The Balanced Scorecard is a multi-dimensional framework for describing, implementing and managing strategy at all levels of an enterprise, by linking objectives, measures, targets and initiatives to an organisation's strategy. The scorecard provides an enterprise view of an organisation's overall performance by integrating financial measures with other key performance indicators around customer perspectives, internal business processes, and organisational growth, learning and innovation.
Once a balanced scorecard has been developed in this way for the organisation as a whole, separate scorecards can be generated for each of the functional or support business units within the organisation. This 'cascading' of the scorecard to lower levels of the organisation typically involves repeating the process illustrated above for each business unit. The management teams within each business unit need to develop their own objectives, measures, targets and initiatives, consistent with the objectives of the corporate scorecard. We need to:
The performance management system is only one part of the overall management process. If the culture of the organisation is not right, then no amount of measures and targets will give high performance results. To achieve this, the style of management needs to be participative and consultative, open and honest, supportive, empowering and visionary. This should in turn be driven by excellent communications, effective training, and appropriate rewards and recognition.
Effective performance management requires every member of the organisation to adapt their behaviours to match the strategy set out and communicated by senior management. If they don't understand or believe the strategy, or trust the management team, they won't change their behaviours to match.