have aligned it with the strategy
execution characteristics inherent in
the Scorecard and have thereby forged
a powerful bond between resource
allocation and strategy.
Compensation
The ubiquitous presence of incentive
compensation systems in place at
companies around the world is a
testament to the power of money
as an extrinsic motivator of human
behavior. Always seeking more of
a good thing, most organizations
have instituted some form of these
programs, which attempt to focus
employee actions on specific goals,
the achievement of which leads to
monetary rewards in the form of
bonuses for workers and enhanced
revenue and profitability for the firm.
But do they actually work?
Many researchers believe they do
provide significant value to both
employer and employee. In one
study of “What really works” within
successful organizations, the authors
bluntly asserted, “It should be obvious
that the best way to hold people to
high standards is to directly reward
achievement. Ninety percent of the
winning companies in our study tightly
linked pay to performance, while only
fifteen percent of the losers did.
the pay component of the equation
keeps everyone committed to doing
whatever it takes to achieve Scorecard
targets.
One of the greatest attributes of
the Balanced Scorecard framework
is its applicability to virtually any
organization operating in any
arena. The Scorecard is a powerful
communication device signaling the
key objectives of the organization, and
through cascading the line of sight
between individual contribution and
overall goals can become 20-20, but
for many people it simply doesn’t hit
their radar screen until it lands in the
middle of what Stephen Covey terms
their “rice bowl,” more commonly
referred to as their paychec ks.
In linking balance score card and
corporate governance the role of
corporate Boards may be summarized
with the following three key
responsibilities:-
In many ways the Balanced Scorecard
and compensation is a match made
in pay-for-performance heaven
because the Scorecard contains the
key metrics, exclusively derived
from strategy that set a trajectory of
future growth and profitability, while
Corporate Governance
Oversight of the company’s strategic
direction and risk management:
Challenging strategic direction,
providing insight, and identifying,
monitoring, and managing risk.
Ensuring accountability: Making
certain ethical behavior is displayed,
ensuring compliance, and providing
internal and external stakeholders
with reliable information for decision
making.
Evaluating performance and seniorlevel staffing: Evaluating corporate,
CEO, and Board performance, and
selecting a qualified Chief Executive.
The corporate Balanced Scorecard
significantly enhances the Board’s
oversight capacity by providing a
revealing glimpse into the strategy
execution efforts of the company, but
today’s directors, facing unprecedented
pressure to adhere to leading-edge
governance standards, require a tool to
assess their own performance as well.
Enter the Board Balanced Scorecard,
an emerging tool in the arsenal
of pioneering Boards wishing to
maximize their contribution to
corporate performance and sustain
the ability to add value in the years
to come through the identification
and evaluation of key performance
measures utilizing the proven
Scorecard framework.
Should the Board capably perform
their required tasks, there is an
assumption that those efforts will
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