Using the Balanced Scorecard concept for employee remuneration

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JEL classification

• Compensation Packages; Payment Methods
• Business Economics

Keywords

Balanced Scorecard, breakdown of targets, KPIs, motivation, metrics

Abstract

This article discusses the fairness of rewards and their motivational effects. It employs the idea that in order to drive higher productivity through the feeling of fair reward, it is advisable that employees are acquainted with the factors influencing the amount of the reward. Based on a survey performed in a major telecommunications company, the article illustrates how to break down targets to those for specific employees. This breakdown is realised by means of the Balanced Scorecard concept and thus the acquired balanced set of criteria is used for personal bonus calculations. The benefits of the proposed solution are not only knowledge on individual staff contributions to the objectives of the company, but also the unusual use of metrics instead of objectives by breaking the company down into smaller scale levels.