2. Failure to communicate and educate. A scorecard is only effective if it is clearly understood throughout an organization. Frequently, scorecards will be developed at the executive level, but not communicated or cascaded down through an organization. Without effective communication throughout the organization, a balanced scorecard will not spur lasting change and performance improvement.
3. Measures tied to compensation too soon. It is generally a good idea to tie compensation to the Balanced Scorecard. However, several factors suggest it can be a mistake to do that too early in the lifecycle of the scorecard.
• Rarely is an initial scorecard left unrevised. So, if an organization ties compensation to measures that are not in fact driving desired behavior, a powerful motivator has been instituted that will drive an unwise action.
• Data may be incomplete or inaccurate, so measures may not be correct. If employees’ paychecks are adversely impacted, serious morale problems and invalidation of the scorecard inevitably result.
• It may take time to determine realistic targets, and penalizing people for failing to achieve an unreachable target will surely have a negative impact on morale and eventually profits.
4. No accountability. Accountability and high visibility are needed to help drive change. This means that each measure, objective, data source, and initiative must have an owner. Without this level of detailed implementation, a perfectly constructed scorecard will not achieve success, because nobody will be held accountable for performance.
5. Employees not empowered. While accountability may provide strong motivation for improving performance, employees must also have the authority, responsibility and tools necessary to impact relevant measures. Otherwise they will resist involvement and ownership. Resources must be made available, and initiatives funded, to achieve success. Employees are likely to need new information tools to help them understand the drivers of measures for which they are responsible so they can take action. These tools can include systems for analysis and early warning indicators, exception reports and collaboration.
6. Too many initiatives. Large, decentralized organizations usually find that crossover and duplication among initiatives can be identified. Cross-matching scorecard objectives with current and planned initiatives can be an important way to focus and align a company. This method will identify cases where objectives are supported inappropriately. Rather than relying on budgeting for strategic funding, this process eliminates waste, speeds scorecard implementation, and helps an organization prioritize their initiatives to better support their strategy.