Introduction
It is the role of every employee and the management of a firm to ensure that the firm succeeds. To make sure that a firm succeeds, there are ways through which the firm can track its performance. These ways are performance management system and the balance scorecard process. CliftonLarsonAllen is an example of a firm in the United States that uses these two methods to track its performance.
Performance Management
Performance management is the process through which all employees and their staff join hands and work together to strategize, monitor and track the performance of every employee in the firm, the different departments in the organization and the overall firm (Goodrich, 2003). The ultimate goal of performance management is to ensure that employee effectiveness in the firm is maintained. Performance management ensures that the firm and individuals attain their goals (Goodrich, 2003). An effective performance management system has five components. These are goals accomplished, aims and goals, ratings from the supervisor, plans for individual development and lastly the feedback process. Performance management can be administered annually or quarterly depending on the type of organization (Armstrong & Baron, 1998). Performance management allows firms to access their employees and note which of them requires an increase in salaries and bonuses. For many years, the process has been used to reward outstanding employees in the firm.
The performance management system entails self-assessment, different measures of performance, reviews from senior leaders in an organization and uses measurable criteria objective for its assessment (Armstrong & Baron, 1998). Through an effective performance management in a firm, it can achieve its objectives and goals as well as help individuals to achieve their personal goals.
Balanced Scorecard
The balanced scorecard is a system adopted in the management of an organization that is aimed at turning the mission and goals of an organization into performance objectives (Wilsey, 2000). These objectives are closely monitored by the organization to ensure that they are met. This framework was laid in 1992 by David Norton and Robert Kaplan (Butler & Raiborn, 2011). A balanced scorecard in every firm looks at four main parts (Wilsey, 2000). These are the financial side, customer’s side, internal organization of the firm and growth and development part. The financial side measures the operating income of the firm and returns on investments. Customer side focuses on consumer retention and their satisfaction on the products produced. The internal organization of the firm focuses at how the firm’s missions are linked with the firm’s strategic goals. Growth and development part focuses on the satisfaction of the employees and their retention in the firm (Butler & Raiborn, 2011).
A balanced scorecard should always result in improved performance in the firm, motivation and confidence boost among the employees, improved information system among the employees, improved consumer satisfaction and an increase in financial use in the firm. Appropriate use of a balanced scorecard in a firm improves the overall performance of the firm if the results are integrated into the firm (Wilsey, 2000).
Differences between the Balanced Scorecard and the Traditional Performance Measurement
The traditional performance measurement focuses only on the financial position of a firm based on internal accounting reports while the balanced scorecard focuses on other areas apart from financial analysis (Davis & Albright, 2004). The balanced scorecard is also different from the traditional performance appraisal since the traditional appraisal performance is only administered by the supervisors while the Balanced Scorecard is administered by the management of the organization. Another difference is that the traditional performance measurement is only conducted once in a year while the balanced scorecard can be performed several times in a year (Davis & Albright, 2004).
Conclusion
Performance management is a process through which members in an organization such as CliftonLarsonAllen work together to strategize and track the performance of every individual in the firm. A balanced scorecard is a set of tools aimed at improving the performance of the firm. Both methods are integrated into a firm to ensure that the firms are effectively run and performance improved.
References
Armstrong, M. L., & Baron, A. (1998). Performance management: The new realities (developing practice). London: Chartered Institute of Personnel and Development.
Butler, J. B., Henderson, S. C., & Raiborn, C. (2011). Sustainability and the balanced scorecard. Management Accounting Quarterly, 12(2), 1-10.
Davis, S., & Albright, T. (2004). An investigation of the effect of balanced scorecard implementation on financial performance. Management accounting research, 15(2), 135-153.
Goodrich, B. (2013). What is performance management? Retrieved January 26, 2017, from http://www.businessnewsdaily.com/4748-performance-management.html
Wilsey, D. (2000). What is the balanced scorecard? Retrieved January 26, 2017, from https://www.balancedscorecard.org/Resources/About-the-Balanced-Scorecard
