Balanced Scorecard Principles For Performance Measurement

Most of us have heard some version of the standard performance measurement clichés: “what gets measured gets done,” “ if you don’t measure results, you can’t tell success from failure and thus you can’t claim or reward success or avoid unintentionally rewarding failure,” “ if you can’t recognize success, you can’t learn from it; if you can’t recognize failure, you can’t correct it,” “if you can’t measure it, you can neither manage it nor improve it," but what eludes many of us is the easy path to identifying truly strategic measurements without falling back on things that are easier to measure such as input, project or operational process measurements.

Strategic performance measures monitor the implementation and effectiveness of an organisation's strategies, determine the gap between actual and targeted performance and determine organisation effectiveness and operational efficiency.

Good Performance Measures

• Provide a way to see if our strategy and operational plan are working.
• Focus employees' attention on what matters most to success.
• Allow measurement of accomplishments, not just of the work that is performed.
• Provide a common language for communication.
• Are explicitly defined in terms of owner, a unit of measure, collection frequency, data quality, the expected value(targets), and thresholds.
• Are valid, to ensure the measurement of the right things.
• Are verifiable, to ensure data collection accuracy.

Let’s work through an example of an operational plan:

When setting objectives, do it within the framework of the Balanced Scorecard categories, i.e. financial, business processes, learning and growth and customer/supplier requirements. It could be that there are other or additional focus areas that are specific to your business, e.g. “Safety in a heavy equipment environment”. Caution should however be exercised to have no more than 6 broad areas of focus.

RACI Model

A RACI matrix assigns clear roles for each team member for the duration of a project: those who are Responsible and Accountable for the project’s deliverables, those who are Consulted as the work proceeds, and those who need to be Informed of progress, roadblocks, and milestones.

Click here to view and download an example of an operational plan for the production department.