Question

Balance scorecard system is used by many companies to balance strategic planning and management.

Explain what measures are used at workplace to link employee activity with financial outcomes of everyday work activity.?

Answer 1

Customer-based measures are important, but they must be translated into measures of what the company must do internally to meet its customers’ expectations. After all, excellent customer performance derives from processes, decisions, and actions occurring throughout an organization. Managers need to focus on those critical internal operations that enable them to satisfy customer needs. The second part of the balanced scorecard gives managers that internal perspective.

The internal measures for the balanced scorecard should stem from the business processes that have the greatest impact on customer satisfaction—factors that affect cycle time, quality, employee skills, and productivity, for example. Companies should also attempt to identify and measure their company’s core competencies, the critical technologies needed to ensure continued market leadership. Companies should decide what processes and competencies they must excel at and specify measures for each.

Managers at ECI determined that submicron technology capability was critical to its market position. They also decided that they had to focus on manufacturing excellence, design productivity, and new product introduction. The company developed operational measures for each of these four internal business goals.

To achieve goals on cycle time, quality, productivity, and cost, managers must devise measures that are influenced by employees’ actions. Since much of the action takes place at the department and workstation levels, managers need to decompose overall cycle time, quality, product, and cost measures to local levels. That way, the measures link top management’s judgment about key internal processes and competencies to the actions taken by individuals that affect overall corporate objectives. This linkage ensures that employees at lower levels in the organization have clear targets for actions, decisions, and improvement activities that will contribute to the company’s overall mission.