One Simple Diagram Your Business Needs to Succeed
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Every company wants maximum return on its investment in human capital. This requires matching talents with responsibilities and making sure people use their time effectively. It should also mean that people are given the opportunity to offer their best creative input and leverage their strengths through collaboration. Perhaps most importantly it could mean working towards the same goals expressed in measureable terms with a clear line of sight to the company vision.
How do you achieve this? A practical way is the individual scorecard that measures the added value of the job, provides a way of tracking progress, and keeps the individual focused on important priorities. The individual scorecard is a highly valuable instrument that complements the company’s business scorecard. While the business scorecard measures the performance of the company, the individual scorecard is the report card of the performance of the individual.
But, how is the individual scorecard created? Do people just convert their job descriptions into measurable indicators to build their scorecards? Although this could be an option, it is a poor one with significant disadvantages. First, many job descriptions are vague, and converting them into measureable indicators supported by hard data is challenging. Second, indicators defined through this option tend to crowd the scorecard with too many factors that rob jobholders of the focus they need. Third, this option could create overlap of goals across functions and across levels of the organization.
The answer to creating effective individual scorecards that maximize the benefits of your human capital is to first create an alignment map. The individual scorecard is one of the valuable byproducts of the alignment map.
What is the Alignment Map?
The alignment map is the byproduct of a creative process, expressed in a diagram that connects your company’s present to the future. It is a navigation chart that is adjusted to consider changes in key conditions that affect your company’s growth and profitability and is created independently of your organization chart.
To construct an alignment map, begin by placing your company’s mission and vision at its center. On its left is your vision tree, the indicators that measure your company’s vision. On its right is your strategy tree, the indicators that measure your strategic execution.
As your vision is delivered through processes you have established, the left side represents the outcome measures of your existing processes. The right side represents your strategy for establishing new processes for the future. The left side is actually your company’s business scorecard with Performance Indicators (KPIs) of your business tracking how your processes are performing towards your vision. The right side is your strategy map with strategic initiatives that deliver your competitive and growth strategies. The right side tracks how you are progressing in your strategy execution. Both sides show indicators of progress.
How does the Alignment Map relate to individual scorecards?
It is the framework that makes the definition possible. Defining individual scorecards from the alignment map requires a simple three-part methodology. First, assign progress indicators from the left side of the map to the person at the lowest appropriate level in the organization who has the greatest impact on the indicator. Second, assign progress indicators from the right side of the map to the person at the highest appropriate level in the organization who has the greatest impact on the indicator. Third, define the role of the individual, direct influence, cross-functional influence or management influence, that person has on improving the indicator. The logic of this methodology, once understood by everyone, facilitates the ownership of the scorecard by the individual. Discussion of coherence of goals and reaching consensus take place once the indicators in the scorecards are defined.
Why do you need the Alignment Map?
In addition to serving as the mechanism for defining individual scorecards, there is another equally important and impactful role of the map. It gives your executive team a visual picture, supported by data, of the company’s performance (on the left) and the strategic path to its future (on the right) driven by its mission and vision (the center). This simple diagram provides an important focus on three vital areas and enables you to monitor your company’s health, performance, and future orientation. You can capture learning and adjust your course for a more successful future.