The most painful measure
Balanced Scorecard in the traditional execution allows us to measure the most crucial but also the most painful variable. This variable is management team’s development: learning and growth. After all, given enough time, the right management with the right skill sets can fix anything, or even build the whole organizations from scratch. They would find a way to locate and meaningfully organize the resources necessary to produce the desired outcomes. No organization can go above and beyond their management talent and in most organizations, the entire business is nothing more than magnified picture of the eccentricities of the executive team.
However, the Balanced Scorecard does not hold the spotlight to the management’s learning and growth too tightly, allowing the leeway to pick the the Key Performance Indicators that either don’t really monitor their performance in a meaningful ways, or worse yet, apply to only lower echelon of workers in the organization.
Two thousand years ago, James, brother of Jesus, made a statement that I think is highly applicable to managers today. Just substitute the word teacher for the word manager and you will get the point:
“Not many of you should presume to be teachers, because you know that we who teach will be judged more strictly. We all stumble in many ways. If anyone is never at fault in what he says, he is a perfect man, able to keep his whole body in check.
When we put bits into the mouths of horses to make them obey us, we can turn the whole animal. Or take ships as an example. Although they are so large and are driven by strong winds, they are steered by a very small rudder wherever the pilot wants to go. Likewise the tongue is a small part of the body, but it makes great boasts. Consider what a great forest is set on fire by a small spark. The tongue also is a fire, a world of evil among the parts of the body. It corrupts the whole person, sets the whole course of his life on fire, and is itself set on fire by hell.
All kinds of animals, birds, reptiles and creatures of the sea are being tamed and have been tamed by man, but no man can tame the tongue. It is a restless evil, full of deadly poison.
With the tongue we praise our Lord and Father, and with it we curse men, who have been made in God’s likeness. Out of the same mouth come praise and cursing. My brothers, this should not be. Can both fresh water and salt water flow from the same spring? My brothers, can a fig tree bear olives, or a grapevine bear figs? Neither can a salt spring produce fresh water.”
I believe that the description he has for the tongue and for teaching readily applies to the management of the organizations, as well. It is a lot easier to manage millions of dollars than it is to manage oneself and our own tongue. One management decision can influence the fate of many resources, entire organizations. A failure by the manager is by far more devastating than that of an entry level employee. So, managerial development is essential for the organizational growth and development. It is crucial for organization’s health and survival that there is a significant emphasis on the development of the organization’s management team, or the organization is gambling with that which is the foundation of all else.
In most organizations you see precisely the opposite: a lot more effort is spent on measuring and managing the performance of lower level employees than on those of the executive team. Nobody wants the spotlight pointing toward them. Yet, who has the most impact on the organizational performance? Is it the person who is capable of sending a shipment to the wrong location, or is it a person who can hire and fire that person, or a person who can institute policies and processes that eliminate the opportunities for these kinds of mistakes?
With that said, what are some good Key Performance Indicators that would help an organization insure that there is a culture of learning and growth that permeates its executive ranks? Well, the output variables are pretty easy to track: Engagement of the workforce, a clear result of great management can most easily be tracked by the number of improvements that are recommended by the workers and are implemented per employee. Unlike good attendance or other such measures that can be forced by just paying or punishing for them, it cannot be achieved without a good working relationship between the managers and the workers. But while this is a valuable Key Performance Indicator, it looks at the output not the input.
Another variable that might serve as KPI for good managers, is dollars or Return on Investment generated by the new initiatives of the management team, but this variable takes years to materialize and can be affected by a bunch of factors that have nothing to do with the talents of the management team.
In all reality every KPI on the scorecard is a reflection on the management, but they are mostly all outputs. In the next article I will discuss some inputs of good management.
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Oleg Tumarkin is an Adjunct Professor of Business at Lakeland College and Concordia University of Wisconsin. His firm, FutureWorks, in partnership with AKS-Labs provides business coaching and Balanced Scorecard implementations. His life’s passion is the development of a universal business measurement and management system that would cause management in to the realm of a repeatable, replicable, yet humane and flexible science.
