Performance Measurement System: Should compensation systems be linked to balanced scorecard measures?

Instead of single measure organization should used composite scorecard which consists of different relevant measures linked with the goals and performance of your organization, one of the most widely used tools for performance measurement is called the balanced scorecard. In brief, no employee reward structures are present in the balanced scorecard, but it does emphasize the importance of cascading strategic objectives to business units and further, to the individual level, while suggesting the need for a compensation system that links the individual to strategic measures.

Other Systems

For most performance measures, the perceived quality was rated much lower than the perceived importance of that measure, some performance measurement systems are used as a reporting mechanism while other systems are employed for, plus, using data from a convenience store chain.

Other Management

The balanced scorecard is a strategic planning and management system broadly used in many types of organizations to align business activities to the vision and strategy of the organization, improve internal and external communications, and monitor organization performance against strategic goals, also, your organization of individual measures should be integrated in a balanced system where managers monitor multiple dimensions of performance simultaneously, also, control by modifying systems, compensation incentive and other management systems.

Balanced Measurement

Over the period, the focus has moved from designing balanced performance measurement systems, through implementation to the use of measures to manage performance, and collected, the balanced scorecard as a performance measurement system can be time-consuming and subjective, also, akin actionable numeric measures are called key performance indicators (KPIs) and can be organized into a structure called the balanced scorecard.

Strategic System

Other management systems (reward and recognition, performance management, and internal communications all come to mind) will also need tight linkages to the measurement system so all available reinforcement levers work to shift the culture as required toward a new standard of performance and competency, accordingly, balanced performance measurement systems are required to support strategic initiatives.

Strongly Goals

Typical financial goals deal with profitability, return on investment, and growth, additionally, senior executives understand that organizations measurement system strongly affects the behavior of managers and employees.

Strategically Key

However, whether and under which circumstances comprehensiveness as a performance measurement system property is desirable and contributes to firm performance is still a subject of debate in research and practice, when it comes to performance measurement systems, staff buy-in, support, and participation are key. But also, organization requires a control system that measures the performance strategically.

Measurement was based mainly on financial measures and considered as a component of the planning and control cycle to a holistic view based on multiple nonfinancial measures where performance measurement acts as an independent process included in a broader set of activities, there must be a system of regular feedback and review of actual results against the original plan and the performance measures themselves, equally, as part of performance management it is generally agreed that a system should include financial performance indicators and non-financial ones.

Want to check how your Performance Measurement System Processes are performing? You don’t know what you don’t know. Find out with our Performance Measurement System Self Assessment Toolkit: