There has been debate in both the corporate world and academic circles on whether the balanced scorecard approach is better than other systems of managing performance.
My answer to this question is yes and it's based on several years of experience using the balanced scorecard approach both locally and regionally.
First, I must make it very clear that the balanced scorecard will yield the desired results provided certain conditions exist with within the implementing organisation. Top among these conditions is that there must unwavering support from both the board of directors and top executives.
The second factors is that top management must be willing to use the balanced scorecard approach as a management tool and make it part of the culture of the organisation. Just like budgeting the balanced scorecard must be used as one of the many tools in the management tool kit.
The third factor is that the balanced scorecard must be used to recognise those adding more value to the organisation and they must be rewarded accordingly. Without recognising those achieving the desired results over and above the call of duty the balanced scorecard will fail.
When the above conditions have been met the balanced scorecard appr-oach will yield good results for your organisation provided its implemented properly.
The major reason why some scorecard initiatives fail is that many organisations fail to take advantage of one of the key advantages of the balanced scorecard which is the ability to bring out measurable goals.
There has been confusion for decades on how to define performance. While others would want to take performance as the process used in achieving results, the more recent and more effective definition is the one that looks at performance as an output or result.
Due to the confusion surrounding the definition of performance some organisations have focused on measuring behaviour or personality and calling that performance. The danger with such an approach is that both dimensions are very subjective and are often used by managers to settle scores with employees. This results in employees resenting performance management and more specifically performance appraisals.
One factor that is sure to derail the success of any performance management system is how performance is measured. In the majority of cases we have tended to focus on things that are not measurable and calling these performance.
People often refer to action plans as goals when in fact action plans are activities undertaken in order to achieve a goal. With this wrong categorisation of goals some organisations end up rewarding people for engaging activities that have no direct impact on the outcome.
I already see this confusion in the inclusive government where there are very few tangible goals set but an avalanche of action plans with no direct link to any specific goal.
The following example will help you why it's necessary to distinguish between a goal and an action plan. There was a beekeeper with two sections, A and B. In both sections the management there were mandated to come up with the best way to measure the performance of the bees and reward them accordingly.
In section A the bees were measured on the number of flowers visited and in section B on the amount of nectar collected. After a few months after the introduction of the of the system section B was far ahead in terms of producing honey that section A. In section the bees wee moving from one flower to the other in order to reach the target of visiting as many floors as possible.
In the processing of visiting as many flowers as possible they lost sight of the overriding goals of producing more honey for exports. I am sure if bees in section A where given a clear goal they would have produced a different result.
Look at your organisation.How many people are visiting flowers and not collecting nectar because of the way goals are set and how the rewards are structured? The inclusive government might run the risk of visiting too many flowers without actually collecting the nectar because of how their goals have been structured.
Most of the items called goals are not goals but action plans. The majority of what are termed goals or objectives are not measureable at all. They suffer from the following problems: they are actions and not results, they are about planning to plan, they are made up of high sounding words such as: accountable, aligned, capacity, collaborative, commitment, ensure, promote, stabilise, enhanced, maintain, optimise, robust, sustainable etc. These are the words you find in documents that are not written in results language and they yield very little results if any at all. Most strategy documents suffer from this problem.
When something is said to be measurable you must be able to: to count something, you must be able to observe it-to see it, hear it, touch it. Detect it objectively and consistently. In order to observe something you must be able to describe it and separate it from other things so that you can recognise it.
How do you then structure the goals so that you can start collecting nectar? In order to collect the nectar goals must be structured in the following way. Within the balanced scorecard approach a goal is made up of a: goal, measure, baseline target, stretch target and reporting frequency. The goal must always start with an action verb such as grow revenue, build a strong employer brand, reduce costs, create new jobs or increase capacity utilisation.
Memory Nguwi is the Managing Consultant of Industrial Psychology Consultants (Pvt) Ltd a management and human resources consulting firm. He can be contacted on 481946-48/481950/2900276/2900966 or cell number 091 2356 361 or email: