Remote work and the implications of continuing the process, including its potential impact on employee performance, are widely discussed. However, there is no right answer, and it is not one-size-fits-all.
The future of work includes flexibility, employee experience, agility, and the responsible use of artificial intelligence (AI)—these significant shifts impact where and how employees work. With an increase in remote work options, we have seen positive trends in work-life balance, employee empowerment, inclusivity, and an increase in diverse talent. These factors are also known to increase employee productivity and retention. According to BCG, a considerable population of employees are ready to leave their jobs if they find their flexible work arrangements unsatisfactory. Based on their survey, approximately 90% of women, caregivers, individuals identifying as LGBTQ+, and those with disabilities, deem flexible work options as crucial in determining whether they will continue or resign from their current employment.
Remote work productivity is subject to debate due to various factors that must be considered. Some suggest remote work can increase productivity due to a flexible schedule, no commute, and fewer interruptions. While many employees thrive in a remote work environment, some find it challenging due to the discipline it demands.
Remote work was on the rise even before the COVID-19 pandemic. A July 2023 report from Stanford University found that working remotely has doubled every 15 years. Then, when the pandemic occurred, although devastating, it provided a new perspective for those previously constrained, forced to relocate, or live in less favorable locations to work for a specific company and advance their career. Worldwide ERC states that around 56 million Americans moved to new residences between December 2021 to February 2023 due to COVID-19-related shutdowns and the surge in remote work and online education. With such a huge increase in their number over the past few years, this begs the question: do employees working remotely demonstrate productivity?
Taking a deeper look into the study by Standord University, researchers shared that remote work employees’ productivity differs depending on perceptions—the nature of the research and the conditions under which it was conducted. The report revealed that workers believed productivity was higher at home (approximately 7% higher), while managers perceived it lower (around 3.5% lower). Another example, according to a poll by the video presentation applications mmhmm, 43% prefer office work and 42% favor working from home for peak productivity. Moreover, 51% of employees stated that working asynchronously or having the flexibility to set their schedules contributed positively to their productivity. Perceptions aside, the Stanford analysis found a 10% to 20% reduction in productivity across various studies.
The bottom line is today’s company culture is crucial. Ensuring work-life balance and putting the employees in the driver’s seat are the best ways to retain and increase productivity because they will feel valued and empowered. In a 2022 Microsoft employee engagement survey, 92% of employees say they believe the company values flexibility and allows them to work in a way that works best for them. An even higher percentage (93%) are confident in their ability to work together as a team, regardless of location. People have different preferences—some individuals opt for a hybrid approach, while others choose either remote or in-person work exclusively.
Regardless of the work setup, company leaders and human resources (HR) or human capital management (HRM) executives should ensure that they can still make a lasting impact on employee performance. One measure involves establishing key performance indicators (KPIs) that assess innovation, program, project, and product success—the output, not the physical location. Another crucial step is developing a strategy that includes all future work options, such as in-person, hybrid, and remote choices. Employees tend to be more productive if there is a level of empowerment that allows them to decide where to do their best work.
Planning in person events makes a difference. Leaders who bring new hires and internal transfers, new to the team, on-site for several days should see an uptick in productivity post-gathering. In-person team or company-wide gatherings 1-4 times per year provide employees an opportunity to reset and socialize. Moreover, managers should bring teams together for major program and project kick-offs. When onsite in person, people being present makes a difference. Discourage using Teams or Zoom when employees are in the general vicinity. I have seen companies spew the importance of in-person just to fly employees into a specific location and have people take meetings from their desks or in a different on-site building-conference room, defeating the purpose of in-person interaction.
Having organizations foster all work options is critical and foregoes having to decide which is best. There is no right or wrong answer to this challenge; it should be considered a new way of working and requires future-forward ways of thinking, just as we do with emerging technologies.
Interested in more articles on productivity improvement? Click here.
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About the Guest Author:
Dr. Malika Viltz-Emerson is a Senior Global Human Resource Leader at Microsoft. She has over 20 years of experience in human capital management. Her mission is to identify and address the real-world challenges and opportunities for employees and the company, and design and implement optimal solutions that leverage the latest tools, technologies, and processes.
Editor’s Note: This article has been updated as of September 18, 2024.
The Balanced Scorecard (BSC) is one of the most important performance management tools used to improve business functions and their outcomes. This tool is used not only at the organizational level but also at the departmental level.
By using departmental scorecards, managers are able to get detailed insights into the performance of their departments. The scorecards can also determine the responsibilities of the employees in terms of achieving strategic objectives.
To implement an effective balanced scorecard for the departmental level, organizations should take into consideration these best practices.
Develop the Right Template
Employees are often asked to collect data since every manager knows that it is essential in generating qualitative insights. However, the different performance reports could easily lead to different interpretations. A well-designed template leads to a clear, structured reporting and improves communication through standardization.
The template should contain four perspectives that meet the organization’s strategic needs. The most commonly used perspectives are Financial, Customer, Internal Processes, People Learning, and Growth.
Moreover, the template should also display the objectives associated with each perspective and the KPIs associated with each objective. For each KPI, the target and thresholds, the trend, and the previous and current result should also be presented.
Choose the Right Objectives
When preparing a departmental scorecard, one of the most important steps is to select the right objectives for the different categories, and those objectives should align with the organizational and departmental strategy. Through the cascading process, the organizational objectives and KPIs are translated from the strategic level down to the departmental level.
The departmental scorecard must contain some specific objectives depending on the activities of the operations team. The same objective can be cascaded to more departments, each of them measuring it through different KPIs. Some organizational objectives may not be cascaded to lower levels.
For example, the objective of the Financial perspective is to Increase profit. This organizational objective can not be directly cascaded to the human resources department since the human resources department has no direct influence on the revenue of the organization. However, they could reduce their spending in order to increase organizational profit. Therefore, the objective for the human resources department could be to minimize operational costs. Since the sales department is responsible for profit generation, they can cascade down this organizational objective without any modification.
Choose the Right KPIs to Measure Chosen Objectives
As mentioned before, it is recommended not to cascade all objectives and KPIs from the organizational level to the departmental level, but organizations may add specific ones that represent the department. The most important attributes in KPI selection are relevance, clarity, and balance.
In many cases, organizational and departmental scorecards may not be enough to communicate the organizational strategy to all employees. Therefore, individual scorecards should also be created for them.
Data Sources for a Balanced Scorecard
During the scorecard development process, organizations may find it hard to determine the right objectives and KPIs. Objectives and KPIs must be based on relevant data. There are two types of sources of data to consider: primary and secondary.
Feedback from internal stakeholders can be considered as an internal primary data source, while feedback from external stakeholders is an external primary data source. Secondary internal sources could a company’s previous reports and strategy plans, while smartkpis.com and academic articles are external secondary sources.
Figure 2: Marketing Departmental Scorecard Example
Benchmarking is a highly structured process which aims to improve the performance of an organization by comparing it with other competitors or with the market’s best practices. Secondary benchmarking refers to a benchmarking study that is based on data which is accessible to the public and the comparison is usually done within a specific industry. The gathered data comes mostly from annual, sustainability or financial reports of the companies chosen as benchmarking partners.
Although less complex and much more limited, secondary benchmarking has specific advantages, as it is easy to deploy and it has the capacity to highlight key relevant aspects about the industry – trends or top performers. Moreover, secondary benchmarking helps identify the industry’s common and primary benchmarks, and it can form the basis of a very well structured primary benchmarking project.
For a better understanding of the importance of the key performance indicators (KPIs) used, it is mandatory to comprehend the difference between KPIs and benchmarks. Benchmarks play a key role in any benchmarking project and they can be seen either as the company’s goals, or as a baseline.
In the first case, companies usually choose benchmarks based either on the industry’s standards, or on top performance in the industry. These two set the performance level for all the other actors within the industry. In the latter case, benchmarks are used to highlight the current level of performance and to enable goal setting to increase performance.
In both cases, it is mandatory to have a performance management system in place and to measure performance through KPIs on a regular basis, at the departmental or organizational level. A performance management system pinpoints the current level of performance and enables organizations to see the differences between their performance and the industry’s average level of performance or that of the best performers within the industry.
However, in practice the situation is quite different and given the fact that organizations measure different indicators based on the key elements of their strategic objectives and their development strategy, a lot of differences between indicators or measurements can be spotted.
For example, some companies may focus on constantly innovating and improving their products, while other organizations within the same industry may perceive a high customer service performance as a key driver for their development. In this case, it is only natural that the production KPIs for the first type of organization would include:
One the other hand, organizations like the one in the second scenario will focus on KPIs such as:
% Drop call rate;
% Customer calls answered in the first minute;
% Agent utilization;
# Call handling time;
# After call work time; or
% Calls answered within SLA.
While this can block the actual comparison stage of a benchmarking process, it can also be seen as an opportunity, because it can drive organizations to change their focus, or at least consider giving more attention to another part of their business based on the common KPIs used within the industry.
One other important aspect to consider when choosing KPIs for a benchmarking project is the availability of data. For a complete and relevant output, you need to make sure that the chosen KPIs are reported by most of the benchmarking partners, or that the data has been available for more than just one year.
This will on one hand help you during the comparison process, and on the other hand, it will make it possible for you to spot the pattern of development of a single company. It will be hard to draw any insight, if just one organization reports that KPI and if data is available for a single year.
Based on the experience gained from deploying benchmarking projects and working with KPIs, the specialists at The KPI Institute have encountered one recurring issue which may impact the deployment of a benchmarking project. This issue concerns the terminology used when referring to KPIs and performance management in general.
Each company uses its own terminology and refers to specific processes in a language fostered by its organizational culture. Although two companies might measure the same indicator, they might be using different words and formats to express it.
For example, in the latest benchmarking project deployed by The KPI Institute – the Secondary Benchmarking Report Series within the Utilities sector – we have noticed that when referring to interruptions, some organizations named this term “supply interruptions” and others “interruption time.”
Image Source: Freepik
Hence, to make sure that the results of a secondary benchmarking project are as accurate and as complete as possible and that similar KPIs are easily identified, I would recommend to start the data analysis phase with standardizing the names of all indicators from the data base according to TKI’s standards:
Use a short and concise name;
Add a symbol in front based on what the KPI measures;
Use the same name for indicators measuring the same process.
Moreover, the unit of measurement might differ from one company to another – some might measure the interruption time of supply for 100 customers, while others for 1000.
Another KPI example from the Secondary Benchmarking Report Series within the Electricity sector is the rate of electricity consumption, which can be measured in GWh or in MWh. Having different units of measurement affects the final output as the data cannot be compared.
For the first example, the data can easily be manipulated in such a way that it can be compared. If we are interested to report the numbers for 100 customers we can multiply the results for 1000 customers by 10. In the second case, we want to standardize units of measurement such as GWh and MWh, by simply converting one of them into the desired one, as per international standards.
In conclusion, make sure that you use these three simple recommendations in order to choose and standardize the indicators for your benchmarking report, as this is a very important step in the beginning of any benchmarking project:
Consider the availability of data during the KPI selection process;
If you wish to know more about benchmarking and all the challenges associated with it, The KPI Institute’s training program, Certified Benchmarking Professional, is designed to fill the gaps you might have or to provide complete new knowledge about aspects on how to conduct a benchmarking study.
For further knowledge, feel free to download any of our webinars that are focused around the idea of Benchmarking or take a look at our Benchmarking Solutions, which span from audit services to Benchmarking framework optimization.
Interested in more benchmarking best practices? Click here.
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Editor’s Note: This article has been updated as of September 17, 2024.
Benchmarking—i.e. learning from best practices—can boost a company’s performance by enabling a learning experience that relies on underlining the best in-class practices and their integration into your own organizational processes. Moreover, it allows companies to focus on strengths and weaknesses in comparison to those of their main competitors and, as such, it supports them in strengthening their position on the market. Nowadays, benchmarking is one of the most frequently used strategies for improving business performance.
Best practice benchmarking allows companies to conduct a comparison of performance data obtained by means of studying similar processes or activities performed by other organizations, and identifying, adapting, and implementing the practices that produced the best performance results. This represents the most powerful type of benchmarking, as it focuses on “action” and it is used for learning from the experience of others.
Through benchmarking, companies can easily determine which of their procedures would benefit more from improvement strategies and what they should do to become more productive and profitable. Comparisons are actually made in business on a daily basis, as companies need to know where they stand, in regards to their competitors, and frequently ask themselves questions such as: “Why are others better?”; “What can we learn from them?”; or “How can we catch up and become the best in our sector?”
Even if many companies have already adopted practices for measuring their performance by monitoring key performance indicators (KPIs), this aspect should be just the first one in calibrating an organization’s business performance. Hence, benchmarking sets some standards against which these key performance indicators can be measured and compared to.
Benchmarking can be used in any business to compare KPIs, and processes performance, to certain industry standards. As a general methodology, there are three questions to answer prior to starting a benchmarking study in your organization:
What will be benchmarked? ( e.g. processes, results)
Against what will your organization be benchmarked? (e.g. standards, other organizations)
How will be benchmarking used? (e.g. for continuous improvement, for evaluation)
The concept of benchmarking also relies on the idea that performance numbers can mean less when analyzed without having a point of reference (a benchmark) as a comparison starting point. For example, in airline industry, an airline company has a turnaround time of 55 minutes. Is it good, or bad? It is hard to find the answer, unless you compare this 55 minutes turnaround time to an objective standard, such as the industry average turnaround time for other airline companies.
Therefore, benchmarking enables a company to discover its performance gaps in comparison to another company and incorporate processes belonging to leading firms into its own process flow in order to increase performance and close gaps.
In conclusion, as measuring performance through KPIs has become a standard practice for most of companies that want to improve their performance, the next step necessary for improvement that should be considered is to implement a benchmarking study, aimed at comparing their performance against that of best practitioners. Without benchmarking, performance improvement could be limited, as it will only measure performance in isolation, with no reference to any industry standards or competitors’ results.
Throughout the years, many studies have examined the use of the balanced scorecard (BSC) in a board’s performance evaluation. Why is this important and how can this be implemented?
The modern business landscape is characterized by fast-changing trends, an expanding weight from the competition, and risks emerging from new trends. This is why a good corporate governance system is what can help companies achieve high business performance despite uncertainties. Having a control mechanism will help managers carry out business activities that can maximize profits for shareholders. Board members represent an important internal control mechanism.
The BSC, designed by Robert Kaplan and David Norton, is primarily made of financial and non-financial benchmarks. The BSC model starts from a defined mission, vision, goals, and strategy of the company and identifies specific goals, tasks, benchmarks, and initiatives from four basic causal relationships: financial perspective, stakeholder perspective, internal business process perspective, and learning-growth perspective.
The BSC Component in the Context of a Board’s Performance
In 1996, Kaplan & Norton suggested that the vision and strategy of a company be more specifically defined from four basic, interconnected perspectives:
Financial Perspective – how to implement a strategy that will maximize profits for equity owners.
Customer Perspective – how to achieve customer satisfaction and loyalty.
Internal business process – how to achieve an effective and efficient business process.
Learning and Growth Perspective – how to gain human capital competitive advantage.
Later, in 2004, Kaplan & Michael E. Nagel proposed a three-part BSC program:
Enterprise Scorecard – synchronized list of results at company level
Board Scorecard – synchronized list of Board results
Executive Scorecard – synchronized list of executors’ scores
Synchronized lists at the company level ensure that top managers, starting from a well-defined company strategy, goals, tasks, benchmarks and initiatives through the four outlined perspectives. This process converts the company’s strategy into operational terms.
It is necessary to build a synchronized list at the board level. That is, the board of directors should evaluate and approve the corporate strategy map and the corporate level’s harmonized list. According to Kaplan and Nagel, a synchronized list at the board level also has four perspectives:
Financial Perspective – Similar to the company level, the goal is to maximize value for equity owners.
Stakeholder perspective – This is a broader perspective than at the company level because it is now important to respect the interests of all stakeholders.
Perspective on internal business processes – This explains how the board contributes to achieving shareholder goals and relates to performance monitoring, reward systems, etc.
Learning and Growth Perspective – This captures human capital as a source of competitive advantage, related to the specific skills and the knowledge and capabilities of board members.
Application of the BSC to a Board’s Performance Evaluation
According to research published in the Managerial Auditing Journal, studies that have suggested the possibility of using the BSC in evaluating the board performance recognize the financial dimension, the stakeholders’ dimension, the internal processes dimension, and the learning and growth dimension in the BSC.
The framework of the board’s BSC is based on identifying four basic elements in each dimension: the objectives, the performance drivers, the measures, and the targets:
The objectives reflect the board responsibilities;
The performance drivers are actions taken by the board to achieve the objectives. Each performance driver should be linked to specific measures and targets;
The performance measures are used to control the performance drivers and assess whether the board has achieved the goals;
The targets reflect the best practices of the industry.
Using the BSC in a board’s performance evaluation can help define strategic contributions of the board; provide a tool to manage the composition and the performance of the board and its committees; clarify the strategic information required by the board, and help monitor the structure and performance of the board and its committees.
The Evaluation Process: Agents and Contents
According to the study “Evaluating Boards and Directors”, evaluating board performance may be done by an internal party represented by the chairman of the board. In some cases, it may be appropriate to delegate the evaluation process to a non-executive member, a lead director, or a committee of the board. Also, the evaluation process may be carried out by an external party who has experience in corporate governance and performance evaluation.
The self-evaluation method is a common way to evaluate board performance. Even though this method is characterized by confidentiality, biases can still occur. The close work relationship between chairman or the non-executive member and the board members can affect the objectivity of their point-of-view. The lack of skills and time in conducting performance evaluation can be a major influence on the evaluation results.
Through a nominating committee or an audit committee, a higher degree of objectivity and independence can be achieved; however, the bias risk will remain.
Hiring an external advisor is applicable for the non-availability of the necessary skills for the evaluation process and achieving greater transparency and objectivity. The external counselor may be a professional advisor. Several enterprises use a trusted adviser as the board prefers to deal with people whom they know and trust, but it is better to use a professional advisor that has a proven technical skill in their past experiences and a high degree of independence.
The responsibilities element aims to evaluate the fulfillment of the board’s responsibilities.
The operations element aims to assess the board’s relationship with the management.
The structure element aims to assess the board’s composition.
The board membership element aims to assess the overall board’s skills and knowledge, experience, competence, ethics, diligence, and independence.
Figure 1. Strategic Objectives and KPIs | Source: The KPI Institute
The BSC is an advanced performance management tool that supports organizations to transform vision and strategy into short-term and long-term targets and specific measuring rules. The application of a balanced scorecard in evaluating a board’s performance has been proven through many studies as an effective performance management tool. It also helps a board’s direction to be more aligned at the company and operational level.
Using a BSC in a board’s performance evaluation requires skillful and independent evaluation agents to maximize its potential. To gain the right skills and learn how to implement a balanced scorecard management system in your organization, sign up for The KPI Institute’s Certified Balanced Scorecard Management System Professional course.
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Editor’s Note: This article has been updated as of September 17, 2024.
About the Guest Author:
