Once objectives and measures have been defined and communicated, performance expectations
must be established. Performance expectations are communicated by setting
targeted values for the measures associated with each objective. Managers are held accountable
for the assigned responsibility by comparing the actual values of the measures
with the targeted values. Finally, compensation is linked to achievement of the scorecard
objectives. It is vital that the reward system be tied to all the scorecard objectives
and not just to traditional financial measures. Failure to change the compensation system
will encourage managers to continue their focus on short-term financial performance
with little reason to pay attention to the strategic objectives of the scorecard.