Cascading Performance Measures for the Achievement of Goals



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Navigation: All Balanced Scorecard Articles > Cascading in BSC

With the performance indicators, organizations are able to measure their progress well. Cascading performance will drive results and control the risks that may arise. Check additional information about Cascading performance.

Many organizations make use of performance measures but they are rarely aligned to the goals of the business. As a matter of fact, most are not designed to gauge a particular process and thus, it remains to be unaffected by the factors that are outside that process. In this case, the organizations here will face poor results. This is because those that are in charged of the company will only concern themselves with the process indicators that are considered to be of higher level. For instance, they will only want to measure the value of sales, the number of sales that they have acquired for the day or for a period in time, the operations, the costs of the operations, marketing and the like. However, the decisions that will be made by the company will not only be based upon those indicators. Therefore, there is a need to start cascading performance measures.

Cascading performance is a must since most of the time wise decisions are based upon the lower level processes. Examples of this are the employees working an extra shift, investing on much better machinery and training of the sales people so that they can acquire better product knowledge. Cascading KPIs down through the causes and effects can be a very simple yet effective method so that the company will be able to arrive at the right key performance indicators for every process. The best method here is to cascade the processes first before cascading performance indicators. However, most businesspersons tend to forget this.

Cascading performance should be a normal part of the indicator development process. For example, you will be creating or selecting indicators for your sales team, you can break down the KPIs into the following format. First is the net profit after tax, which will be composed of the three main indicators that are sales, tax and the costs. In each of these indicators, there are corresponding metrics. For instance, in sales, you can use sales to the new customers as well as the sales from the existing clients. Once again, you will have to insert indicators on those two metrics such as in the sales from the existing clients, you can use the average current sales for every customer during a defined period or you can have the number or the percentage of the current customers during a given time.

Cascading performance measures is like a tree which has branches. You should continue adding the right components until you find the point wherein you can no longer measure the indicator anymore. This pertains to the independence of that particular key performance indicator from another. Once you are finished with defining the KPIs, you can now collect the data if you are through with the creation of the indicators.

If you are not able to measure the progress or the performance of your company adequately, there will be risks associated with such instance. Therefore, you are advised to be in control of your company as a whole and invest on processes which are essential in cascading performance indicators.

If you are interested in Cascading performance, check this link to find out more about cascading KPIs. Also, you can check other articles in Cascading in BSC category.



 

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