Cascading the Balanced Scorecard from Corporate Level to Business Levels to Individual Level

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Balanced Scorecard > Best Practices > Cascading the Balanced Scorecard from Corporate Level to Business Levels to Individual Level

Cascading the Balanced Scorecard from Corporate Level to Business Levels to Individual Level
Nelson Waweru, Manager, Kenya, Member
What I have seen working is linking the organization's score card to the business unit's/divisional/departmental score cards and finally individual score cards.
In some organizations this idea fails when it is left to HR alone. The BSC is then easily perceived as a staff performance appraisal tool only.
BSC is basically a tool to help you track the implementation of your strategy but you can only do this effectively through individuals. Hence the need to cascade the BSC from corporate level to individual level.
 

 
Line Management Responsibility
Gary Wong, Consultant, Canada, Premium Member
I agree. This is a line management exercise. Leaving it to HR personnel to implement is not delegation but abdication. For further comments, please see mine and others below under Create Strategic alignment+Line of sight.
 

 
Cascading the Balanced Scorecard from Corporate Level to Business Levels to Individual Level
Alfred Mifsud, Director, Malta, Member
I agree the Balanced Scorecard is not a tool left to one department, but has to be tackled in a collective manner. Its basis rests on strong teamwork. Aligning it across the entire organisation is paramount to its eventual success.
 

 
Cascading the Balanced Scorecard
Johnny Michael Tan, Management Consultant, Malaysia, Member
I agree that leaving the 'sole' coordination to HR for Balanced Scorecard administration and cascading is a recipe for disaster.
BSC needs the concerted focus and joint ownership by all. I would advocate coordinated 'exercise' of weighting being applied. e.g. quality goals - quality assurance department has 40% (amongst all other goals of the dept itself), manufacturing 35%, engineering 30%, maintenance 35%, R&D 25%, SCM 20%, TQM / TPM 25%, it 15%, facilities 20%, HR 15%, finance 15% etc.
 

 
BSC and Its Ownership
Earle Taylor, Turnaround Manager, United States, Member
We must be very clear where the ownership of the BSC resides FOR EACH TYPE of scorecard. For example, we have:
- The Corporate Scorecard (CSC) that is jointly owned by the key organization stakeholders.
- Divisional, Departmental or Functional scorecards.
- Individual scorecards that are linked with the CSC.
The HR department/division/section, even though its function is cross-sectional, would have its own (departmental) scorecard. Technically, the process to develop departmental/divisional scorecards which is described as cascading, requires a very systematic procedure to ensure balanced outcome progression, internal consistency, coherence and alignment of HR goals with CSC objectives and budget, and that the various linkages are dynamic, positive and add value to the corporate objectives, mission and vision.
 

 
Cascading the Balanced Scorecard Allows for Management
Ladislav Novacic, Business Consultant, Croatia, Member
This method is the best one in my 40 years experience as manager. It could be implemented in any process and levels.
This method gives you opportunity to manage every process as the manager. As we know any person is the manager of himself. That is why the BSC should be applied down to the last level: a employee.
 

 
It's not Only About BSC, It's About KPI's:)
Olena, HRM&Organizational Development, Ukraine, Member
That's what I'm specializing in - Key Performance Indicators. Strategic goals (in BSC) must be "turned" into KPI's: exact "smaller" goals for units and individual managers. If not, we have a lot of common goals for absolutely different kinds of activity, and nobody knows how actually they are expected to reach them. HR's should have methods of describing KPI's for separate kind of activity, line managers should develop KPI's for their activities by the methods. For this we need to understand what KPI mean and how this specific type of activity can influence the achievement of general objectives.
There are a lot of speculations about KPI's, and sometimes "developed" KPI's are not KPI's at all, and are not 'compatible' with KPI's of other types of activity, and with general goals.
You never can have effective strategy implementation if people at different levels of organization do not understand their roles is in it, and what exactly you want from them.
 

 
Example of how the BSC and KPIs are Shared and Cascaded Through the Organization...
Johnny Michael Tan, Management Consultant, Malaysia, Member
Just an example... Quality.
- The QRA department takes the key role alongside with manufacturing. Where do the others come in?
- Finance - providing the costs of total quality index.
- HR - hiring the right staff, having proper quality training and development.
- SCM - dealing with the suppliers of raw materials alongside QRA's incoming qc.
- Security - ensuring manufacturing rejects are collected, stored and disposed securely, protecting intellectual property loss exposure.
- Facilities - ensuring proper utilities like clean dry air does not have any water or liquid condensation. So the BSC is the strategic glue and KPIs are a must for all to participate and own their portion of the measurement.
 

 
Cascading the Corporate Scorecard (CSC) to the Individual Level
Aniruddha Nandi, Management Consultant, India, Member
@Olena: I readily agree with the notion that the KPIs are the outcome of the CSC and this segregated in the different value drivers helps is cascading the CSC goals in a finite package to the individual level.
 

 
Challenges of Cascading the BSC to Individual Employees
Belay Gezahegn, Director, Ethiopia, Member
The BSC is a means to implement strategy through cascading corporate objectives to functional, team and individual employees. But there are many challenges underway like:
1. Identification of measurable objectives and setting targets
2. Identification of optimum number of objectives that are SMART and reflect corporate objectives
3. Identification of measures that correctly measure performances
4. The problem of cascading the four perspectives of the BSC to individual employees in alignment with their job descriptions.
5. Identification of SMART objectives for back office employees. These are the most challenging. For instance how could one establish personal BSCs for branch internal auditors and set objectives that are SMART?
The BSC is a useful instrument to successfully implement strategies if the techniques of implementation are appropriate under the prevailing circumstances. The situation of service giving firm is entirely different from manufacturing and construction industries.
Besides that, the BSC is also a useful instrument to measure performances of employees and reward according to their achievement. But if our measures are not precise to measure performances, we may end up rewarding poor performers which will be demotivating and counterproductive.
So it is important when implementing the BSC to have or bring in a high level of technical capability and experience.
 

 
BSC Cascading Process
Sethu, Business Consultant, India, Member
Developing an organizational Balanced Scorecard being Phase I, Phase II is cascading it to BU/Function/Team/Individual level. This is quite an involved exercise.
It is good to take help of specialist consultants when an organization attempts to roll out BSC the first time, because how sharply the measures down the line are aligned with the organization scorecard is key to successful performance delivery. It takes good amount of time to do this and get consensus and sign-off.
it's best done through a cross functional team, as many of the measures and organizational programs identified will have cross functional involvement needing mutual agreement on role / work / success criteria definitions.
 

     
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