I balance encounters with humanoids by creating "fair" characters, giving them the exact same number of points in each catagory as players of the same level would have and asign skills and equipment accordingly.
Then I reason a 4 player party should be able to handle 4 NPCs of the same level or maybe 3 of the same level plus one at +1 level for a somewhat harder fight. If they can't handle such an encounter they would be wise to flee combat.
For monsters it is a bit harder to balance as I don't restrict myself with points or skills for custom creatures, but again I asume the party will be smart enough to flee an encounter they can't handle (yet).
For standard monsters I use the "rule" for NPCs using their level as a guideline, leveling them up or down before the session starts.
Emersion will only be broken if you have to pause the game to make adjustments, but that is just my oppinion.
