Cascading Performance Measures

BSC Survey

Cascade Performance Measures

Balanced scorecard strategy map displays the organizations comprehensive view of the strategic framework. This framework describes in easy to understand terms the strategy focus of a balanced scorecard organization. Measures used to analyze objectives directly are defined based on the strategy map. The success of a strategy map is the execution of cascading roles, responsibilities, and planning that supports each objective.

The balanced scorecard is successfully executed when the organization effectively is able to cascade objective measurements. When measurements are incongruity, the effectiveness of cascading diminishes. Measurements must be relevant and clearly identifiable. What might be considered “white noise”, measurement without meaning, creates confusion. The relevance of measurement provides clarity to support the notion of cause-and-effect within and between objectives.

Cascading balanced scorecard objectives through the organization provides organizational alignment. Like a waterfall, cascading centers on the concept of a connected series of objectives. The associated measurements carry results up to executive management as cumulative performance measurement. Cascading provides an explicit link from one operational level to another or linking at the peer level. There is congruency in this type of environment.

The cascading scorecard identifies and maps out the cause-and-effect relationships that exists between higher and lower level strategic objectives. At the lowest common denominator, it links every employee’s performance to the top level of the organization based on the organizational strategic objectives as described on the strategy map. Cascading provides powerful insight into business performance. The linkage between top-level outcomes and the underlying root cause can be analyzed through multidimensional drill downs found in the detail of the strategy map.

Simplified reporting increases the understanding of balanced scorecard. It will also lower the level of risk associated with balanced scorecard adoption. Cascading provides the means to share measurements at different levels of the organization and study cause-and-effect relationships. The top tier of the organization sets the goals and objectives to be used to measure success. Each tier below measures based on that tiers objectives. The knowledge at each tier determines the functions and requirements to measure the objectives set by the strategy map. Tier knowledge creates the relevant objective measurements.

Each tier level may measure objectives differently. A tier above or below may define a perspective uniquely. In a manufacturing environment, the shift supervisor may measure customer satisfaction through production line availability. The plant manager may look at customer satisfaction through returns and rejects or even schedule adherence. Other factors that may be considered include number of calls received by the service desk, customer retention, and on-line delivery. The most important point is that when measurements are cascading they are congruent to the strategy map.

To drive balanced scorecard results the strategy map is built on a multilevel framework linking and aligning balanced scorecard objectives. The process known as cascading involves the flow of strategy through the organization hierarchy allowing connecting levels to analyze the relationship of objectives.