case Study
Scotiabank Background
The Bank of Nova Scotia (BNS) opened in 1832 in Halifax63. It was created to support the trans-
Atlantic trade between Britain, North America and the West Indies. In 1882, the bank opened a
branch in Winnipeg, Manitoba. In 1892, BNS became the first bank to operate in
Newfoundland.64 By the late 1800s, the bank quickly expanded into the United States and
Jamaica, and become the first Canadian branch to operate outside Canada, the US or the UK.65
By the early 1900s, a coast-to-coast Canadian branch network had been established. In 1957,
Scotiabank became the first bank in Canada to install an electronic posting machine, when one
was installed at the Toronto main branch. In 1958, Scotiabank became the first bank in the world
to offer gold certificates, as well as the first to offer daily quotations on the price of gold. In
1961, Scotiabank became the first Canadian bank to appoint women to the position of bank
Manager.66 In 1981, Scotiabank became the first Canadian bank to connect nearly all domestic
branches to an online computer communications network. In 1985, Scotiabank and the National
Bank of Canada were the first to establish a shared ABM network.67 In 2001, Scotiabank was the
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first Canadian bank to offer a “no down payment” mortgage for first-time buyers. Scotiabank
joined with three other Canadian banks to launch the world’s first real-time, person-to-person
(P2P) e-mail money transfer service.68 BNS was involved in several mergers which helped
solidify its position as a Canadian branch bank. It amalgamated with Union Bank of PEI (1883),
Summerside Bank (1901), Bank of New Brunswick (1913), Metropolitan Bank of Canada
(1914), The Bank of Ottawa (1919), Montreal Trust (1994) and National Trust (1997)69
Scotiabank is currently the third largest bank in Canada by assets and the second largest by
market capitalization. It is Canada’s most international bank, having branches in more countries
than the other major Canadian banks.70 Scotiabank’s goal is to be the best Canadian based
financial services company71 Scotiabank has nearly 60,000 employees and services more than
12,500,000 customers in more than 50 countries around the world. Its services are grouped into
personal, commercial, corporate and investment banking. 72
The domestic banking component refers to operations within Canada. This involves 21,800
employees in over 1000 branches servicing more than 7,000,000 customers. International
banking involves operations outside of Canada and is spread across more than 40 countries. This
involves 34,000 employees servicing more than 5,000,000 customers worldwide. 73 Operations
are concentrated in the Caribbean and Central America, Mexico, Latin America and Asia. Scotia
Capital offers lending, investment banking and capital market products to corporate, government
and institutional clients throughout the NAFTA region74. Net income in the amounts of
$1,550,000,000 from domestic banking, $1,232,000,000 for international banking, and
$1,114,000,000 from Scotia Capital were generated in 2007.75
Scotiabank has been recognized with several awards that speak to the quality of the work
environment for employees and the service to customers. Scotiabank has been named one of
Canada’s 50 Best Employers for 2008 for four consecutive years by the Globe and Mail Report
on Business. It is ranked at number 14 on the Top 125 Training Organization by Training
Magazine, which is its fifth consecutive year on the list. 76 In 2006, Scotiabank was rated the
Best Bank in Canada by Global Finance Magazine.77 In 2007, Scotiabank won the prestigious
Catalyst Award for its outstanding initiatives that result in advancement of women in the
workplace.
Bank Strategy
The priorities at Scotiabank for 2008 are to focus on sustainable revenue growth, capital
management and leadership.78 In domestic banking, branches and salespeople are added to target
high-growth customer segments. In International Banking, the branch network is continually
expanded marketing to new customer segments through innovative delivery channels.
Scotiabank will take advantage of acquisition opportunities wherever possible. Investing for
business growth is the focus in using capital. Scotiabank seeks to develop new leaders with a
global mindset, which will provide a significant long term competitive advantage. 79
Use of Metrics
Oracle’s paper on Corporate Performance Management in the financial services industry
suggests that it is important to get intangibles into the evaluation and improvement of a financial
services firm.80 Scotiabank has repeatedly taken steps to see that metrics become a more integral
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part of their strategy setting, feedback and evaluation. Metrics are important to Scotiabank as a
means to help set strategy, communicate actions that will drive the strategy, evaluate the results,
and solicit feedback on future strategy generation.
Metrics are used primarily within the framework of the Balanced Scorecard. A Balanced
Scorecard is used for the bank as a whole, with additional scorecards created by each department
in line with the overall scorecard. Metrics are also used to evaluate activities and projects.
However, they are used mostly as a way to derive the value to the employees taking part, and not
the value added to the organization. The greatest potential exists to use metrics to drive human
resource activities. Notwithstanding, there are opportunities in all areas of the bank to use
metrics as a valuable evaluative tool.
The mission, vision and values is communicated throughout Scotiabank to all stakeholders.
Employees are clear what the organization stands for. The departmental Balanced Scorecards
and the associated results, however, are only reported to senior management, and not filtered
down to other employees in the bank.
Balanced Scorecard at Scotiabank

In an effort to publicize the use of the scorecard and to reports its effectiveness, Scotiabank has
made its scorecard public. It should be noted that some of the exact target figures as well as the
drilled down departmental scorecards have remained confidential.
Financial Customer
• Return on Equity of 20-23% • High levels of customer satisfaction and

• Diluted earnings per share growth of loyalty
7-12% • Deeper relationships with existing
• Long-term shareholder value through customers
increases in dividends and stock price • New customer acquisition
appreciation
Operational People
• Productivity ratio of <57% • High levels of employee satisfaction and

• Sound ratings engagement
• Strong practices in corporate governance • Enhance diversity of workforce
and compliance processes • Commitment to corporate social
• Strong capital ratios responsibility and strong community
involvement
Source: Scotia World Magazine, 1.
The following 2007 figures were reported for each Balanced Scorecard segment. Scotiabank had
a 22% ROE and an EPS growth of 13%. Scotiabank’s customer loyalty index was 53%.
Scotiabank had a productivity ratio of 53.7%. The Tier 1 capital ratio stood at 9.26%. Scotiabank
achieved an 87% score on their Employee Satisfaction Index, a measure of employee attitudes
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towards their work. The Diversity Index, which tracks employees’ perception of their
inclusiveness and fairness of the workplace, rose to 89%. The percentage of Women in senior
management reached 31.5% domestically and 22% internationally. Visible minorities in senior
management reached 10.2% domestically. Aboriginal employees reached 1.1% domestically,
and employees with disabilities stood at 4% of the domestic workforce. Scotiabank also launched
the Bank wide global wellness initiative to help develop locally customized programs to address
the physical and mental health concerns of employees. A summary of the Key Performance
Indicators is provided in Exhibit 12.
Gathering Data
The greatest problem with the creation and evaluation of metrics is ensuring that the required
data is available. It has been the trend that organizations will create their metrics based on
available data, rather than creating mechanisms for collecting data based on the metrics that are
desired. Where data is collected by departments or by third party providers, it can become a
maze of approvals before the data is made available. There is currently a need to refine the
approach that is taken with respect to the collection of data to ensure that it can be available to
those who need it, all while maintaining the required confidentiality.
Decision Point
Tommy now has to make a recommendation to his boss on what needs to be done in the Metrics
and Analytics department for the next six months. He will need to comment on the Balanced
Scorecard, the alignment with bank strategy and the availability of data. He will need to suggest
new procedures as well as new and amended metrics. He will need to show how he is going to
make his case that metrics can improve the overall productivity of an organization. It is this set
of recommendations that has Tommy so deep in thought. As he reaches the Scotiabank elevator,
he has but a few seconds to gather his final thoughts before entering the briefing meeting to
deliver his ideas.
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Case Questions
1. Assuming you are Tommy, who has just questioned the relevance of metrics in the
organization. How would you explain why metrics are important and how they can
contribute to improved performance and/or profitability?
2. What are the advantages and disadvantages of leading and lagging metrics?
3. Analyze the metrics that are currently being used for the Scotiabank Balanced Scorecard.
How do the metrics align with the overall strategy of the bank? What recommendations
would you make?
4. What are the three biggest problems facing the new role?
5. Based on your understanding of forward looking metrics, and using the framework for
creating new metrics, create one new metric for each quadrant in the Scotiabank
Balanced Scorecard.
6. What additional data will you need for your new metrics? How would you go about
gathering it?
7. Create a short (1 paragraph) communication plan for informing employees of the metrics
and benchmarks being used in the organization. Be sure to balance the need to convey
information with sensitivity of data and the information that it will provide.
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Activity: Metrics Calculation

1. Calculate the metrics listed below using the data provided in the exhibits for October 31, 2007 (part A). For
all metrics that require FTE, use only domestic data. See exhibit 14 for the formula guide.
2. Fill in the Saratoga data for the Banking industry (part B).
3. Calculate the difference between the Scotiabank calculation and the industry average (part C).
Metric A) Scotiabank Calculation B) Saratoga Data C) Difference (A-B)
Revenue Factor
Expense Factor
Income Factor
Human Capital
ROI
Compensation
Revenue Factor
Compensation
Expense Factor
Training
Investment
Factor
4. Be prepared to answer how the difference (positive or negative) contributes or takes away from effective
Human Capital Management at Scotiabank.
5. What are the limitations of the metrics listed above?
6. Calculate the Tobin’s q for Scotiabank. What does this say about its knowledge assets?
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Exhibit 1: 2007 Scotiabank Financial Highlights
Scotiabank., Opportunity Means the World to Us: 2008 Annual Report, 27.
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Exhibit 2: Scotiabank Average Sheet and Interest Margin
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Exhibit 3: Net Income by Geographic Segment
Exhibit 4: Scotiabank Non-interest Expenses and Productivity
Source: Scotiabank., Opportunity Means the World to Us: 2008 Annual Report, 81.
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Exhibit 5: Domestic Banking Financial Performance
Exhibit 6: Scotiabank International Banking Financial Performance
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Exhibit 7: Total Shareholder Return
Exhibit 8: Capital Stock
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Exhibit 9: Diversity at Scotiabank Exhibit 12: Scotiabank Key

Performance Indicators
Scotiabank, 2007 Corporate

Social Responsibility Report, 15.
Exhibit 10: Number of Scotiabank

Employees in Canada

Exhibit 13: Scotiabank Turnover

Exhibit 11: Scotiabank’s Global

Network
Scotiabank, 2007 Corporate Scotiabank, 2007 Corporate

Social Responsibility Report, 6. Social Responsibility Report, 21.
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Exhibit 14: Saratoga Human Capital Metrics Formula Guide
$ Revenue /
RF = Revenue Factor
Total # FTEs (FTE = full-time equivalent)
$ Operating Expenses /
XF = Expense Factor
Total # FTEs
$ Income /
IF = Income Factor
Total # FTEs
= Revenue - (Expenses - Compensation - Benefits - T&D) /

HCR = Human Capital ROI
Compensation + Benefits + T&D
$ HR Expense /
HRX = Human Resource Expense
$ Total Expense
Total # FTEs /
HRR = HR Headcount Ratio
Total # HR FTEs
$ Compensation Costs /
CRF = Compensation Revenue Factor
$ Revenue
$ Compensation Costs /
CXF = Compensation Expense Factor
$ Expense
# Voluntary Separations /
VSR = Voluntary Separation Rate
# Headcount
# Involuntary Separations /
ISR = Involuntary Separation Rate
# Headcount
$ External Hiring Costs /

CHE = Cost per Hire External
# of External Hires
$ Internal Hiring Costs /

CHI = Cost per Hire Internal
# of Internal Hires
average number of calendar days between receipt of job requisition

TFE = Time to Fill External
and date the external hire accepts the offer
average number of calendar days between receipt of job requisition

TFI = Time to Fill Internal
and date the internal hire accepts the offer
# Job Offers Accepted /

OAR = Offer Acceptance Rate
# Total Job Offers Extended
# Total employees trained /

ETP = Employees Trained Percent
# Headcount
= $ Total Training Cost /

TIF = Training Investment Factor
# Headcount
Exhibit 15: Tobin’s q
q= Market value of installed capital / or Market value/ or Value of stock market/

Replacement cost of capital Asset value Corporate net worth
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References
1
David P. Norton, “Measuring the Contribution of Human Capital,” Balanced Scorecard Report 3 No. 4
(2001): 1.
2
Nick Bontis “Intellectual Capital: An Exploratory Study That Develops Measures and Models,” Richard
Ivey School of Business (1998): 63.
3
“Measuring and Managing Human Capital Intelligence: The New Wealth in Information Age
Organizations,” SAS (2002): 2.
4
“Measuring and Managing Human Capital Intelligence: The New Wealth in Information Age
Organizations,” SAS (2002): 2.
5
Nick Bontis and Jac Fitz-ens, “Intellectual Capital ROI: A Causal Map of Human Capital Antecedents and
Consequences,” Journal of Intellectual Capital 3, no. 2 (2002): 224.
6
Christopher Cornell, “By the Numbers,” Human Resource Executive (August 2004): 37.
7
8
Stephen Gates, “Measuring More Than Money,” The Conference Board (2004): 34.
9
10
Helen De Cieri and John W. Boudreau, “Global Human Resource Metrics,” Center for Advanced Human
Resource Studies (March 2007): 4.
11
Matt H. Evans, “Course 11: The Balanced Scorecard,” Excellence in Financial Management (February 4,
2002).
12
Cognos., Monitor, Manage, Perform: Scorecarding with IBM Cognos 8 Business Intelligence (Burlington,
MA: Cognos, 2008).
13
John W. Boudreau, “HR Metrics and Strategy,” Center for Advanced Human Resource Studies Working
Paper Series (1997): 1.
14
15
16
17
18
19
Robert S. Kaplan and David P. Norton, “The Balanced Scorecard – Measures That Drive Performance,”
Harvard Business Review (Jan-Feb 1992): 71.
20
21
_____________________________________________________________________________________________
22
23
24
25
Marvin J. Soderberg, “The Balanced Scorecard: Structure and Use in Canadian Companies,
http://library2.usask.ca/theses/available/etd-04262006-154022/unrestricted/BSC.pdf
(accessed April 19, 2008).
26
27
2002).
28
29
Arthur M. Schneiderman, “Must Your Scorecard be Balanced,”
Strategy+Business, http://www.schneiderman.com/The_Art_Of_PM/must_a_BSC_be_balanced/
(accessed March 17, 2008).
30
Ibid.
31
“Made to Measure: Corporate Performance Management in the Financial Services Industry,” Oracle
(March 2004): 3.
32
Robert S. Kaplan and David P. Norton, “Using the Balanced Scorecard as a Strategic Management
System,” Harvard Business Review (Jan-Feb 1996): 84.
33
Ibid.
34
35
36
“Balanced Scorecard Example,” Collaborative Performance,
http://colperf.wordpress.com/2007/09/20/balanced-scorecard-example/
37
2002).
38
39
Ian Cobbold and Gavin Lawrie, “The Development of the Balanced Scorecard as a Strategic Management
Tool,” 2GC Active Management, http://www.2gc.co.uk/pdf/2GC-PMA02-1f.pdf
_____________________________________________________________________________________________
40
Ian Cobbold and Gavin Lawrie, “Classification of Balanced Scorecards Based on Their Intended Use,”
2GC Active Management, http://www.2gc.co.uk/pdf/2GC-PMA02-3f.pdf
41
Robert S. Kaplan and David P. Norton, “Using the Balanced Scorecard as a Strategic Management
System,” Harvard Business Review (Jan-Feb 1996): 85.
42
Robert Angel and Hubert Rampersad, “Do scorecards add up?,” CA.com,
http://www.camagazine.com/2/6/1/7/9/index1.shtml (accessed April 19, 2008).
43
2GC Active Management, http://www.2gc.co.uk/pdf/2GC-PMA02-3f.pdf (accessed April 19, 2008).
44
http://www.camagazine.com/2/6/1/7/9/index1.shtml (accessed April 19, 2008).
45
Cognos., Monitor, Manage, Perform: Scorecarding with IBM Cognos 8 Business Intelligence (Burlington,
MA: Cognos, 2008).
46
Ibid.
47
48
“Balanced Scorecard,” Wikipedia, http://en.wikipedia.org/wiki/Balanced_scorecard
49
50
51
52
53
54
55
http://www.camagazine.com/2/6/1/7/9/index1.shtml
56
57
Kevin Hendricks, Larry Menor and Christine Wiedman, “The Balanced Scorecard: To adopt or not to
adopt?,” Ivey Business Journal, http://www.iveybusinessjournal.com/view_article.asp?intArticle_ID=527
_____________________________________________________________________________________________
58
http://www.camagazine.com/2/6/1/7/9/index1.shtml
59
2002).
60
2GC Active Management, http://www.2gc.co.uk/pdf/2GC-PMA02-3f.pdf
61
62
2002).
63
“Our History: The Scotiabank Story,” Scotiabank,
http://www.scotiabank.com/cda/content/0,1608,CID8399_LIDen,00.html
64
“They Built a Great Bank,” Scotiabank,
65
“The Scotiabank Story,” Scotiabank,
66
“Our History: The Scotiabank Story,” Scotiabank,
67
Ibid.
68
Ibid.
69
“The Scotiabank Story,” Scotiabank,
70
“The Community,” Scotiabank, http://www.scotiabank.com/cda/content/0,1608,CID12016_LIDen,00.html
71
Scotiabank, Opportunity Means the World to Us: Annual Report 2008 (Toronto:
Scotiabank, 2008), 2.
72
“Corporate Profile,” Scotiabank, http://www.scotiabank.com/cda/content/0,1608,CID821_LIDen,00.html
73
Ibid.
_____________________________________________________________________________________________
74
“Corporate Profile,” Scotiabank, http://www.scotiabank.com/cda/content/0,1608,CID821_LIDen,00.html
75
Scotiabank., Opportunity Means the World to Us: Annual Report 2008 (Toronto:
Scotiabank, 2008), 9.
76
“Scotiabank reports first quarter earnings of $835 million,” CNW Group,
http://www.newswire.ca/en/releases/archive/March2008/04/c7939.html
77
“In Good Company,” Scotiabank, http://www.scotiabank.com/cda/content/0,1608,CID9079_LIDen,00.html
78
Scotiabank., Opportunity Means the World to Us: Annual Report 2008 (Toronto: Scotiabank, 2008), 6.
79
Ibid.
80
“Made to Measure: Corporate Performance Management in the Financial Services Industry,” Oracle
(March 2004): 3.

Metrics and Balanced Scorecard:: Driving Human Capital Measurement at Scotiabank

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Metrics and Balanced Scorecard:

Driving Human Capital Measurement at Scotiabank

Human Capital Measurement (HCM) is a critical component of strategic planning,

Leading / Forward Looking Metrics

many non-financial type measurements (production breakeven, customer retention, employee

Developing New Metrics

New Metric Framework

Common measurements include a company’s ability to innovate, improve, and learn.54

Adoption of the Balanced Scorecard

Criticisms of Metrics and Balanced Scorecard

1. Linkage to strategy: Only 5% of the workforce understands their company strategy.

Scotiabank Case Study

Balanced Scorecard at Scotiabank

• Return on Equity of 20-23% • High levels of customer satisfaction and

• Productivity ratio of <57% • High levels of employee satisfaction and

Source: Scotia World Magazine, 1.

Activity: Metrics Calculation

Metric A) Scotiabank Calculation B) Saratoga Data C) Difference (A-B)

Exhibit 1: 2007 Scotiabank Financial Highlights

Exhibit 2: Scotiabank Average Sheet and Interest Margin

Exhibit 3: Net Income by Geographic Segment

Exhibit 4: Scotiabank Non-interest Expenses and Productivity

Exhibit 5: Domestic Banking Financial Performance

Exhibit 6: Scotiabank International Banking Financial Performance

Exhibit 7: Total Shareholder Return

Exhibit 8: Capital Stock

Exhibit 9: Diversity at Scotiabank Exhibit 12: Scotiabank Key

Scotiabank, 2007 Corporate

Exhibit 10: Number of Scotiabank

Scotiabank, 2007 Corporate

Exhibit 13: Scotiabank Turnover

Scotiabank, 2007 Corporate

Exhibit 11: Scotiabank’s Global

Scotiabank, 2007 Corporate Scotiabank, 2007 Corporate

Exhibit 14: Saratoga Human Capital Metrics Formula Guide

= Revenue - (Expenses - Compensation - Benefits - T&D) /

$ External Hiring Costs /

$ Internal Hiring Costs /

average number of calendar days between receipt of job requisition

average number of calendar days between receipt of job requisition

# Job Offers Accepted /

# Total employees trained /

= $ Total Training Cost /

Exhibit 15: Tobin’s q

q= Market value of installed capital / or Market value/ or Value of stock market/

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