Why Top-Down Scorecard Cascading Doesn't Work

Does this sound familiar?
Management thinks of top-down scorecard cascading as a carrot and a stick.
They know best what’s really driving performance and they want accountability for results.

The front line thinks of top-down cascading as just the stick.
It’s another chance for the big brother to watch over their shoulder and they don’t even know what’s really driving performance.

A Balanced Scorecard framework can only deliver results when there’s two-way communication.

During Scorecard cascading (see more on this here), you utilize the top-down process matrix approach as well as the bottom-up SWOT analysis from the individual departments.  I’m not just talking about picking scorecard-level objectives and measures for the front line; I’m also talking about building the leading measures beneath the lagging measures.  This means the leading measures are not prescribed up-front by top management, but created from the bottom up.

Here’s what this gives your organization:

1. The front line can lobby for resources to fix root cause problems using data to prove their story.  This removes the emotional and political influences on resource allocation.
2. The front line is engaged in the routine performance review process.  This is very different than most front line scorecard teams I see that view the Scorecard as a project owned by someone else (the quality department, top management).
3. Top management allows its strategy to become more complete by listening to the voice of the front line, who usually have a good idea of the true drivers of performance.
4. Everyone from the front line to top management can tell you readily what piece of the strategy they own and how that impacts achievement of the top level vision.

Comments

[Stefan Lanfer]

This is a great insight. In our work at Palladium/Balanced Scorecard Collaborative, we refer to the methodology you describe as "middle-up-down," where key strategic insights emerge from the middle management layer. Then, senior managers synthesize what bubbles up to them, and that synthesis guides the downward cascade - rather than an initial top-down mandate of a traditional cascade. In our experience, this is complicated to manage, and requires senior leaders have larger tolerance for uncertainty, but can also be a great way to build buy-in and achieve real innovation.

Here's an interesting piece from Sloan Management Review with a case study from Honda: http://sloanreview.mit.edu/smr/issue/1988/spring/1/