Could your organisation improve its performance if you could somehow better communicate to your employees what your strategy is? Do you have employees whose hard work is actually running counter to the organisation’s goals because they have a different understanding of what you are trying to accomplish? Do various departments in your organisation focus on activities within their own
Department more than on how they support the organisation’s mission and vision?
The problems addressed by these questions centre on the issue of organisational alignment. While the balanced scorecard can be an effective tool for creating organisational alignment, the actual success of the system as an alignment tool can vary depending on the strategic focus of the scorecard (simple performance measurement dashboard tend to not be very helpful), the success of its implementation and whether or not the organisation successfully cascades the scorecard down to business or support unit level and/or individual levels.
What is cascading and how does one do so effectively?
Cascading a balanced scorecard means to translate the corporate-wide scorecard (referred to as Tier 1) down to first business units, support units or departments (Tier 2) and then teams or individuals (Tier 3). The end result should be focus across all levels of the organisation that is consistent. The organisation alignment should be clearly visible through strategy, using the strategy map, performance measures and targets, and initiatives. Scorecards are used to improve accountability through objective and performance measure ownership, and desired employee behaviors are incentivized with recognition and rewards.
An effective cascading effort is designed to achieve the following:
- Align strategic objectives for the organisation's primary operating and support units to the organisation's high-level vision, mission and strategy.
- Align employee objectives and the work people do on a day-to-day basis to the organisation's operating and support unit strategy.
- Focus individual effort on results and accomplishments.
Cascading is most effective when organisations focus and align around strategic objectives rather than on activities, initiatives or projects. By aligning around objectives, an organisation can better focus efforts on long-term results and accomplishments, instead of just short term milestones and task completion. The same is true for performance measures. Aligning measures rather than objectives quickly loses strategic intent, and the effort becomes little more than a "pick a measure we can use" exercise to satisfy a measurement goal, rather than develop aligned strategic work and results.
To speak to one of our consultants about cascading, please contact Balanced Scorecard Australia on +61 3 9607 8530 or firstname.lastname@example.org