Why Balanced Scorecard Implementations Fail and Lack Sustainability

Hubert Rampersad, Ph.D.

Harvard Business School professor Kaplan’s Balanced Scorecard (BSC) concept deviates in a number of points from my authentic and holistic Total Performance Scorecard (TPS) system. In practice the BSC approach is applied as mechanistic driven and it neglects the importance of people. The TPS system ensures that business results are achieved through a focus on people.This is very important for sustainable performance improvement and developing a real learning organization. The biggest financial waste is related to people! It’s related to disengagement. A recent Gallup study shows that 70% of American workers are unhappy in their jobs and there are 22 million disengaged employees in America. Unhappy workers cost the American business economy up to $350 billion annually in lost labor productivity, and earnings per share increase 2.6 times more if employees are engaged in their work. Nearly one-third of US workers’ values are in conflict and mismatched with their company’s values. Instead of matching the right employee to the right position for long-term success, HR departments are often forced to put the emphasis on filling the position as quickly. As a result, American businesses are losing money as fast as they are losing employees. Check my article "How to Enhance Employee Engagement and Workforce Productivity" .

I have therefore launched an innovative revolutionary, holistic concept called Total Performance Scorecard which actively has human capital embedded in the BSC concept in a manner that not only stimulates commitment, integrity, work-life balance, passion, enjoyment at work and employee engagement but also stimulates individual and team learning in order to develop a motivated workforce and sustainable performance improvement and quality enhancement for the organization.

TPS, in contrast with Kaplan's Balanced Scorecard, integrates people involvement and happiness into balanced scorecard and involves individual buy-in, in order to realize sustainable personal and organizational performance improvement. It is about aligning human capital to business success. That’s why numerous case studies indicate that the implementation of the BSC in North America have been disappointing at best, and in Europe and South America even more so. Despite the above criticism the BSC is a splendid concept that makes a most useful contribution to the successful implementation of TPS.

Ten Reasons for Balanced Scorecard Implementation Failures:

1. Applied as mechanistic and too results driven, with no linkage between the critical success factors of the organization and the personal critical success factors of individual employees-- creating human capital tensions between work and non-work aspirations.
2. Emphasis mainly on financial measures rather than non-financial, leading to measures that do not connect to the drivers of the business and are not relevant to performance improvement.
3. No explicit link between shared ambition and specific organizational objectives; results in insufficient employee support to work according to organizational performance measures and an implementation plan that is not grounded in reality and unable to respond quickly to unforeseen events.
4. No explicit link between personal ambition and ethical behavior; neglect of personal integrity and business ethics.
5. No explicit link between personal ambition and shared ambition.
6. Poor communication of the new way of working by management; results in creation of an employee mentality that is hostile to management messages.
7. Results in an individual performance plan that focuses too much on the money side and not enough on delivering organizational values, leading to a “what’s in it for me” culture.
8. Self-learning and team learning are not facilitated; results in creation of a climate of defensiveness and mistrust and a business strategy that is poorly understood and therefore impossible to execute.
9. Too many objectives defined and too many performance metrics being measured.
10. Data on current individual and organizational performance insufficiently available; poor data on actual performance, negating most of the effort invested in defining performance measures by not being able to monitor actual changes in results from changes in behavior.

Ten Reasons for Applying Total Performance Scorecard:

1. Enhancement of personal effectiveness with the Personal Balanced Scorecard concept, which is part of the TPS system.
2. Personal Balanced Scorecard stimulates self-learning and working smarter through learning and knowledge of the self. We become more creative as we grow more conscious of ourselves—our real character, inner processes and driving forces. This leads to inner harmony.
3. Development of personal integrity; by aligning and balancing your personal ambition with your personal behavior, you will create inner peace and improve your own credibility, as well as acting according to your conscience.
4. Creating a happy workforce and enjoyment at work; as a result of the balance between your personal ambition and the shared ambition, your inner involvement is increased. Happiness is enhanced at work by reducing the gap between company life and private life, and between the way people deal with their colleagues at work and the way they act with their friends and family in their spare time.
5. Development of effective talent management; integrating the employee's Personal Balanced Scorecard in the appraisal system results in a sustainable talent management process, which is related to a continued taking up of challenges and development of related skills.
6. Development of team learning and creating trust; by stimulating individuals to share their personal ambition with each other they will get to know, understand and appreciate each other better, which forms a stable basis for greater mutual respect and trust.
7. Personal Balanced Scorecard helps to manage your time effectively and manage yourself like a business.
8. Personal Balanced Scorecard drives out fear; it creates conditions to eliminate fears of employees and enable them to realize their full potential and contribute creatively.
9. Aligning personal BSC with corporate BSC reduces stress and burnout.
10. Enhancement of employee engagement; by matching the personal ambition with the shared organizational ambition.

Dr. Hubert Rampersad is a global crusader for sustainable innovation and a global crusader against racism, and author of “Authentic and Holistic Design Thinking for Personal, Corporate, and Social Innovation” . He is also author of 25 other books on innovation, management, and entrepreneurial leadership, published in many languages. One of his books, Total Performance Scorecard, published in 20 languages was foreworded by Harvard Business School innovation professor Dorothy Leanard. His Ph.D. dissertation "Integrated and Simultaneous Design for Robotic Assembly" was published by John Wiley in 1995, based on this PhD research at the prestigious Eindhoven University of Technology in the Netherlands. He has been featured on BusinessWeek and Bloomberg.

Center of Excellence in Design Thinking

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