The first and most important component of a BSC is a so-called ‘Strategy Map’ that shows the overall destination, the key objectives and priorities a company must deliver along the way. The strategic objectives are usually mapped along four perspectives, which support each other:
1. Financial Perspective – outlining the financial objectives
2. Customer Perspective – outlining the objectives related to customers and the market
3. Internal Process Perspective – outlining the internal business process objectives
4. Learning and Growth Perspective – outlining the objectives related to employees, culture, and information system
Each perspective includes strategic objectives or key result areas, key performance indicators (KPIs), targets, and initiatives that align with the organization's overall strategy.
Focus Areas/ Perspectives
Perspectives also know as focus areas in the system represent different strategic areas or viewpoints used to assess and measure an organization's performance. There are typically four primary perspectives within the BSC and they come default in the system which means a user does not have to create
- Financial Perspective
- Customer Perspective
- Internal Process Perspective
- Learning and Growth Perspective
They can however choose to create additional ones:
- Navigate to the Focus area submodule
- Click on the ‘Add focus area’ button
3. The focus area is added
Plans
A plan is the focal point of BSC and where KRAs and KPIs stem from. A plan is created by
1. Navigating to the Plan submodule
2. Clicking on 'Add New Plan'
3. Enter the plan name, plan owner, review period, start date, and end date
4. The review period will represent the review cycles that the user sees when adding a key result area e.g For a plan with a per-quarter review period starting on January 1, 2024, and ending on December 31, 2024: When adding a KRA, the available review cycles should be Q1 2024, Q2 2024, Q3 2024 and Q4 2024 as the available options.
Assigning weights to departments
In every strategic plan, assigning weights to each department per focus area is crucial. This process helps determine the significance of specific focus areas to individual departments.
These weights play a pivotal role in shaping the final Balanced Scorecard report during the review period, offering insights into the relative importance of different focus areas across departments.
The weights for each department that are entered for each focus area should be equal to 100%.
Assigning weights to the various departments is done by
- Navigating to an individual plan
- Clicking on the three dots
- Clicking on the 'assign weights' button
BSC Settings
These are settings used to define certain aspects of BSC. They include performance ratings and scale.
Performance Ratings
These ratings serve as benchmarks in the appraisal process. For instance, by creating a rating labeled "Excellent" with a corresponding value of 5, and setting the range from 81% to 100%, it means that when an individual's average Key Performance Indicator (KPI) scores fall within the range of 81% to 100%, they are assigned the rating of 5 or "Excellent" in their appraisal assessment.
The system comes with default ratings that can be edited or deleted by a user.
Likert Scales
Scale is used when creating a qualitative KPI to determine how the KPI will be measured e.g. For instance, you can create a scale called "satisfaction," describing 1 as "very dissatisfied" and 5 as "very satisfied," or inversely, as needed.
Key Result Area/ Objectives
A KRA represents a strategic area critical to the success of an organization. It's a broader category or domain that outlines the key focus areas essential for achieving strategic goals. KRAs are fundamental to an organization's strategy and can encompass multiple KPIs within them. They provide a framework for defining and evaluating various KPIs.
You can create a Key Result Areas by:
- Navigating to Plans
- Clicking on an individual plan
- Clicking on 'Create Key Result Area'
You can also create a KRA from
- Navigating to the Employee KPIs and KRAs page
- Clicking on 'Create Key Result Area'
- Input the following details for the Key Result Area (KRA): department that the KRA relates to, review cycle, start date, and end date that dictates when that KRA will be relevant, whether it will recur or not, related plan and focus. The entered review cycle will also apply to the associated Key Performance Indicators (KPIs) that are created from it.
Key Performance Indicators(KPIs)
Key Performance Indicators are quantifiable values that help track progress toward achieving strategic objectives/KRAs.
KPIs are selected based on their direct relevance to the strategic objectives defined. They provide a clear and measurable way to assess whether an organization is meeting its desired targets and objectives across various perspectives, such as financial, customer, internal processes, and learning/growth.
We have two types of KPIs:
1. Quantitative KPIs - These KPIs are expressed in numerical terms and involve measurable, quantifiable data. They deal with quantities or numerical values, making them objective and easily quantifiable. Examples include revenue growth percentage, sales figures, customer acquisition numbers, production output, or error rates.
2. Qualitative KPIs - These KPIs are more subjective and focus on qualities or attributes that are harder to measure in numerical terms. They provide insights into aspects that are not easily quantifiable and are often observed subjectively. Examples include customer satisfaction ratings, brand reputation scores, employee engagement levels, or the quality of customer service.
You create a KPI by
1. Navigate to ‘Employee KRAs and KPIs' or 'My KRAs and KPIs’
2. Click on ‘Add New KPI’
3. Select the plan, focus area, and key result area that the KPI relates to. If you click on Add a New KPI , these fields will be pre-filled.
4. You can create multiple KPIs for multiple employees on the same drawer by first selecting the employee, then adding the KPIs
Updating KPIs
Following the creation of a KPI, it's possible to modify it to reflect the employee's progress and whether they've met the target within the designated timeframe. Updates can be made by either the KPI owner or the supervisor
Appraisals
Appraisals refer to the assessment and evaluation of performance against the established objectives and key performance indicators (KPIs). They are done according to the review period set when creating a plan e.g if the review period was set as annual then appraisals should begin at the end of the year. If the review period is set as quarterly then the appraisals will be done at the end of the quarter.
Employee Appraisal
The appraisal process begins with a self-appraisal where the employee appraises each KPI
This is done by:
- Navigating to the Appraisals module
- Clicking on the ‘Appraise’ button
- Viewing the rating that the system has given them
- Adding a comment to each KPI
- Clicking on the Save button
P.S The system calculates the rating for each KPI based on the updated value provided by the employee.
Supervisor Appraisal
Once the employee does the self-appraisal, the appraisal is sent to the supervisor. The appraisal is done by an employee’s supervisor This is done by:
- Navigating to the Appraisals module
- Searching an employee and selecting them
- Entering a rating for each KPI
- Enter the final recommendation: either PIP or salary review and
- Click on 'Submit to Admin'
Calibrated Results
The rating is derived from the average between the supervisor's assessment and the employee's assessment.
Final BSC Report
The final Balanced Scorecard (BSC) report is a comprehensive document that consolidates performance data across various perspectives, providing a holistic view of an employee's performance. It typically includes:
- Perspectives: Summarizes performance across different business areas like financial, customer, internal processes, and learning & growth.
- Objectives/KRAs and KPIs: Outlines the set objectives and corresponding Key Performance Indicators (KPIs) for each perspective.
- Actual vs. Target: Compares the achieved performance against the predefined targets for each KPI.
- The overall rating on a BSC report: Represents a comprehensive evaluation of their performance across various Key Performance Indicators (KPIs) and perspectives. This rating provides a synthesized view of an individual's contribution to the organization's strategic objectives
It’s usually done for every employee and looks like the below:
Performance Improvement Programme
A PIP stands for "Performance Improvement Plan." It's a structured and formal document outlining specific goals and expectations set for an employee who's struggling to meet performance standards or facing challenges in their role.
An employee can be recommended for PIP on the system by
- Going to the PIP module
- Clicking on 'Add PIP'
- Selecting the employee, selecting the KPI, adding the start date and end date of the PIP, Selecting how often the KPI should be reviewed, adding any notes that could be relevant
- Clicking on 'Add PIP'
A PIP can also be submitted as a recommendation by a supervisor when the supervisor is doing the final appraisal for an employee.
After adding a PIP, the user can choose to set the outcome of the PIP as:
- Extended: This outcome signifies that the PIP's timeline or duration is extended beyond its original set duration. It's chosen when an employee is making progress but needs more time to meet the set goals within the PIP. The extension provides additional time and support to help the employee achieve the specified improvements.
- Lifted: This outcome is selected when the employee successfully meets the goals outlined in the PIP. It indicates that the performance issues identified have been sufficiently addressed, and the employee is now performing at the expected level. The PIP is considered completed, and no further action is required.
- Terminated: This outcome means that the PIP has not resulted in the desired performance improvements, and the employee has failed to meet the outlined goals within the specified timeframe. It might lead to further actions, such as, termination of employment based on the organization's policies and guidelines.