Are logistics managers interested in BSC use?
Much has been said and written about conditions and requirements for successful implementation of balanced scorecard. It’s not a secret that this system will not work unless such conditions are observed. It often happens that companies claim they are using balanced scorecard but in fact they use BSC as a kind of accounting system or a system of managerial control. But BSC can become the most expensive system of management control the company has ever had. First and foremost, balanced scorecard is a strategic management tool that ideally becomes company business philosophy. Balanced scorecard is not just a managerial tool or an accounting system. Balanced scorecard should start discussion inside the company. As a rule, such discussions lead to adoption of the wisest decisions.
Develop a clear and comprehensive reward system
But how to get company personnel involved in discussion of strategy maps and implementation of balanced scorecard? Of course, employees should be well motivated. Work with balanced scorecard will require time and effort. If employees do not understand why they need such a system they will work with balanced scorecard because they have to but not because they are interested in success.
Financial motivation proved to be one of the most effective systems of reward. But it is very important to reward employees for real success, but not for achievement of certain indicators values. For example, in logistics evaluation there is such an indicator as timely delivered units. If logistics managers receive bonuses for each timely delivered unit they are likely to forget of about such an indicator as cost per unit. In other words, logistics managers are not interested in saving companies money. As a result, logistics company or logistics department may suffer enormous losses, although customers will be satisfied as they will receive their products or cargoes on time.
What makes a motivated employee?
The right choice of indicators and results for which employees will be rewarded is one of the preconditions for successful implementation and maintenance of balanced scorecard. But rewards can be also nonfinancial and nonmaterial. It is not only about money. For example, employees may receive such rewards for personal achievements and great contribution to implementation of company goals as additional vacation or time off, attendance of business seminar, meeting with business experts. It often happens that nonmaterial rewards are greatly by employees, as compared to financial bonuses.
If logistics managers are properly motivated and receive bonuses not only for high performance according to current scorecard but also for contribution to implementation of strategic goals, such logistics company is very likely to achieve success.
Tags: BSC motivation, reward system
