How to use Balanced Scorecard in Employee Performance Management

Balanced Scorecard is best when used across the whole workforce

Balanced Scorecard is a great way for senior managers to track indicators of performance. But if that’s all it is, a tremendous amount of potential value is being missed. If effort has been spent balancing planning across the four factors of balanced scorecard but people aren’t aligned to those plans and working in the same direction, the plans can only partially work at best.

The tool used to align people to a company’s balanced scorecard is performance management. In this article we’ll explore the two primary methods to achieve this:

Goal alignment
Behavioural alignment

Goal alignment

Goals are one of the primary methods available in performance management to align people to an organisation’s strategic plan. When done well an individual should be able to understand how each of their goals links to the company’s strategic plan. In other words, how they are contributing to the company’s overall goals. This helps people feel a sense of being part of something bigger and also ensures teams are moving in the same direction.

To align the goals of individuals in an organisation to the strategic plan there are two common approaches:

Top Down Functional Model
Balanced Scorecard Model

Alignment means creating a goal that contributes to the completion of a higher level goal.

In the Top Down Functional Model the CEO of a company creates company goals and then senior managers align their objectives to the CEO’s goals. This creates goals for each division. This process then repeats and cascades throughout the entire organisation until each individual contributes to the goals of their managers.

Using the Balanced Scorecard Model goals are aligned to each of the four key areas of a company’s balanced scorecard:

Financial
Customers
Internal Process
Learning & Growth

The Balanced scorecard aligns business activities to the corporate vision and supports efficiency at every level. This view of goal setting is like a puzzle where individual goals are interconnected and supportive of achieving each other.

In practice, most organisations have a mixture of Top Down Functional goals that transfer directly from manager to team member and goals that when pieced together (Balanced Scorecard) create the circumstances for achieving a larger goal.

Behavioral alignment

Goals are not suitable for every role in an organisation. Even so, it’s important that everyone in a company is moving in the same direction and contributing to the strategic plan. How do we do this when goals aren’t suitable for a role? The answer is values and behaviours. Values and behaviours communicate important aspects of an organisation’s culture to a person. They provide direction and set expectations for how things should be done.

An example of a value aligned to a balanced scorecard might be “We Are Customer Focussed”. Behaviours might be:

We put the interests of the customer first.
We respond to all customer emails within 4 hours.
When speaking with customers we summarise what they have said and confirm our understanding

Values and behaviours can be used simply to communicate expectations to team members. They can also be used in performance management. For instance, in a quarterly check-in a manager might be asked to talk to a team member about the values they have most displayed and least displayed.

Final thoughts

Balanced Scorecard provides a holistic approach to strategic planning and tracking indicators of success. Performance management is the tool that aligns people to the balanced scorecard and strategic plan. It provides a way to carry out the plan and track indicators at the individual and team level.

How to use Balanced Scorecard in Employee Performance Management

Balanced Scorecard is best when used across the whole workforce

Goal alignment

Behavioral alignment

Final thoughts

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