The Balanced Scorecard is one of the most widely adopted strategic planning tools used by businesses today. Unfortunately, most companies fail to translate the resulting strategy into actual business results. But successful executives are now discovering automated technology solutions as a means of operationalizing their Balanced Scorecard methodology. This new breed of applications enables them to cascade strategy, link individual performance to strategy, and attain proactive visibility — thus achieving the competitive advantage of a workforce that consistently delivers on strategic objectives.
The Balanced Scorecard has been widely adopted by top companies as a valuable strategic planning framework. By balancing the lagging indicators of financial measures with leading indicators of operational drivers, the Balanced Scorecard provides a comprehensive approach to strategic planning. The Harvard Business Review highlighted the Balanced Scorecard as one of the 75 most influential ideas of the century.
Putting Your Strategy to Work Throughout Your Organization
While developing a winning strategy is certainly not easy, executing that strategy is even more challenging. According to a Fortune Magazine study, 70% of CEO failures were due to poor execution of good strategies. An Ernst & Young study found that financial analysts consider "execution of corporate strategy" to be even more important than "quality of corporate strategy" when evaluating companies for investment.
The key to achieving your objectives lies in not shelving your strategy maps after a one-time Balanced Scorecard exercise, but engraining the strategy, as a living plan, in the core of your company's operations. By taking several critical steps — cascading the Balanced Scorecard to every individual in the company, linking employee performance measures and rewards to execution of strategy, and making operational decisions through proactive visibility—your company can reach unprecedented success by actualizing your business strategy.
"70% of CEO failures were due to poor execution of good strategies."
- Fortune Magazine
Cascading Your Strategy Throughout Your Company
Cascading your corporate goals throughout the organization lets you align your entire workforce to the overall strategy. This ensures that everyone is focused on your key business objectives. Translating high-level strategic goals into clear objectives for every business unit and every employee creates a clear line-of-sight — from top down and bottom up — so that each individual understands how their day-to-day actions are contributing to overall company success.
This also allows employees to develop goals that link to the organization's objectives, driving understanding of strategy, generating commitment, and instilling personal accountability.
Linking Measures and Rewards to Strategy
Directly linking every employee’s performance measures and rewards to their execution of corporate strategy is considered by senior executives to be an invaluable tool for achieving better financial results. And for good reason: tying compensation to strategically aligned performance metrics helps employees to be more engaged and increases productivity.
But simply motivating your workforce is not enough. Energy spent on misaligned projects is not only wasted, it devours valuable resources that could be contributing to real business goals. Linking employee metrics and rewards to strategy ensures that their efforts are focused on what is truly critical to the success of the business.
Steering to Future Success Through Proactive Visibility
Having visibility throughout the organization to proactively assess progress and reallocate resources is crucial to driving results. Defining strategically aligned objectives provides each employee with incremental measures of their own performance, gives managers the ability to track employees’ progress, and affords executives the visibility they need to ensure that strategic initiatives are receiving sufficient coverage.
Unlike traditional lagging indicators that only provide a rear-ward view, this kind of forward-looking visibility offers opportunities for executives to make immediate course adjustments to keep performance on track.
Visibility enables insight. Insight enables proactivity. Proactivity enables success.
"50% of the average employee's time is spent on non-productive work."
- Norton & Kaplan, Balanced Scorecard
While defining a business strategy is extremely important, executing strategy is even more critical to a company's success. By providing each individual with the line-of-sight, accountability, and rewards to contribute to the overall strategy, you’re motivating employees to be not only more productive, but more strategically productive.
Executives are further empowered to drive results through proactive visibility. Armed with leading indicators of performance drivers—in addition to lagging indicators of financial data—problems can be identified early and changes implemented to achieve intended strategic objectives.
About SAP SuccessFactors HCM
With SAP SuccessFactors solutions, we believe that purpose drives people and people drive business performance. To meet business goals today and be ready to digitally transform for the future, your organization must be able to attract, develop, and retain the best people – tapping into their full potential. We innovate every day to help connect your people to your purpose and transform your workforce experience, to inspire people to perform at their best, and develop the workforce needed for the future. With a leading cloud-based HCM suite, SAP SuccessFactors solutions help more than 6,400+ customers and over 100 million people, across more than 60 industries in over 200 countries and territories, turn purpose into performance. The SAP SuccessFactors brand is part of SAP, the market leader in enterprise application software. SAP helps companies run better, with applications and services that enable our customers to operate profitably, adapt continuously, and grow sustainably. For more information, visit www.successfactors.com or www.sap.com/hcm.