By December 28, 2009 0 Comments Read More →

Is the Balanced Score Card Really The Best Answer?

Is the Balanced Score Card Really The Best Answer?

I recently responded to a question on Linkedin. The question was about performance problems at a company and whether to implement a balanced score card to get better results.

Most of the other answers said yes, implement a balanced score card. My answer was no, look at the root cause of the performance and implement some performance measures and a simple performance management approach to fix the problem. Then, you can consider a balanced score card.

The idea is to keep it simple. Don’t use a sledge hammer to hang a picture. And don’t jump on a bandwagon when you really need a motorcycle. The bandwagon isn’t nimble, won’t get through tight spaces and takes a lot more maintenance and attention. A true balanced scorecard isn't the tool to start with if you have performance problems. It’s usually too broad and is most often used at higher levels to get an overview of performance across a broad range of performance characteristics (hence the term balanced). It also means a much higher level of effort.

To deal with specific issues, focus on them first. What you need is something grass roots and directed - the things that usually roll up to the balanced scorecard. Once you get these things going, then a balanced score card can be put together that includes many different areas of performance.

If you don’t already have one, start by developing your Mission, Vision and Values with your staff involved in the process. Make them concrete, understandable and action oriented. Avoid the typical corporate fluff.

Then, based on your objectives that come out of your MVV process (or other strategic initiatives), which should be tied to your organization’s success. Identify performance results and characteristics your company needs to achieve in order to be successful. These are usually the Key Performance Indicators or KPI’s – but just a handful. These help everyone understand the goals, show overall performance and can eventually be part of a balanced score card. With these, everyone knows the overall company performance.

The next step is to drill down to specific internal services, systems, processes and resources to identify measurements for processes and tasks that contribute to the KPI's results. Some of this may come from your current systems already; others may need a new way to collect information. The important part is to collect information, not just data. I’ll cover that issue in a future podcast.

The main intent of these measurements is to help you manage performance and improve results, not to implement a reward/penalty system.

It's true that without information about your business, you can't make decisions that will improve results. That's the real reason for measurements - to manage performance, not just measure it. Think about Wall Street when you think about a reward/penalty system - sometimes it can lead to the wrong behavior.

Develop your performance management system to provide information you can use to move forward, not as data you look at through a rear view mirror. Quite simply, if you can’t see what's happening, what's working well or what's an obstacle, you can't manage it or improve it. That’s actually a principal of many Quality Assurance processes. Also, if you make it painful, staff will find ways to fool the system and morale will suffer even more.

Get your staff and suppliers involved in developing the measurements and management process and get them interested in using the results and information the measures provide to find ways to improve and change, not just to measure them for their performance review. Show them that it isn't a threat and they will respond better, as long as they are the right people in the first place, of course. This process may even help you decide whether they are.

About Michel Theriault

Michel is the founder of Success Fuel for Managers. He is an author, speaker and consultant focusing on topics relevant to Managers and aspiring Managers in businesses of all sizes who want to get results, get attention, and get ahead. He is also a contributor to Forbes and AllBusiness Experts . Michel is available for speaking engagements, training and consulting. Connect with him or send an email.

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