Balanced Scorecard Approach to Measure Performance

The balanced scorecard focuses on the measures that drive the employee performance. The balanced scorecard provides a list of measures that balance the organizations internal and process measures with results, achievements and financial measures. The two basic features of the balanced scorecard are:

A balanced set of measures based on. the four perspectives of balanced scorecard

Linking the measures to Employee Performance

A balanced set of measures

Instead of relying on just one instrument or measure, using a balanced set of measures ensures that all the aspects of the employees’ performance are covered and provide relevant support for the decisions taken.

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Therefore, it is necessary that the manager should be capable of observe and note the several instruments and measures simultaneously. The four perspectives given by Kaplan and Norton are the financial measures, the customer’s perspective, the internal business perspectives and the innovation and learning perspectives.

For each perspective of the following things are measured:

  • Objectives: the goals and the targets to be achieved


  • Measures: the standards which will be used to measure the actual performance and the progress.


  • Action plans: the initiatives taken and the course of action to be followed to achieve the objectives

Tie-In to Employee Performance


The balanced scorecard approach can be used and applied at both the individual and the organisational level. It provides a balanced approach to evaluate the employees’ performance (for the purpose of Performance appraisal) in a comprehensive manner rather than a partial view. In most of the organisations, the common practice of measuring the employee performance refers to only the comparison of their action plans and behaviours with the standards set i.e. without actually measuring the results of their actions like profits and increase in market share. This conventional practice can lead to the appraisal of most of the employees without any or little progress towards achieving the goals and objectives of the organisation. Thus, the balanced scorecard gives the complete view of the employees and the organisational performance and helps to align the employee performance/action plans with the organisational goals.

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Benefits of Balanced Scorecard


The benefits of the balanced scorecard approach in measuring performance are:

  • Gives the complete picture of the employee as well as the organisational performance.


  • It guides users in determining the critical success factors and performance indicators.


  • Strategic review or analysis of the organisational capabilities and performance.


  • Focusing the whole organisation on the few key things needed to create breakthrough performance.


  • Integrating and directing the performance and efforts from the lowest levels in the organisation to achieve excellent overall performance.

 

Last Updated: 08/01/2014







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