People Focused Consulting principal Christine Bau said in a blog that a balanced scorecard provides an opportunity to signal to advisers how they should go about achieving the desired business results, and what behaviours the business will reward and encourage.
She said that, according to figures released by ASIC, a third of licensees are utilising a balanced scorecard to pay bonuses to advisers.
“This approach ensures bonuses are determined using a range of measures that are not solely linked to the recommendation or sale of financial products,” Ms Bau said.
“The ability to define and articulate your company values and culture cannot be underestimated.”
Ms Bau said an added advantage of using a balanced scorecard is that it provides a framework for communicating how the organisation’s strategic vision aligns to the day-to-day work performed by advisers and employees generally.
Further, she said it identifies a range of financial and non-financial indicators that need to be achieved to be considered eligible for a bonus.
“These are categorised into four groups of equal or similar weighting – employees, clients, processes and financial,” Ms Bau said.
“Thus, the model implies that strong performance involves more than just financial results.”
Shartru Wealth chief executive Robert Coyte said in an ifa blog that it is impossible for financial planning to be provided in a way in which the adviser’s remuneration is not conflicted.
“The adviser and the client are different people so they naturally have distinct interests and these will conflict when providing a service,” Mr Coyte said.
The Balanced Scorecard approach had been around for a long while, but has failed to gain a lot of traction because most organisations find it too prescriptive and inflexible. Incorporating non financial measures into employee performance and reward systems is fundamentally a great idea. However Balanced Scorecard tends to take this too far and ends up entrenching counterproductive “political correctness” behaviours that benefit no-one except the bureaucrats paid to enforce it.
Not sure that first comment is right in any way. It’s not really possible to argue against balanced contribution at work (results, skills, behaviours). It makes total sense given the different ingredients required for a successful, sustainable organisation. The alternative, focussing on one area to the detriment of others, is dangerous and myopic.