Business performance management systems that want to move beyond the obvious performance indicators such as corporate finance will have to include the balanced scorecard in their mix. It tends to operate by attaching targets to non-traditional performance factors such that the company has an overall picture of success.
The first major challenge is to identify which project requires which indicators. The list of performance desirable will be virtually endless and the managers will have to make a decision to prioritize or deprioritize certain factors.
A weighting index can be applied and the decision making about the factors can be democratized so that everyone has a chance to contribute their own interests. However the business has to have its own standards that ensure that the strategic objectives are being carried out even at the lowest units.
The balanced scored gives opportunities for managers to include socially responsible measures within the performance management framework yet still retain the core issues such as sales figures. This can enhance the reputation of the company and mean that it does not fall foul of recent legislation covering the conduct of companies. Environmental issues are such one area that can be included in the score card.
The problem with including worthy causes is that they are very hard to measure and in fact could be working directly against the other traditional objectives of the firm. Take for example the need to control emissions versus the need for an oil refining company to make as much profit as possible. The balanced score card would put these diametrically opposed issues against one another.
Managers have tended to deal with this problem by concentrating on the bottom line. The issue of profits enables them to concentrate minds. The only problem with this approach is that it is now not only the government that is placing legislation against anti social business practice but also consumers. Boycotts are not uncommon if a particular company is found to be violating the moral standards of their customers.
A far better way is to think of the firm as an organism that requires different nutrients to thrive and grow. Some of those nutrients are more expensive than others but the bottom line is that the organism needs those nutrients and must therefore have a balanced diet. The purely traditional methods of assessing the business performance of a firm can be outdated and mind end up costing more.
A lot of effort should be put into identifying the areas which can easily be put onto the performance scorecard. A broad priority list can then be created to ensure that as many of the non popular causes as possible are included. The business performance management protocols can then decide when to add an element and when to subtract it.
After all the greatest ambition of performance management is to provide the decision makers with a situation where the organization as a whole is thriving and contributing to the business objectives of the owners. It is better to have too much information than no information at all.