When will we ever learn?
A New Era Is Dawning

How Balanced is a Balanced Scorecard?

Do they give a truly representative picture? What do you think? 

If you are not sure perhaps this diagram will give you a clearer idea.

Balanced Scorecard 

The circular shape depicts the organisation and the rectangle in the middle it's raison d'etre - its purpose. Of course the purpose is what drives the vision and strategy and ultimately the direction in which the organisation is headed. Yet all too often when you start with strategy you forget this. I would say that is one of the major shortcomings of traditional balanced scorecards, wouldn't you? They always seem to have the strategy as the central point.

The surrounding rectangles all depict the conventional measurement categories and there is no change there. However, you will notice that I have divided them into 2 halves with the bottom half showing depicting the foundation for each category. Here is where you will notice the departure from convention because all but the financial are ultimately dependent on people.

Furthermore, if you think about the top one "financial perspective" you will observe that the foundation for that is "productivity." Why? Because ultimately all financial measures focus on productivity. And what is the most common measure of productivity? That's right - it is the net income per employee. So once again it boils down to the effectiveness of your people.

You may recall that before the advent of the Balanced Scorecard businesses relied exclusively on financial measures. So it is appropriate that the financial perspective should appear at the top. You could perhaps say that is the allegorical rear-view mirror and many have said that managing a business from historical figures is like driving a car by looking in the rear-view mirror!

So how much added-value does the balanced scorecard give you? Well, I would say that unless you take this diagram to heart and recognise the value of your people and the contribution they make, you are still in the dark ages. You see, you are still thinking like a manager rather than as a leader. 

This diagram shows why employee engagement is the hot issue it is. It also shows why employee ownership is such a powerful force, because it is the only way you can start to align the purpose of your people with that of your organisation. It is only then that you will get the organisational integrity that you need for improved performance, success and sustainability.


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