Page 41 - Performance Leadership

30 • Part I A Review of Performance Management

direction. For instance, revenue growth may lead to a positive press,
which will in turn have a positive effect on corporate image, and as a
result part of that increased revenue could lead to more investments
on research and development (R&D). Or let’s assume there is a prob-
lem with customer service. The organization is not responsive enough
in e-mail communication. Yet e-mail communication increases and the
number of letters that customers send is only going down. This issue is
addressed with an improvement initiative and a project is started. Given
the importance of the project, it is manned with key staff. The
unwanted result is time away from customer service because of the time
spent by the key staff on the project. The effort to fix the problem is
temporarily focused inward instead of outward. This may lead to a drop
in customer satisfaction and revenue at first before it improves.
The process of implementing the balanced scorecard is perhaps
even more important, than the actual result. The alignment between
people comes from discussing what drives their business, how they see
their strategy map, what performance indicators they share, and which
performance indicators are unique to their domain. In this process it is
perfectly fine to adapt the framework, to cater to the criticism of some
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that the balanced scorecard does not address all stakeholders. Some
organizations have chosen to add a fifth perspective, such as “environ-
ment,” “supplier,” or “society.” Perhaps it is to highlight specifics from
an organization’s strategy that otherwise would not get enough atten-
tion. In some cases, managers think their organization is unique—
whether true or not—and adapting the four perspectives would not do
justice to their specifics.
Sometimes, in the case of departmental scorecards, the four per-
spectives need to be reorganized. For some departments, such as
finance, HR, or IT, the customers are the other departments. Obviously,
there is no goal to maximize the profits of such departments, since these
departments are required to support the other parts of the business. Or
consider the public sector, which is not profit-driven but budget-driven.
In cases like this, you can switch the customer and financial perspec-
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tive around. Finance then becomes a contributing perspective, lead-
ing to (internal) customer service as the bottom line. Another common
misconception is that scorecards need to reflect the organizational struc-
ture. Simply stacking scorecards following the corporate hierarchy may