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Checklist For Implementing a Balanced ScoreCard

August 25, 2008

FOR SOCIALIZATION

  • Communicate the reasons for scorecard implementation, and the benefits to employees and the organization.

  • Sell and communicate the scorecard concepts and how each scorecard ties to organizational strategy.

  • Scorecard systems often help to foster a culture shift or change; therefore, change management and effective communication skills are required.

TO APPROPRIATELY MOTIVATE

  • Use a framework that represents the organization’s vision and business model.

  • The impetus for implementation should come from top-level management.

  • Focus on key business issues and ‘‘burning platforms’’ the system must address.

  • Continue to communicate the reasons for scorecard implementation, and the benefits to the employees and the organization.

  • Use one or more targets where appropriate.

  • Link performance measures to compensation and rewards—where appropriate.

  • Align measures and employees to organizational goals.

  • Advertise successes when they occur.

  • Choose measures carefully and involve those accountable for them in the selection process.

  • Communicate how targets are set and from where data is retrieved.

  • Provide software features that will enable employees to spend their time analyzing and acting on results.

TO CREATE A SUPPORTIVE ENVIRONMENT

  • Impetus for implementation should come from top-level management.

  • Buy-in should occur at the top-level management.

  • Define and communicate the reasons for and benefits of implementing a scorecard system.

  • Articulate and communicate the organizational strategy.

  • Have a strategy champion to maintain the visibility required to be successful.

  • Encourage employees to accept and use the system.

  • Use consultants appropriately.

  • Advertise successes when they occur.

  • Provide adequate time to implement and realize benefits.

  • Create a system that is pervasive, but implement in phases.

  • Create a system that is integrated into the organization’s overall planning and performance evaluation system.

DESIGNING THE SCORECARD SYSTEM

Choose a Framework That Will:

  • Reflect the business model of the organization accurately to be accepted by the employees and be useful for analysis.

  • Be adaptable enough to work for both short- and long-term strategic objectives.

  • Work with reporting on other management initiatives.

  • Create formal ties between the organizational strategy and the scorecard system.

Measures and Targets:

  • Choose measures carefully and involve those accountable for them in the selection process.

  • Align measures and employees to organizational goals.

  • Align employee performance evaluation measures with scorecard measures.

  • Balance the scorecard measures (financial versus nonfinancial, leading versus lagging).

  • Err on the side of tracking fewer measures (you can always add more as needed).

  • Choose financial measures wisely, they are still very important.

  • Use one or more targets where appropriate.

Compensation, Rewards, and Evaluation:

  • Link performance measures to compensation and rewards—where appropriate.

  • Link the compensation and reward systems (eventually) to the scorecard system, if it is appropriate to your organizational culture.

  • Ensure that there is congruence between the scorecards and the performance evaluation system.

  • Provide software features that will enable employees to spend their time analyzing and acting on results.

  • Align human capital to the strategy.

  • Use a feedback loop to understand progress and make changes where required.

  • Implement the system pervasively, but in phases.

  • Ensure your cost management system adequately supports the scorecard system.

  • Maintain flexible reporting on key performance indicators and how they roll up through the organization.

IMPLEMENTATION AND ROLLOUT

  • Set a realistic time frame for implementation.

  • Choose the most appropriate approach for your needs: top-down, bottom-up, or pilot project.

  • Roll out to the organizational level that is appropriate to your ‘‘burning platform.’’

  • Implement the scorecard system in a limited way initially, and then roll it out as your organization gains scorecard experience.

  • Consider future roll-out plans.

  • Have a process to controllably accommodate the updating of scorecards, performance measures, objectives, and accountability.

  • Use outside consultants to facilitate the implementation process, but they cannot and should not be used to replace the necessary involvement of your own personnel.

  • Consider the relationship between the scorecard system and other performance/ cost management tools and how/if they can be supportive.

  • Convene a scorecard system committee comprising the scorecard champion, business users, IT leaders, and power users.

  • Create processes to update the scorecard system as the organization evolves.

AUTOMATION

  • Consider software flexibility in the event that source systems or reporting requirements change.

  • Gather and support organization requirements in automation features (e.g., Web-based reporting, drill-down to root data, customize reports).

  • Link scorecards where appropriate, and roll them up.

  • Access data from legacy systems and other data sources.

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