The variety of discussion people have in elevators without any regard for the unknown audience amongst the rest of the vertical travellers often raises an eyebrow. Last week however my reaction was somewhat more contemplative and left me pondering the subject matter for some time.
I overheard two employees in a corporate client’s elevator discussing their performance appraisals. The one was astounded that her colleague only had thirty criteria on her Balance Scorecard while she had eighty two. Her concern was that having so many items she could never satisfy all of them and she wished she had fewer. My concern was that neither of the two really understood the obvious mathematics involved from a risk perspective. By this I mean that the more numerous the criteria one has on their Balance Scorecard, the lower each criterion’s weighting has to be, the lower the risk of any one item having any significant impact on your performance measurement. The Scorecard was almost viewed as a “to do” list as opposed to a grouped list of initiatives that underpinned their corporate strategic journey.
The Balance Scorecard has its roots in the programming world and was adapted by Kaplan to assist in the achievement of strategic intent. It is basically one of the results of the tried and tested route of PEST and SWOT and the “5 Forces” that one typically follows when developing a strategy. Because of this, it should really only have four high level sections to it but these days I see Balance Scorecards with as much as 10 sections and now as many as 80 weighted criteria. Of course there is no hard and fast rule as to how many sections one has, but this is clearly where dilution enters while clarity and focus exit the elevator on the “implementation” floor.
Just as the processes around establishing a strategy are concerned with grouping themes and whittling down the groups to a select few, well articulated initiatives, so too should the criteria that measure them. This is probably easier in the smaller to medium sized companies but given the huge populations and multitude of subcultures in the large corporate, it does get more difficult to achieve each target with fewer measures. This is ironically why the weighting was included to begin with and so the dichotomy continues….
Maybe the solution is embedded in the good old fashioned principles of management and style? Regardless, there is simply no substitute for the powers of clarity and focus and isn’t that what we are truly working towards?
Or is it?