Why Performance Management?

Building a great company is difficult.

Great companies attract the best employees. They get the highest valuation. Suppliers want to do business with them. They are more fun to work at.

Most companies are torn between financial performance and running a great business.

Balanced scorecard management allows to achieve both. It forces you to:

1. Articulate what you care about.

2. Communicate what you care about.

3. Reward people for what you care about.

But there is another key aspect to performance management: seeking improvement.

If you measure too much, experiments that fail will be punished. If you don't measure, you don't reap the learning.

An important aspect of performance management is designing your rewards and approval systems to encourage experimentation without penalizing the creative projects that lead to continual improvement.

Balanced Scorecard As a Way of Testing Strategies

Business is always about resource allocation.

One way of thinking about performance management and the use of the Balanced Scorecard is to think of it as a way of framing a strategy so that it can be tested.

In effect, a financial outcome is the result of setting customer objectives, process objectives and employee/skills objectives The goal is to figure out where the highest return comes from based upon a combination of such objectives - provided that the mission and values of the company are supported.

Our Bias

Our bias at Eclicktick is that in a competitive environment, great companies are acting on behalf of customers to create great products, service and value.

First, we think it makes sense that customers will come back to such companies.

Second, research on new products says that offering high value, differentiated products leads to a much higher success rate.

Third, research on many businesses says that quality and high market share are related.

Fourth, research on reporting value drivers suggests that public companies who do a better job of communicating their value drivers not only perform better but get higher valuations in the stock market. Higher valuations mean more access to capital. More capital means faster expansion. Faster expansion means higher marketshare and faster product impovement.