I have heard variations of that sentence in organisations more times than I can count. Sometimes the performance-management software is clumsy or broken. Sometimes managers have written vague objectives that nobody can measure. Sometimes appraisal ratings are inconsistent, subjective or politically negotiated. At other times employees are being assessed against behaviours that were never properly defined. Then HR and executives gather around the table, diagnose the problem and announce that the Balanced Scorecard is not working. Really? Which part exactly?
Robert Kaplan and David Norton’s Balanced Scorecard was built around four enduring perspectives: financial performance, customers, internal business processes, and learning and growth. Its central contribution was to remind organisations that strategy cannot be managed through financial outcomes alone. Financial results tell us what has happened. Customer outcomes, process performance and organisational capability help explain what will drive performance tomorrow. Over time, the framework evolved into a broader strategic-management system linking strategy to objectives, measures, targets and initiatives.
“That is like buying a malfunctioning accounting system and concluding that double-entry bookkeeping does not work. This is also how framework hopping begins. A poorly implemented balanced scorecard creates frustration.”
So, when someone says the Balanced Scorecard is broken, I am tempted to ask: has financial performance stopped mattering? Have customers become irrelevant? Can organisations succeed with broken internal processes? Or have people, technology, organisational capability and learning suddenly stopped influencing future performance? Or is the need to translate strategintoto departmental and individual performance and create a strategy-aligned organisation no longer relevant? Which of these exactly no longer works?
The problem is usually not the architecture. It is what organisations do with it. We design 47 KPIs and call them a scorecard. We confuse competencies with KPIs. We write vague objectives such as “demonstrates leadership” and then ask one manager to score them subjectively. We set targets employees cannot influence. We recycle last year’s measures even though strategy has changed. We conduct poor appraisal conversations. We allow managers to negotiate ratings. We implement cumbersome software that nobody wants to use. Then we blame Kaplan and Norton.
That is like buying a malfunctioning accounting system and concluding that double-entry bookkeeping does not work. This is also how framework hopping begins. A poorly implemented balanced scorecard creates frustration. Someone attends a conference or reads a management book and announces that KPIs are old-fashioned and the organisation should move to OKRs. The company that could not write five meaningful strategic KPIs will suddenly write brilliant key results. Managers who could not conduct quarterly performance conversations will apparently become excellent at weekly OKR check-ins. Nothing fundamental changes except the acronyms. A new framework cannot compensate for old management habits.
There is another fashionable criticism: Balanced Scorecards, KPIs and even OKRs are supposedly too numbers-driven. Instead of scores, we are encouraged to use descriptors such as “Exceeded Expectations”, “Met Expectations”, “Partially Met” and “Did Not Meet”. Descriptors can certainly improve interpretation, but they do not eliminate measurement. Suppose an employee has five expectations. Two are exceeded, one is met, and two are partially met. How did the person perform overall? Another employee has three expectations met and two not met. Who performed better? If these assessments influence bonus, promotion, succession or development decisions, the organisation eventually must determine the relative importance of those outcomes and aggregate them somehow. That is arithmetic. Descriptors do not eliminate numbers. They merely hide the arithmetic.
Even financial-statement analysis makes the point. An analyst may write eloquently about declining liquidity, improving margins or excessive leverage, but the prose is grounded in numbers, ratios, trends and comparisons. The narrative interprets the evidence; it does not replace it. Performance management should work the same way. Words help us interpret performance. Numbers help us establish and compare it. The problem is not numbers. The problem is bad numbers: meaningless measures, false precision, arbitrary weightings, unrealistic targets and metrics disconnected from strategy. There is sometimes a discomfort with quantitative measurement in parts of the HR profession, often arising from the legitimate concern that people should not be reduced to numbers or the HR people’s own fear of numbers. But the danger is swinging too far in the opposite direction and replacing evidence with loosely defined descriptors and managerial opinion.
The alternative to crude measurement is better measurement, not less measurement.
That is particularly important for subjective areas such as leadership behaviour, teamwork, communication and collaboration. These may not lend themselves neatly to operational KPIs, but neither should they be left entirely to one supervisor’s opinion. For example, a well-designed 360-degree feedback process provides a stronger evidence base by drawing on multiple observers who have experienced the individual’s behaviour. If one boss says you do not listen, that may be one perception. If ten colleagues, direct reports and stakeholders consistently experience you as someone who does not listen, that pattern tells you something important. The wisdom of the crowd becomes useful when the crowd is informed. This does not mean every aspect of performance must be reduced to a number. Good performance management combines quantitative evidence, qualitative comments, behavioural observations, context and managerial judgement. But judgement should be informed by evidence, not substituted for it.
So before declaring that “this Balanced Scorecard is not working”, organisations should diagnose what is broken. Is the strategy unclear? Are the objectives poorly written? Are the measures disconnected from strategy? Are behavioural expectations badly defined? Are managers incapable of giving objective feedback? Is the appraisal process poorly designed? Or is the software simply terrible?
Kaplan and Norton’s fundamental proposition remains remarkably difficult to argue against: balance financial outcomes with customers, internal processes and the capabilities required for future performance; then translate strategy into objectives, measures and targets that people can understand and act upon. So perhaps the next time someone says, “This balanced scorecard is not working,” we should resist the temptation to start shopping for the next fashionable framework. The Balanced Scorecard works. Perhaps it is your understanding and implementation that sucks!
Omagbitse Barrow is the founder of Efiko Management Consulting, and he supports organisations and leaders to translate their stratintoy to results.
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