Personal Balanced Scoreboards: The Key to Organizational Alignment
Strategic organizational alignment is one of the biggest challenges managers face: only 25% of them have incentives linked to the strategy, while only 6% of employees know their job’s strategic priorities. Learn how to create personal scoreboards and cascade your strategy successfully.
An organization can simply not execute its strategy if its employees are not familiar with it or do not understand the role they play in its implementation. Even so, many traditional employee performance systems are not effective in aligning employee performance with the organization’s strategic priorities.
Correctly implementing and cascading the Balanced Scorecard can help improve organizational alignment as it helps employees comprehend the organization’s integral strategy and know how their work impacts it.
Do Your Employees Know The Strategy?
One of the best practices to help employees familiarize themselves with the strategy is to implement a communication plan that translates the strategy to operative terms.
There are even some organizations that have chosen to continuously evaluate their employees’ level of awareness of the corporate strategy. Studies have found that employees that can correctly identify the organization’s main strategy, have a clearer understanding of their job’s requirements and are more engaged with the organization.
Evaluate Your Employee Performance Management System
A traditional performance evaluation almost exclusively consists of an annual or biannual event in which supervisor and employee gather to evaluate the latter’s performance. In spite of its relevance, it is common for employees (and even some supervisors) to see this evaluation as a Human Resources process. Likewise, many organizations don’t require their supervisors to develop effective evaluations or make sure that all their employees have clearly defined strategic objectives and development plans.
On the other hand, an Employee Performance Management System comprehends a wide array of processes that focus on aligning the organization, achieving results and developing organizational skills through the communication, collaboration and planning processes between supervisors and employees. It also frequently includes linking individual performance to compensation.
The Employee Performance Management System is a strategy that encourages employees to take responsibility for their activities and results, as well as share the responsibility of attaining the strategy. It entails activities such as clarifying expectations, responsibilities and standards; establishing targets and linking them to corporate goals; continuously reviewing processes and adjusting goals; assessing performance; and planning for future development. These activities are cyclical and must be aligned to the organization’s Balanced Scorecard in order to be effective in driving the corporate strategy.
Assess Your Organization’s Current State
Before starting to cascade personal Balanced Scorecards to key organizational members, it is important to evaluate the company’s current Performance Management System. This will allow the organization to know its areas of opportunity and implement the changes that the employees and the strategy need, instead of seeking to preserve the status quo.
In order to evolve from a compensation-focused management system to one focused on employee performance, the employee’s assessment must cover all four perspectives of the Balanced Scorecard. The company may choose to weigh each perspective according to the importance they have for each job.
To help the employees get familiarized with this new approach, we recommend gradually cascading the personal scorecards throughout the organization, starting with the executive team. Afterwards, personal scorecards should be developed for the organization’s most strategic positions and finally, the system should be cascaded to the rest of the organization.
Align the Personnel to the Balanced Scorecard
These personal scorecards may be developed by following the next 5 steps.
1. Construct the individual scorecard. The first step consists on employees developing their own scorecard by replicating the four perspectives of the corporate strategy map and choosing those objectives where they have the most impact. They must then identify the critical success factors for each objective and establish a target for each one of them.
2. Link individual objectives with corporate goals. Along with their supervisors, each employee should clarify how their individual objectives impact corporate strategic goals. Similarly, supervisors should make sure that the proposed targets are both challenging and attainable.
3. Approve and evaluate individual scorecards. Each supervisor should periodically review their employee’s strategic objectives and provide feedback. These evaluations may be monthly, quarterly or annually, but they must be consistent, based on the employee’s personal scorecard and valued by management.
4. Assess the coverage of the Corporate Balanced Scorecard. Company leaders must ensure that the corporate Balanced Scorecard is adequately covered by the individual scorecards, i.e. that the objectives of the organization are attained by the efforts of the workforce as a whole. In order for this to happen, the skill set required for each position must be identified and developed.
5. Link individual scorecards to the employee performance management process. Personal scoreboards should be linked to other components of the performance management system, such as training and development programs, reward and recognition systems, and incentive management to create a comprehensive system to manage individual performance.
If the process of developing personal Balanced Scorecards is conducted properly, employees will be better equipped to prioritize their daily work and thus ensure the successful implementation of the strategy.
Keep in mind that…
Strategy is a team sport that can only be won with a workforce that is committed and focused on the strategy. Sadly, only 1 in 10 businesses manage to successfully execute their strategy. At TRISSA we can help you be part of that 10%.
We provide our customers the tools and expertise needed to help them align every member in the organization through personal scorecards, skill assessments and effective communication plans.
Author: Trissa Strategy Consulting
Source: Frangos, Cassandra A. "Creating a Strategy-Focused Workforce: Aligning Personal Goals to the BSC." Balanced Scorecard Report (2004): 14-16. Online journal.