If safety, customer loyalty, cost reduction and innovation are important goals for the company, does that mean they are important goals for EVERYONE in the company? Should personal scorecards be "mini-me" versions of the corporate scorecard?
Consider safety. If reducing lost time injuries is a corporate goal, imagine what it would be like if everyone had to measure lost time injuries. What sense would that make? Does everyone in the organization have the same impact on or exposure to lost time injuries? Is it the best use of everyone's time to work to improve safety? Of course not.
Rather than over-simplifying the KPI cascading process, follow these four keys to make sure that what gets measured at the individual level is meaningful to the individual at the same time as having a strong "line of sight" to corporate goals:
Key #1: Don't cascade by duplicating the measure, cascade by building the cause-effect chain.
If a corporate goal is loyal customers, then ask "what makes customers loyal?" to determine the first level of cascading. You might end up with things like attracting more ideal customers, keeping promises to customers, and solving customers real problems. Cascade to the next level (say, teams), ask "what makes it possible to attract more ideal customers?". Keep this line of questioning until you reach individuals and their contribution to the cause-effect chain.
Key #2: Only cascade to where it counts, to where there is highest leverage to achieve the corporate goal.
Only a few parts of the organization will truly have a worthwhile impact on a corporate goal. Operations generally has the biggest impact on safety and timely delivery, for example. Marketing generally has the biggest impact on which customers you attract. Keep asking "where is the greatest leverage?"
Key #3: Document the cascading cause-effect links, to build a map or story of the organization's strategy.
It will make it easier to test the logic of cause-effect, and to communicate throughout the organization what matters and why. Maps bring everything together, so you can see the whole, not just the parts. And you can start seeing something more than the cascading – you can see the collaboration!
Key #4: Involve people in the process of determining their "line of sight" to corporate goals.
We find the most meaning in things we take part in discovering and creating. People throughout your organization will not only have the best idea of how they contribute to company goals, but they will also have many times better buy-in if they take part in the cascading process.
Thanks to Stacey Barr