How Can We Accurately Measure Productivity of Long-Time Employees Beyond Annual Reports?

Dear friends,

We are struggling to measure the performance of the so-called white elephants of the company. One of the methods suggested is the Balanced Scorecard. Are there any other ways we can measure their performance apart from the regular annual report? We want to link their performance to their productivity since we believe they have already peaked some years back and are now receiving raises every year simply because they are with us. How long can this continue, especially when we have a set of people every year waiting to join this exclusive group?

Can anyone suggest a good website to learn all about the Balanced Scorecard or some other method to measure their productivity? I belong to the Data Conversion industry.

Thanks,
Bhavana

Hi Bhavna,

Our organization is in the process of implementing a balanced scorecard program and has implemented the same for senior management personnel from Apr 05 onwards.

I am sharing a part of an article and the link on the subject. You can find a wealth of information on this site: [Balanced Scorecard](http://balancedscorecard.org)

Quote:

What is the Balanced Scorecard?

A new approach to strategic management was developed in the early 1990s by Drs. Robert Kaplan (Harvard Business School) and David Norton. They named this system the 'balanced scorecard'. Recognizing some of the weaknesses and vagueness of previous management approaches, the balanced scorecard approach provides a clear prescription as to what companies should measure to 'balance' the financial perspective.

The balanced scorecard is a management system (not only a measurement system) that enables organizations to clarify their vision and strategy and translate them into action. It provides feedback on both the internal business processes and external outcomes to continuously improve strategic performance and results. When fully deployed, the balanced scorecard transforms strategic planning from an academic exercise into the nerve center of an enterprise.

Kaplan and Norton describe the innovation of the balanced scorecard as follows:

"The balanced scorecard retains traditional financial measures. But financial measures tell the story of past events, an adequate story for industrial age companies for which investments in long-term capabilities and customer relationships were not critical for success. These financial measures are inadequate, however, for guiding and evaluating the journey that information age companies must make to create future value through investment in customers, suppliers, employees, processes, technology, and innovation."

The balanced scorecard suggests that we view the organization from four perspectives, and to develop metrics, collect data and analyze it relative to each of these perspectives:

- The Learning and Growth Perspective
- The Business Process Perspective
- The Customer Perspective
- The Financial Perspective

The Balanced Scorecard and Measurement-Based Management

The balanced scorecard methodology builds on key concepts of previous management ideas such as Total Quality Management (TQM), including customer-defined quality, continuous improvement, employee empowerment, and primarily measurement-based management and feedback.

Double-Loop Feedback

In traditional industrial activity, "quality control" and "zero defects" were the watchwords. To shield the customer from receiving poor quality products, aggressive efforts were focused on inspection and testing at the end of the production line. The problem with this approach, as pointed out by Deming, is that the true causes of defects could never be identified, and there would always be inefficiencies due to the rejection of defects. What Deming saw was that variation is created at every step in a production process, and the causes of variation need to be identified and fixed. If this can be done, then there is a way to reduce defects and improve product quality indefinitely. To establish such a process, Deming emphasized that all business processes should be part of a system with feedback loops. Managers should examine the feedback data to determine the causes of variation, the processes with significant problems, and focus attention on fixing that subset of processes.

The balanced scorecard incorporates feedback on internal business process outputs, as in TQM, but also adds a feedback loop around the outcomes of business strategies. This creates a "double-loop feedback" process in the balanced scorecard.

Outcome Metrics

You can't improve what you can't measure. Metrics must be developed based on the priorities of the strategic plan, which provides the key business drivers and criteria for metrics that managers most desire to monitor. Processes are then designed to collect information relevant to these metrics and reduce it to numerical form for storage, display, and analysis. Decision-makers examine the outcomes of various measured processes and strategies and track the results to guide the company and provide feedback.

The value of metrics lies in their ability to provide a factual basis for defining:

- Strategic feedback to show the present status of the organization from many perspectives for decision-makers
- Diagnostic feedback into various processes to guide continuous improvements
- Trends in performance over time as the metrics are tracked
- Feedback on the measurement methods themselves and which metrics should be tracked
- Quantitative inputs to forecasting methods and models for decision support systems

Management by Fact

The goal of making measurements is to allow managers to see their company more clearly, from many perspectives, and thus make wiser long-term decisions. The Baldrige Criteria (1997) booklet emphasizes this concept of fact-based management.

Unquote:

I will try to send you more information sometime later.

Thanks and Best Regards,

Bala

Hi Bhavana,

"We are struggling to measure the performance of the so-called white elephants of the company. One of the methods suggested is the Balanced Scorecard. Is there any other way we can measure their performance apart from the regular annual report? Since we now want to link their performance to their productivity as we think they have already reached their peak some years back and are now getting a hike every year simply because they are with us. How long can this continue, especially when we have a set of people every year waiting to fall into this group?

Can anyone suggest a good website to learn all about the Balanced Scorecard or some good methods to measure their productivity? I belong to the Data Conversion industry.

Besides the Balanced Scorecard, which is a long-drawn exercise as detailed by my colleague, regarding the white elephants - as I understand, you want to get rid of them. On what parameters have you judged them? Getting rid of this so-called segment, as you have identified, encompasses the following steps:

- Skip them in important meetings.
- Give better projects to other relatively newer colleagues.
- Provide better wages to the identified new colleagues than to the white elephants.

I would not recommend the Balanced Scorecard at this stage. Instead, quantify their output individually and increase the targets! In case you find it difficult to quantify the outputs, I can help you out.

Hope this helps.

Cheers,
Rajat"