Individual Performance Factors Based on Kaplan and Norton’s Balanced Scorecard

For those readers who want a more detailed list of actual performance metrics that may be used to measure individual performance, this list has been successfully used in several settings, including a multinational's contact center. Each of the four cells in the balanced scorecard matrix are represented. However, instead of the corporate-level goals, this outline breaks the metrics down into those that should be used to measure individual performance. For companies that want to roll performance up (as opposed to cascading objectives downward), aggregate results of individual team members should be used as the performance objectives of that team's leader. All direct reports roll up to their boss at all levels of the organization.

Productivity & Process

• Quantity of work completed

1. Number and scope of activities completed
2. Percent of work completed on current projects/assignments

• Efficiency & timely delivery

1. Speed of work relative to expectations and peers
2. % of deadlines met
3. Efficient use of down time
4. Efficient use of people involved
5. Efficient use of tools and resources
6. Efficient use of money

• Quality of work

1. Valid
2. Precise/concise
3. Verified as accurate
4. Met requirements and scope
5. Consistent look and feel
6. Clear and coherent
7. Justifiable content (not too much, not too little)
8. Solid craftsmanship
9. Organized and planned (and plan executed)
10. Thorough
11. Applied best practice(s)

Impact on Bottom Line

• Impact on other employees, leaders, customers, company, industry

1. How actions or results affected direct reports
2. How actions or results affected peers
3. How actions or results affected self
4. How actions or results affected the boss
5. How actions or results affected internal customers
6. How actions or results affected external customers (Travel Partners or guests)
7. How actions or results affected the company
8. How actions or results affected the industry (cruise, travel, hospitality, or function)

• Increase revenue

1. Dollar amount that the company made as a result of the employee’s actions
2. Projected impact that actions will have on company revenue
3. Unintended consequences (positive or negative) measured or observed

• Increase customer loyalty

1. Quantified increase in customer loyalty as a result of the employee’s actions
2. Projected impact that actions will have on customer satisfaction
3. Unintended consequences (positive or negative) measured or observed

• Increase in productivity

1. Quantified increase in company, team, and/or customer productivity as a result of the employee’s actions
2. Projected impact that actions will have on productivity
3. Unintended consequences (positive or negative) measured or observed

• Increase in quality

1. Quantified increase in company, team, and/or customer accuracy and/or precision as a result of the employee’s actions
2. Projected impact that actions will have on quality
3. Unintended consequences (positive or negative) measured or observed

• Reduce costs

1. Quantified reduction in company, team, or customer spending or expenses as a result of the employee’s actions
2. Projected impact that actions will have on costs
3. Unintended consequences (positive or negative) measured or observed

• Reduce cycle time/process time

1. Quantified reduction in the time it takes to complete company, team, and/or customer processes and/or activities as a result of the employee’s actions
2. Projected impact that actions will have on activities, processes, and systems
3. Unintended consequences (positive or negative) measured or observed

Customer Satisfaction and Loyalty

• Compliment/Complaint ratio

1. Positive vs. negative customer and employee reactions
2. Unsolicited compliments vs. complaints

• Identified and met or exceeded expectations

1. Number of projects where stakeholders mapped (identified and their position documented)
2. % of stakeholders who confirm their expectations and requirements were met

• Customer satisfaction survey results

1. Results of regularly-scheduled surveys
2. Results of solicited customer surveys

• Impact on team credibility

1. Number of times that personal actions brought the team into question
2. Number of times that personal actions helped the entire team gain respect or recognition

• Continuously improving

1. Results improved for same solutions or activities
2. Streamlining processes, procedures, policies, or methods

Learning & Growth

• Organization’s core competencies assessment

1. Self vs. boss ratings
2. 360 ratings

• Position competencies assessment

1. Self vs. boss ratings
2. 360 ratings

• Error reduction/repeat ratio

1. Number of errors vs. last time on like activities
2. Number of mistakes by level of impact

• Increased autonomy

1. Amount of time spent getting specific direction (whether sought or given)
2. Self-regulated efforts
3. Proactively seeking solutions
4. Focusing on the right objectives/results

• Creative or new solutions applied

1. Number of new ideas sought out
2. Number of ways existing ideas used in new ways
3. Number of existing ideas adapted to new situations
4. Number of completely innovative solutions generated

You can clearly see the connections between this post and my earlier posts on performance management topics. I hope that this, more inclusive and thorough, review of individual performance helps you build a scorecard for the members of your team.

Individual Performance

All employees should:

Contribute to Team Success – establish and maintain team credibility by sustaining the positive perceptions of others, share best practices and help others, and help complete team member’s work when they are out of the office.
Produce Results Relative to Company Investment – ensure value of productivity meets or exceeds rate of pay and contribute to team results relative to percentage of team investment represented.
Meet Customer Requirements and Expectations – establish or identify and met or exceed internal and external customer performance requirements and expectations, including quality and other standards.
Produce Timely Results – delivery results on time, including work, reports, and/or products; be on time, stay engaged throughout the workday, and make up lost time.
Optimize Resources – optimize use of all resources, including tools, equipment, budget/money, and people; minimize waste.
Work Autonomously – achieve results with minimal supervision; identify, source, and invest in solutions where skills do not match requirements.
Constantly Improve – identify opportunities to increase efficiency and efficacy all of the time; surpass previous personal bests; continuously produce more year over year.
Develop and Maintain Effective Work Habits – focus on improving how results are achieved, increase interpersonal competence, eliminate ineffective behaviors, and increase effective behaviors.
Champion the Company – represent the company through professional dress, speech, and behavior in the office, with customers, and in the community; promote achievement of company goals and realization of the company mission; maintain alignment with the company vision and model the core competencies at all times.

Whether you are an executive, middle manager, front-line supervisor, or individual contributor, these are objectives that everyone should be focused on at all times.

Team Performance

Below the organization or department level, performance can be viewed at the team level. Basically, this is a view of the team leader's individual performance. If the leader is effective then the team should excel in each of these areas. The questions around team performance are the same as those for project management. How effective is this group at getting their work done?

Integration - are all team resources such as hardware, software, chemicals, etc., coordinated properly?
Quality - is the team meeting the agreed-upon quality requirements? Metrics include quality planning, quality assurance, and quality control.
Schedule - is work completed in a timely manner? Metrics include activity sequencing, resource planning, activity duration estimating, and work schedule development and control.
Cost - are approved budgets being met? Metrics include resource estimating, cost estimating, and cost monitoring and control.
Risk - have issues that may or do inhibit performance been identified and proactively tackled? The team should identify, assess, and mitigate risks associated with factors such as new technology, very tight time constraints, lack of availability of skilled resources, and customer readiness for the team’s work.
Communication/Information - does the team generate appropriate information and disseminate it in a timely manner to team members, management, and other stakeholders to ensure that their expectations are consistent with the realities of the team’s progress or results?
Organizational Impact - how effectively does the team identify and plan for organizational changes that may or should occur?
People - is the team effectively led? Does the team's boss provide effective leadership and management of the team, including organizational planning, staff acquisition, conflict management, and team development?
Procurement - how effectively does the team manage the processes required to acquire goods and services from outside and inside the company? Metrics include procurement planning, RFP preparation, source selection, and contract negotiation and administration.

Organizational objectives can be cascaded down to a team in similar language, but if you are only measuring a team's performance these generic categories can be very useful. Exact metrics depend on what the function of the team is and how they operate. Hopefully, these nine categories provide some structure for setting up team objectives.

The Big Seven

Recently, I have received a number of requests for help with identifying performance management metrics. Therefore, I wanted to post a few ways to look at performance. Let's start with the company-wide metrics that are often taught in B-school and are affectionately known as "The Big Seven" by students who have suffered through an MBA program.

Effectiveness
1. Increase revenue
2. Increase productivity
3. Improve quality
4. Increase customer satisfaction
5. Increase bench strength
Efficiency
6. Reduce costs and waste
7. Reduce cycle and delivery time


In response to a recent LinkedIn Answers question I pointed out that even though these objectives are meant to drive overall organizational performance, they can be applied at all levels. For that particular question I pointed out how six of the seven can be used to measure the value added by a company's purchasing department.

Regardless of location or size, procurement has several significant impacts on the overall organization. If you look at the 'big seven' performance objectives that they teach in US business schools then you can define the impact that supply chain/purchasing/procurement has across a fairly powerful spectrum.
1. Increase Revenue - the Sales team must have the proper resources or they will not succeed. It does not matter if they are both willing and able if they do not have the products to sell or the tools that enable them to make the sale (software, phone system, etc).
2. Increase Productivity - personal productivity relies very heavily on having the right tools at the right time working the right way.
3. Increase Quality - you can imagine the impact that purchasing had on our guests when I worked for Royal Caribbean Cruises. If the strawberries were rotten the entire ship was slammed on the guest comment cards. However, the extremely comfortable mattresses and sheets resulted in praise from everyone.
4. Increase Customer Satisfaction - this is all about procuring the right tools for the job. If the purchasing agent takes the time to understand how the tools are used and what makes one better for the business than another (value) then s/he can have a significant impact by buying a tool that allows employees to delight the customer (e.g. the right content management system will enable the call center to quickly find accurate information when answering customer questions).
5. Improve Bench Strength - internal to your own team you should make sure that you have planned for near-term workforce needs and have developed talent as needed. Your actions as purchasers can only tangentially affect this objective.
6. Reduce Cost - there is more to this that meets the eye. Sure, things can be procured for a low cost, but a very savvy purchasing team can train the entire company on how to negotiate (or not) with vendors. If people who are clueless or corrupt get involved then your vendors can get the upper hand during negotiations and rob your company blind. I have seen several IT people who favored a product erode the company's negotiating position by giving insider information during negotiations. They were not evil, they just really wanted to help the vendor that they felt was clearly best and deserved the most possible money from the company. (As one IT person said, "We have a ton of money so it doesn't really matter.")
7. Reduce Cycle Time - excellent negotiators can get faster computers and more bandwidth for the same price that competitors are paying for inferior products and services. That extra power and speed is a distinct competitive advantage because it cuts down on the overall time to deliver answers. Clearly, just-in-time delivery of raw materials for construction can also improve cycle time by eliminating wait.

Bonus thought: there is an eight performance metric.

8. Increase Market Capitalization - this is effectively the net result of the first seven objectives being met. If you do the first six things right then your company's tangible and intangible value should increase and be justly rewarded by investors.

Recruiting Videos

Visit YouTube.com and pull up Jeff Sass's video called "Work's A Beach!". He shot this with his phone before going into the office, downloaded it to YouTube, pushed it to Twitter while walking back to work, and had an interested candidate Twitter back before Jeff reached his desk. The person that wrote back was JC, and JC ended up earning the job (after properly being interviewed and such).

What is the lesson learned for your company?

Building a Job Profile or Core Competency Profile

The steps I typically follow depend on the nature of the position that I am looking at. If the position is a leadership role within the organization and it is fairly senior then I am probably going to leverage the Lominger Leadership Architect products. I am certified in all of their products. If the role is more tactical then I am going to use a job analysis to identify the competencies and from there build the required strategies and tools.

Leadership example:

1. Assess the required culture for driving the company's vision, mission, and strategic plan by facilitating a discussion with the executive team. A deck of cards (Cultributes) is sorted by each executive and the aggregate results and agreements define the organizational environment needed to drive the company forward.
2. The environmental attributes are converted into a core competency model by software. This set of competencies is also discussed by the executives, who often want to have their own team assessed using a 360-degree feedback tool that Lominger developed (Voices).
3. The results of the multi-rater feedback are shared in confidence with each executive. An individual development plan is created that includes learning, application, and feedback loops. Most executives embrace the feedback and want to improve in any areas of weakness, even if the weakness is only relative to other strengths.
4. The collective picture of the executive team is shared with them and gaps in the core competency model are identified. Future members of the executive team will be chosen, in part, based upon a competency assessment so that the executive team can add competencies that are currently under-represented.
5. I create strategic plans for sourcing, attracting, and selecting future executives that will bring the missing pieces to the team. I build the selection process and tools, which will include a behavioral interview and other assessments.
6. I am often asked to provide coaching to senior executives in areas where they want to improve and require confidential feedback (e.g. managing ambiguity).

Key technical position example:

1. Bring together a group that represents the boss, peers, customers, and high performers for the identified position. Review all existing job descriptions and other performance management data.
2. Conduct a near-term scenario plan with the group so that we have some reasonable collective idea about what the position may entail over the next 2-3 years.
3. Collectively document the 4-7 most critical performance objectives for the people in the position, given what we have discussed thus far.
4. For each objective, define the activities that must be executed well to meet the objective. We also identify some of the activities that, if done poorly, could seriously impact the person, team, or company in a negative way.
5. For each activity, we identify the competencies required to execute the activity as flawlessly as possible. The competencies will include knowledge, skill, experience, ability, and personal traits.
6. I compile the results and bring the group back together to review and prioritize the list of competencies. In this meeting the group also splits the competencies into two categories: price of admission and train/develop.
7. Based on the price of admission competencies (those that are a commodity or those that are almost innate), I create strategic plans for sourcing, attracting, and selecting candidates for the position. This includes the development of behavioral interview guides, a scorable simulation, and possibly another assessment.
8. Based on the training/development competencies (those that are not reasonably learned outside of the organization) I put a strategy together for providing on-demand access to critical information and best practices, instructor-led and self-paced training, learning activities (e.g. special projects that will force application of the required competency), and feedback programs (e.g. mentoring assignments and accountability coaches). I may create some of the materials myself, but typically there is so much work to be done here that I am assigned subject matter experts and people who need to learn the skills to help me.
9. A final step that many organizations want to take is to assess the incumbents against the competency-based profile that was just created. This leads to identification of people who need to improve in some of the critical areas. Those employees are often the first to take advantage of the new learning strategy and tools.

Using Tests During Selection

Late last year we decided to improve our Sales selection process. We completed job analyses on both inside and outside Sales team members who were consistent top performers according to production numbers. We created two tools based on the price-of-admission competencies: behavioral interview guides and work simulations, but we also wanted to assess sales aptitude. It was clear that aptitude had a great deal more to do with their success than any specific sales process or technique. In fact, they were very diverse in their approach, the tools that they used, and their demographic makeup. The only historical trait that many shared was their involvement in sports during high school and/or college. One was a former NFL player.

To identify a sales aptitude assessment vendor we started with the usual tools: Google and our professional networks. We ended up with over 12 companies that we decided to investigate. All were the 'big dogs' in the employee assessment space. However, the approach that each company used to sell us their tests were very different. Most resisted our insistance on an internal validation study because their products were already supported by a great deal of statistical analyses. That showed a lack of appreciation for the impact of organizational culture, sales philosophy, and preferred processes and tools on sales effectiveness.

We only moved forward with those companies that agreed to test a few of our employees so that we could see whether their tool was a match with our own performance data. We asked both top and bottom performers to take two of the assessments at least a week apart. Some of the companies told us that they knew who the top performers were based on the results, but they were completely wrong on roughly 80% of those that they tested. Two of the companies used a different approach. They asked to be told who the top and bottom performers were up front. They then analyzed the results by pointing out the behavioral attributes that were common amongst both the top and bottom performers, which were not all of the attributes that were measured. When we gave them a couple of additional people to assess they were spot-on with predicting who the top and bottom people were based on their prior results.

We also looked at whether the tests would have caused us to rule out any protected class of employees (adverse impact). No such impact was observed as the tests scored a diverse group of people both high and low.

This internal validation process is of critical importance in the selection of a test or assessment. We met the requirements of the EEOC's Uniform Guidelines on Employee Selection Criteria because we made certain that there was no prima facie evidence of discrimination, the test is a business necessity because it will help us hire top performers, and we are also incorporating other, equally-weighted assessments in the process (interview and simulation) so that we don't run into problems with alternative practices with lesser impact on protected classes.

If you are wondering which product we ended up selecting, the final criteria was based on the relationship that the top salesperson at that company built with our selection committee. He was an excellent salesperson in his own right and practiced what he preached:

Michael Hopkins, Senior Vice President
Profiles International, Inc.
5205 Lake Shore Drive
Waco, TX 76710
1-888-744-5205 x141
mike.hopkins@profilesmail.com