Volume 2, Issue 2

A Balancing Act
About the Author
Howard Rohm is Vice-President of the Balanced Scorecard Institute, president of Howard Rohm Howard Rohm Consultants, LLC and an international trainer, consultant, and facilitator. He has over 25 years of government and private industry strategic planning, Balanced Scorecard, Performance Measurement, and information technology experience.

on private businesses, and performance improvement and reform pressures on public sector organizations, mandate that organizations continually worry about executing good strategy well, at the same time that they worry about running business operations efficiently. Today’s organizations need to be both strategically and operationally excellent to survive and meet tomorrow’s challenges. One framework that helps achieve the required balance between strategy and operations is the Balanced Scorecard. The Balanced Scorecard is a Performance Management system that can be used in any size organization to align vision and mission with customer requirements and day-to-day work, manage and evaluate business strategy, monitor operation efficiency improvements, build organization capacity, and communicate progress to all employees. The scorecard allows us to

measure financial and customer results, operations, and organization capacity. This article discusses how to develop a Balanced Scorecard performance system, explores issues that organizations face in building and implementing scorecard systems, and shares lessons learned from organizations that have taken the Balanced Scorecard journey. Originally developed as a framework to measure private industry non-financial performance, Balanced Scorecard systems are equally applicable to public sector organizations, but only after changes are made to account for the government mission and mandates, not profitability, that are unique to almost all public sector entities. (Some public organizations g e n e r a t e a n d u s e r eve n u e s t o o ff s e t expenses and minimize the need for annual Congressional appropriations; their

Developing and Using Balanced Scorecard Performance Systems
Private and public organizations find themselves continually trying to do more with less. As I visit business and government managers around the world, I am reminded of Stephen Covey’s quote: “People and their managers are working so hard to be sure things are done right, that they hardly have time to decide if they are doing the right things.” Doing the right things and doing things right is a balancing act, and requires the development of good b u s i n e s s s t r a t e g i e s a n d e ff i c i e n t operations to deliver the products and services required to implement the strategies. Competitive pressures

Featured in this issue...
A Balancing Act - Page 1
by Howard Rohm

Implementing the Balanced Scorecard in Asia - Page 27
an interview with Louis Schwendener by Jeremy de Constantin by Ed Harmeyer

There’s More to Your Organization Than You Can See - Page 9
by Brett Knowles by Paul R. Niven

Meat Processor Slaughters Outmoded Culture - Page 29 State of Illinois Performance Review - Page 30 Reading Room - Page 31

Maintaining the Balanced Scorecard - Page 13 A Journey of Change - Page 20
by Georgia M. Harrigan and Ruth E. Miller

A Balancing Act
Figure 1: Balanced Scorecard Performance Management System

operations are more like a business than a government entity, and employee buy-in and communicate results; Business Strategies they could use the private sector scorecard model). and Strategic Maps, to chart the course and define the logical decomposition of strategies into activities that people Originally developed in the early 1990s, the Balanced work on each day; Performance Measures, to track actual Scorecard has migrated over time to become a full Performance performance against expectations; New Initiatives, to test Management system applicable to both private sector and strategic assumptions; Budgets, including the resources needed public (and not-for-profit) organizations. 1 Emphasis has for new initiatives and current operations; Business and Support shifted from just the measurement of financial and non- Unit Scorecards, to translate the corporate vision into actionable financial performance, to the management (and execution) activities for departments and offices; and Leadership and of business strategy. Individual Development, to ensure that employee knowledge, skills and abilities are enhanced to meet future job requirements Balanced Scorecard systems give us the ability to view three and competition. We’ll explore each of these components different dimensions of organizational performance: Results in more depth in this article and a follow-up article, in the (financial and customer), Operations, and Capacity, as shown in next issue of Perform Magazine . In this first article, we’ll Figure 1 above. The figure also shows the components of a fully concentrate on how to build a scorecard. developed scorecard system: Business Foundations, including vision, mission, and values; Plans, including communications, In Balanced Scorecard language, vision, mission, and implementation, automation, and evaluation plans, to build strategy at the corporate level are decomposed into different views, or perspectives, as seen through the eyes of business Basic 2: Design A Balanced Scorecard owners, customers and other stakeholders, managers and Figure Basic Of Design of a Balanced Performance System process owners, and employees. The owners of the business Scorecard Performance System are represented by the Financial perspective; customers and stakeholders (customers are a subset of the larger universe of stakeholders) are represented by the Customer perspective; Financial managers and process owners by the Internal Business Processes perspective; and employees and infrastructure (Capacity) by the Learning and Growth perspective. Internal Business Vision &
Customers
Strategy

Processes

Learning & Growth

Figure 2 shows an integrated relationship among the key parts of a scorecard system – Vision, Strategy, and Perspectives. Balance is achieved through the four perspectives, through the decomposition of an organization’s vision into business

Source: Kaplan & Norton

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A Balancing Act
citizens, regulators and other oversight bodies, businesses, and Figure 3: Public-Sector Balanced the public at large. These changes are much more than cosmetic Scorecard Public-Sector Balanced Scorecard – they represent a fundamental shift in the logic of building
Mission

and implementing a scorecard performance system. But at the heart of the public scorecard system, just like for the private sector, is business strategy. Strategy is the approach used to accomplish the mission and implement an organization’s vision. Strategy exists at different levels within an organization, such as overall organizational strategy to, for example, address certain business markets and eliminate others, or to aggressively pursue research and development internally as a way of developing new products.

Customers/Citizens
Objective Measure Target Initiative Customers & Stakeholders

Objective Objective Measure Target Initiative

Financial

Budget

Strategy

Objective Measure Target

Learning & Growth Employees Initiative & Organization Capacity

Measure Target Target Objective Measure Objective

Internal Business Process Initiative Internal Business Initiative Processes

Internal Business Process

Organizations usually have more than one macro business strategy and then into operations, and through the translation of strategy; typically, several common strategic themes or focus strategy into the contribution each member of the organization areas show up repeatedly across different businesses – Build the must make to successfully meet its goals. Business, Improve Operational Efficiency (or Effectiveness), and Improve Product Competitiveness, for example. The same Variations in the basic design are common. Typical pattern is true for public sector organizations, where examples changes include changes in the categorization of perspectives include: Meet Citizen Needs, Enhance Technology Applications, (Innovation and Learning, or Employees, in place of Learning Improve Operational Effectiveness, and Enhance Community and Growth, for example) and the number of perspectives Safety and Well-Being. Each of the above strategic themes may (adding Stakeholders as a separate, fifth perspective, for contain one or more business strategies that determine what example). people do on a day-to-day basis. When the Balanced Scorecard framework is applied to a public organization, such as a Federal agency, a military unit, or a state and local government organization, the framework must be changed to capture the mission-driven nature of public organizations (in contrast to the profit-driven motivation of private businesses). Also, government reform initiatives at all levels of government are placing more emphasis on accountability and results to meet citizen expectations for public services and products. The desired outcome for a private organization is a growing, profitable, competitive enterprise; for a public organization, desired outcomes center on the delivery of necessary, cost-effective services for citizens or members (for not-for-profits). At the next lower level of strategy, sometimes called management (or department) strategy, managers develop the strategies for their business units that support overall organizational strategy and help propel an organization to reach its goals. But before we know which strategies are successful and which are not, they must be treated as hypotheses to be analyzed and tested as data becomes available from the scorecard management system. We need a framework to develop and manage strategy, and align the work we do with the goals of the organization. The decision to undertake development of a Balanced Scorecard is a decision to undertake a journey, not work on a project. While there are discreet start and stop points along the way, one should not miss the point that the real value of a scorecard system comes from the continuous self-inquiry and in-depth analysis that is at the heart of all successful strategic planning and Performance Management systems. Start your Balanced Scorecard with the idea that you are in it for the long term, and that changing behavior is at least as important as measuring performance.

Figure 3 shows the basic design of a public sector scorecard system. Note the changed emphasis on Mission (the key driver of a public sector organization), the change in the Customer perspective to Customers & Stakeholders (mission driven customer requirements, subject to government mandates and limitations), and the changed positions of Financial and Customer perspectives. We like to use the term Employees and Organizational Capacity for the final perspective, to reflect the importance of the human system and of capacity building The scorecard journey has two phases: Building The Scorecard through trained and knowledgeable employees and efficient and Implementing The Scorecard. information technology systems. Also, sometimes a Budget perspective is used in place of the Financial perspective, We use a six-step framework to build an organization’s to reflect the budget formulation and execution processes Balanced Scorecard, and an additional three steps to implement associated with public accountability of funds. the scorecard system throughout all levels of an organization. The steps and their sequence are shown in Figure 4. At the For public organizations, the broader universe of all end of the first six steps, the high-level corporate scorecard stakeholders becomes important as Balanced Scorecard teams is developed and it forms the basis for subsequent scorecard account for the impacts of public programs on directly affected development. (Sometimes a scorecard journey begins in a

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set a schedule for the development steps. Usually. strategic themes might include: Build A Strong Community. weaknesses. and documented. to ensure that the assumptions that underlie the basis for the organization’s existence and its business strategies are still valid and sound. short. It is important. Strategy is a hypothesis of what we think will work and be successful. Improve Education. In larger organizations. and an understanding of what satisfies customers.A Balancing Act need to repeat this “environmental scan” of an organization if the information is available and current. business strategy.and long-term goals. financial position. and Develop New Products. For public sector organizations. opportunities. called Objectives. competition. in which case the unit scorecard is built first and becomes the basis for subsequent unit and corporate scorecards. say within the past six months. identifies what approaches have not been selected. and Meet Citizen Requirements. and how effective they are in moving the organization forward toward its goals. and develop a roll-out communications plan to build buy-in and support for the changes that will follow. Many organizations have completed this basic step. Step Three is a decomposition of business strategy into an organization’s strengths. Improve Operational Efficiency. consists of six steps. Figure 4 strategic business unit or support unit. Communications planning includes internal and external public information activities that will be used to spread the word about the Balanced Scorecard initiative and what it means for managers and all employees. There is no smaller components. Step One is an Assessment of the organization’s foundations. how efficiently they are being executed. The remaining steps in the scorecardbuilding phase provide the basis for testing whether our strategies are working. however. discussed. Step Two is the development of overall Business Strategy.) Phase One: Building A Balanced Scorecard Phase One: Building The Scorecard. its core beliefs. and threats are developed. secure resource commitments necessary to develop and sustain the scorecard system. by elimination. several overarching strategic themes are developed that contain specific business strategies. Objectives are the Figure 5: Strategic Mapping Broaden Revenue Mix Strategic Mapping Improve Operating Efficiency Increase Customer Satisfaction Through Superior Execution Shift to Appropriate Channel Reduce Cycle Time Provide Rapid Response Improve Returns Financial Increase Customer Confidence in Our Advice Develop New Products Customer Internal Processes Increase Employee Productivity Understand Customer Segments Cross-Sell the Product Line Hire Key Technical Talent Implement CrossTraining Provide Access to Transaction Information Align Personal Goals Learning & Growth (Employees) 4 . typically as a self-assessment at an off-site workshop for managers and executives. In addition to describing what the approach is. market opportunities. Grow the Tax Base. Examples of common strategic themes include: Build the Business. Other important aspects of the self-assessment step are to choose a champion and the core Balanced Scorecard team.

The strategy has the following main themes: Growth In Step Five. Relationships among the results Environment. Education and performance measures. Increased Use of Partnerships. both strategic and operational progress. The relationship among strategy components is used to identify the key performance drivers of each strategy that. Figure 6 shows a continuous learning framework for measuring and managing both strategic and operational performance. The business strategy of Southwest includes the following components: innovation and speed in the redefinition of a marketplace.4 One of the military commands has developed the following strategic themes to meet its goal of Equipping The Warfighter To Win: Quality Systems Equipment. Increased Employee Desired outcomes are measured from the perspective of internal Knowledge. and processes are measured from the Capacity. a strategic map for a transactions-based company. The Federal Aviation Administration Logistics Center developed two business strategies: Become Customer Driven and Increase Business.5 We use the strategic map developed in Step Four. Each theme decomposes into specific objectives that drive performance and can be measured. and ticketless travel. point-to-point routing (a significant departure from traditional hub-and-spoke routing). Skills and Abilities. Performance Measures are developed to track Management and Environment. the components (objectives) of strategy are connected and placed in appropriate scorecard perspective categories. Strategic components include: Increased outcomes and the processes that are used to produce outcomes. short-haul. shows how an objective (effect) is dependent on another objective (cause). a very simple fare structure. one has to understand the desired Economic Opportunity. North Carolina developed a strategy from activities to desired end outcomes. a high proportion of leased aircrafts. Expert Life-Cycle Management. Thus. we look for the few measures (key performance drivers) that are critical to overall success. Southwest Airlines developed a business strategy to compete successfully in the crowded commercial airline market. Improved Service Value. and Reduced we want to achieve and the processes needed to get the results Preventable/Communicable Diseases and other Health must be fully understood before we can assign meaningful Problems. to develop meaningful performance measures for each objective. Improved Technology and external customers.A Balancing Act Develop Results and Process Measures Are We Doing Things Right? Inputs People Process Activities Results Figure 6: Develop Results and Process Measures Are We Doing The Right Things? Systems Activity Activity Activity Process Measures Output Outcome Information Result Measures Input Measures Performance Measures basic building blocks of strategy – the components or activities that make up complete business strategies. and specifically the objectives. Figure 5. Employee Motivation and Satisfaction. and Social. among others. To develop meaningful Effective and Efficient Government. Reduced Reliance perspective of the process owners and the activities needed to on Property Taxes. they form a strategic thread Mecklenburg County. Community Health and Safety. and High-Performance Organization. Improved meet customer requirements. taken together. or measure if we are doing things right. Reduced Crime and Violence. 5 . Using cause-effect linkages (if-then logic connections). We put our Performance Measurement stethoscope wherever it is required to get meaningful performance information.2 In Step Four . high frequency. and how. a Strategic Map of the organization’s overall business strategy is created. Operational Efficiency. whether we want to measure if we are doing the right things. taken together. 3 performance measures. chart the path to successful end outcomes as seen through the eyes of customers and business owners. These strategies were then decomposed into actionable goals with specific performance measures (metrics) and targets. to implement the Board of County Commissioners vision for 2015.

Start with the outcome and work backwards to the processes that produce the outcome. the development of Balanced Scorecard Logic Figure 8: Balanced Scorecard Logic Customers Mission Vision Core Values Goals P e rspectives STRATEGY O b jec tives S trategic Map Themes Input Process Outputs Measures Outcomes Targets Initiatives Budget 6 . and sometimes for private sector as well. The process works from outcomes to processes also – just substitute “How” for “Why” in the model above. and has been a favorite tool of systems engineers and process designers. It takes more work to develop a few good measures than it does to develop many poor measures. not the and Activities to Outcomes end themselves. This happens because. The problem with this approach is that the value of information generated is limited. outputs (what we produce). I asked him if he could Why? To Reduce Oil Spills Why? To Improve Water Quality To Reduce Disease In Fish And Humans Why? Developing meaningful performance measures (metrics) and the expected levels of performance (targets) is hard work if done correctly. and the burden of data collection and reporting can quickly become overwhelming. usually in response to pressure from a supervisor.A Balancing Act Figure 7: Moving FromTo Outputs & Activities Outcomes into question the value of the whole strategic and operational effort. This was reinforced for me when I was training a Balanced Scorecard team in Europe. Write A Rule Moving From Outputs performance measures is not taken very seriously. among others. hoping that a few good ones are in the group and will “stick”. processes (how we transform inputs into products and services). and the processes needed to produce desired results. We apply the technique to build a better scorecard performance system. or when little control is exercised over the ultimate achievement of the end outcome. desired results.) Another challenge is a tendency to rush to judgment – not thinking deeply about what measures are important and why. we add another measure category: intermediate outcomes. This model reinforces the logic of the strategic map by showing the relationship among the activities that produce good outcomes. as flow charting processes helps identify the activities (and measures) that matter most to produce good outcomes. and then announce that the corporate scorecard had been built! These “metric” scorecards are of little value to an organization. putting Process Output Intermediate Outcome Intermediate Outcome Intermediate Outcome End Outcome Why? To Enact A Rule Why? So Industry Takes Action We use three different models to get to the measures that matter most. measure it – if it isn’t. In most strategic plans and scorecard systems I have seen and reviewed. to capture the important intermediate transformations that take place between what we produce and what we accomplish. and the development process is fraught with challenges. asking a series of “Why” questions will eventually get one to outcomes. This additional step is especially useful when the end outcome is far removed from the outputs produced. Remember. Our goal is to identify the critical business drivers. and to operating good processes efficiently. (“If it is important to executing good strategy well. Process Flow – Flow-charting has been around for a long time. An additional benefit of the technique is that it often identifies places where improvements in efficiency in workflow are needed and possible. one of the team members volunteered that his group had 930 separate performance measures. categorize them into four scorecard perspectives. (One of the worst mistakes I’ve seen made is for an organization to take measures that already exist. we get in a hurry to develop a final set of performance measures (“I need some measures – just get me some measures!!”). The causal model is most useful for identifying input and process measures that are leading indicators of future results. as they bear little relationship to strategy. The steps required to secure an end outcome usually include several intermediate outcomes. measure them. One challenge is the tendency to hurry and identify many measures. And we have found that after applying the model. For public sector organizations. and use the information to improve decision-making. As shown in Figure 7. we usually end up identifying several new initiatives (discussed in Step Six) that can be used to test our strategic hypotheses.) The three models are: The Logic Model – This model allows us to explore the relationship among four types of performance measures: inputs (what we use to produce value). measures are a means to an end. Causal Analysis – Causal analysis identifies the causes and effects of good performance. and outcomes (what we accomplish). We start with the result (the effect) we want to achieve and then identify all the causes that contribute to the desired result. don’t”.

Figure 8 shows the logic of scorecard development. availability of scorecard team members. given the comprehensive nature of the previous setting complete the process of adding the new initiatives exercise. S1-I1: Re-engineer delivery identified over 100 new initiatives Initiatives I I process 1 2 to pursue. The team was surprised to have identified any new test strategy assumptions. two to four months is typical. specific and measurable. the journey goes faster and smoother when outside expert training and facilitation assistance are used. Customer Driven. Figure 9: Putting It All Together – Putting It AllLogistics Together Federal Government Center– Mission Vision Federal Government Logistics Center Provide Logistics Support and Products to Assure Safety for the Flying Public World-class.15% 2000 -. (At the risk of sounding self-serving.60% • Sales Promotions • New Channel Marketing • Frequent Buyers’ Club • R & D Program • Customer Mailing • Custom Training • Knowledge Library i n Learning & r a e L Internal Customer eu th Growth o I w n t C r G Customer retention % Revenue from new products Develop Cross-train strategic skills 90% How long does it take to build a scorecard system? Depending on the size of the organization. a performance measures (metrics) view. size of the organization. including: an end outcomes view.A Balancing Act identify the strategic measures. Note how an organization’s vision and mission can be decomposed into strategic components that are Linking Scorecard Components actionable. and new initiatives a dozen new strategic initiatives that were not on the original provide new information to successfully meet challenges and list of 100. and facilitation support. Providing Quality Services Worldwide In Step Six. the scorecard team identified about levels of performance that are desired. currency of existing assessment information. S1-02-M2 : % defective shipments At one organization I worked S1-O1-M1-T1: 100% in 2002 T TT with. strategies are made up of building blocks that can be mapped and measured with performance measures. Linking Scorecard Components How success will be measured and tracked Performance expectation Key action programs required to achieve objectives an o l a What strategy must be achieved and what is critical to its success O b jective Measure Target Initiatives Broaden revenue mix Increase customer satisfaction Develop new products Revenue mix 10% Product A 40% Product B 50% Product C 95% 1999 -. new Initiatives are S1 : Become more customer-driven identified that need to be funded Strategy S1 S2 S2 : Increase business opportunities and implemented to ensure that S1-01: Assure timely delivery (Customer) our strategies are successful. not ends. after some reflection he said h e d i d n ’t t h i n k t h a t h e h a d any strategic measures.) g n rFinancial Fs n i t m n 7 . business strategies give us the approach chosen to meet customer needs and attain the desired goals.50% 2001 -. willingness to change and embrace new ideas. Few of the initiatives S1-I2: Six Sigma training were strategic in nature. Figures 9 to 11 show examples of several different presentations. six weeks is possible. targets give us the expected ri a l e c Figure 10: What does a completed scorecard look like? The presentation of final scorecard results takes a number of different unique forms to support each organization’s unique communications and management needs. vision. unused. S1-02-M1-T1 : Zero in 2002 Targets 1 1 1 working outside the framework S1-02-M2-T1 : Zero in 2002 of a Balanced Scorecard system. judgment – initiatives are means. The drivers of “shorter rather than longer” are: senior leadership support and continuous commitment. an improvement team. a new initiatives view. and a strategic map. Resource identification and budget initiatives at all. Objectives S1-02: Raise quality level (Customer) Initiatives developed at the end O1 O2 O3 S1-03: Reduce cycle time (Internal) of the scorecard building process S1-O1-M1 : % on-time delivery are more strategic than if they M MM Measures S1-O2-M1 : % defective product 1 1 2 are developed in the abstract. His Performance Measurement report sits on his shelf. and values shape the culture of the organization. and after going through the logical framework presented here. level of organization pain that is driving the scorecarding journey. mission. be careful to avoid a rush to to the current operations to get a total proposed budget for the reporting period. As in the previous step. Most organizations want to see different scorecard views. Customer requirements drive the way an organization responds with products and services to market opportunities. and lead to a set of strategic goals that outline expected performance.

these changes can be troubling.S. as new policies and procedures are developed and implemented.A Balancing Act Putting It All Together – Local Government Figure 11: Putting It All Together – Local Government Mission Citizen Needs & Desired Outcomes Vision Strategy Serve County Residents by Helping Improve Their Lives and Community Be the Best Local Government Service Provider S1: Increase value by providing more cost-effective services S2: Reduce violence. we will explore the steps involved in Publishing implementing a scorecard performance system throughout the organization. and From Meeklenburg County. See the description of the original study in Kaplan & Norton. and provides training. consulting. Keeping Score. 5 Preliminary material from the U. hrohm@mindspring. Fairway Press The Business of Government. “A Balanced Scorecard system provides a basis for executing good strategy well and managing change successfully. Corbett & Associates. Quality Resources Measuring Performance. Strategic Plan.com. Thomas G. The Balanced Scorecard. Building a Balanced Scorecard performance system using the framework described here will cause people to think differently (more strategic) about their organization and their work. Niles-Gorman Olve. Mark Graham Brown. Wiley The Strategy-Focused Organization. A Balanced Scorecard system provides a basis for executing good strategy well and managing change successfully. Howard Rohm Performance Scorecard Toolkit. For many. and discuss the implications of using and End Notes: 1 managing with a Balanced Scorecard. Harvard Business In the second installment of this article. 3 clearing house on Balanced Scorecard issues. and facilitation Results Balanced Scorecard. this is a refreshing change to “strategic planning as usual”. Howard Rohm Performance Drivers. How To Measure Performance: A Handbook of Techniques and Tools. harm & injury through community partnerships S1-01: Optimize organization (Internal) S1-02: Identify service & resource gaps (Employee) S1-03: Survey citizens (Customer) S1 S2 Objectives O1 O2 O3 M M 1 1 T 1 I 2 T 1 Measures M 1 T 1 Targets S1-O1-M1: Skills match index S1-O2-M1: Cost per unit service S1-03-M1: Citizen satisfaction rating S1-O1-M1-T1: Skills index = 80% in 2002 S1-02-M1-T1: 7% improvement above baseline S1-03-M1-T1: 95% in 2002 S1-I1 : New outreach program S1-I2 : Communications plan Initiatives I 1 References: Building and Implementing A Balanced Scorecard: Nine Steps to Success. Kessler and Patricia Kelley. Department of Energy Various Balanced Scorecard Case Studies. above.” 8 . North Carolina Managing For techniques. 2 The Balanced Scorecard Institute is a free information See Outsourcing at Southwest Airlines. Management Concepts Outsourcing at Southwest Airlines: How America’s Leading Firms Use Outsourcing.balancedscorecard. in the next issue of Perform Magazine . For some. Jan Roy and Magnus Wetter. Michael F. Robert Kaplan and David Norton.org. concepts. The realization is that the Balanced Scorecard journey involves changing hearts and minds at least as much as it involves measuring performance. Marine Corps Systems Howard Rohm can be contacted at Command. Robert Kaplan and David Norton. Performance-Based Management Special Interest Group. Harvard Business School Press. You can reach the 4 Fe d e ra l Av i a t i o n A d m i n i s t ra t i o n L og i s t i c s C e n t e r Institute at: www. Bob Frost. suppor to organizations all over the world.S. Harvard Business School Press The Balanced Scorecard. Ltd. But it will also bring change in the way things are done. U.

There is no ‘correct’ “40 percent of the market value of the median U.500-fold increase in intelligence to silicon. say. steel. I have used this framework since I worked with St Onge in the early 90’s and have found it valuable in every application. What are Intangible Assets? Intangible Assets are packaged and useful knowledge.A. etc. public proportion to these elements – and indeed they change corporation was missing from the balance sheet … in knowledge intensive corporations over 80 percent is missing!”1 The Whole Organization “Information has become the source of about 75 percent of manufacturing value-added. a database. around the world. GILBERT service.ca “Stick close to your desks and never go to sea And you may be rulers of the Queens Navee!” . There are three types of reserves in organizations – Financial Performance. when it is given coherent form (a mailing list. Are there intangible elements? They may be manifested as design/engineering work. For now I’m going to provide you with a simple framework first developed by industry practitioner and author Hubert St Onge. testimonials acquired.S. ultimately.W. It will become the single most important element in your Performance Measurement scorecard. how long it should be. You’ll be surprised at how much of your business is intangible. Every $100 invested in Microsoft buys just over $1 in fixed assets. Intelligence becomes an asset when some useful order is created out of free-floating brainpower – that is. Here are some examples: and exchange between the three reserves. Intangible Assets are about Half the Value of Your Organization The Three Reserves in any Organization There are three types of reserves in organizations – Financial A number of recent studies have attempted to quantify the significant contribution of Intangible Assets (I. documentation. Sustained organizational performance is attained by continual growth valuation of businesses. when it is captured in a way that allows it to be described. Tangible Assets and Intangible 9 . customer Tangible Capital Assets. a description of a process). shared. Here’s the issue – as more and more of the value that we process and deliver to our customers is rooted in “knowledge” – intangible asset stuff – the more we need to measure and monitor these aspects of our organizations.”5 Human Capital Intangible Assets Customer Capital Intellectual Capital Financial Performance “Every $100 invested in IBM buys $23 worth of fixed assets. an agenda for a meeting. etc. Figure 1: There are three types of reserves in organizations – Financial Performance. distributed and put on a shelf to be sold.’s) in the Performance. I urge you to read the references to this article. CRM. reader ratings appear online – all done before ink hits paper! All these activities are mostly intangible and add value that cannot be seen – and will never be physically seen by the reader of the book. yet have significant impact on the value of that book and.”4 “There has been a 3. a book.There’s More to Your Organization Than You Can See By Brett Knowles President PerformanceMeasurement. Marketing campaigns are developed and executed. printed.”3 “A car’s electronics cost more then the steel in it. What do I mean? Think of something as traditional as. and its mechanisms. voice mail. There is little difficulty in measuring Intangible Assets once you understand the concepts involved. If you want to learn more.S. Figure 1.”6 Think about what your customers are getting – or expecting – from your organization. and exploited. It is simple and versatile. plastic and wire in the average PC over the last 15 years. cover graphics are developed. training.A.7 There are several great works providing much more comprehensive definitions of I. and when it can be deployed to do something that could not be done if it remained scattered around like so many coins in a gutter. These days extensive market research is done to determine what will sell.”2 “391 recent acquisitions indicate that the real value of the corporations were 41⁄2 times book value. Tangible Assets and Intangible Assets. the success of the publisher. In the ‘old days’ a good book would be written. book tours are arranged. web support. Tangible Assets and Intangible Assets.

service marks ♦ Corporate culture ♦ Knowledge bases ♦ Financial relations ♦ Management philosophy ♦ Use of information systems ♦ Use of web sites ♦ Corporate strategies 10 .. Tangible to them. in ♦ Ability to relate order to do their jobs better. Human Capital ♦ Know-how ♦ Education ♦ Vocational qualifications ♦ Work-related knowledge ♦ Occupational Measures ♦ Psychometric assessments ♦ Work-related competencies ♦ Cultural diversity Customer Capital ♦ Brands ♦ Customers ♦ Customer loyalty ♦ Customer penetration and breadth ♦ Backlog orders ♦ Distribution channels ♦ Joint ventures ♦ Licensing agreements ♦ Favorable contracts ♦ Franchising agreements Structural Capital ♦ Patents. There are a number of lessons to apply to the measurement of performance: Figure 2. Of The knowledge that exists and is accessed in an organization course it is important to have strong human capital and customer that can be used to create differential advantage. budgets and The ability to codify the right bodies of knowledge.A. Skandia Insurance. Items in this pool include: ♦ Customer solutions early in the project stage ♦ Span of contacts (narrow or wide) in both seller’s and buyer’s organizations How Does this Apply to How We Measure I. was the first publicly traded company to produce extensive I.’s are made up of three pools – each of which you already understand to some extent. Included are: ♦ Systems. phone system. There is a long list of items that fit in this pool. Financial Performance is measured through income statements. such as CRM information. Assets are measured in Balance Sheets. products. . The elements of Intangible Assets within our current organization – it is a matter of putting them back into context. just in time.A. coverage. ♦ Ability to create. and to connect the right data..10 On the reporting side. Although the size of each pool is important. it turns out that Human Capital organizational gain is generated by the flows between the pools. structure and strategy ♦ Position of product in value to market ♦ Sharing of information ♦ Need for joint crafting of opportunities ♦ Quality ♦ Global reach ♦ Customer knowledge. The Three Intangible Asset Capital ‘Pools’ The initial work and taxonomy around I. scorecard.’s are attracted to or developed in. cash flows and EVA related Structural Capital frameworks.. through the work I was associated with in the mid-90s..A. loyalty and profitability of our customers.A.8 capital pools. I. experts and expertise. culture. etc. processes and I. roles.There’s More to Your Organization Than You Can See dramatically over time as products. copyrights. although several accounting associations are working on them.. but wealth is created by the flow of information from your human capital pool to the customer pool – and vice-versa. structure in line with customer Win-win approach to joint ownership of risks and benefits High margins.but the Value is in the FLOWS between the pools. capital pools: Human Capital. In the public sector/ not-for-profit. statements.A.A. and be able ♦ Level of initiative to access the information they are looking for instead of interacting ♦ Individual learning agility with your people… and your people should be able to access your ♦ Investment in human resource development structural capital.9 Customer Capital The likelihood that our customers will continue to do business with us – the penetration. Things like: Likewise.’s has identified three I. There are no formal standards as of yet. Customer Capital and Structural Capital. your customers should be able to interact with your ♦ Commitment to the enterprise structural capital – your web site. get access financial reports report their financial performance. and migrate from the organization.11 Here is the issue: Intangible Assets are typically not measured or reported. This isn’t complicated.? Here’s the summary: Intangible Assets are a key element of the valuation and performance of your organization. ♦ ♦ ♦ ♦ Operational integration Values. etc.

Quality and Renewal and Growth activities.K. velocity and quality. The pool itself is value in waiting. unpublished work from CIBC 8 no effort to be comprehensive. Some Examples.There’s More to Your Organization Than You Can See The pool itself is value in waiting. to measuring Intangible Assets and the Thomas Stewart. ♦ Measure the flow in both directions between each of the three pools. He has clients from around the world and in all sectors.ca. Brett Knowles is an independent Performance Measurement consultant who has been working in this area for over 12 years. His clients have won two Hall of Fame Awards from Drs. Doubleday. pools (Human. Customer Capital. pg 12 6 Figure 4. Tuck School of Business at Dartmouth The ideas above may be enough to get you going – but College 3 some ideas and examples of some of the unique and interesting Professor Keith Bradley. velocity and quality of flows across the pools. Kaplan and Norton and have been profiled in Harvard Business Review . the three pools are: Human Capital. ♦ Measure the three I. Enough of the Academics. The attributes of the flows to measure are: volume. His experience includes the initial research work on the BSC. co-founder of Panorama Business Views and EVP at The Balanced Scorecard Collaborative. Value creation depends on the volume. Key dimensions to measure for each pool are the current Pool Size. sustain and consume them.. Value is created by the flows between any of the pools. Intellectual Capital. Robert S. Customer. and Structural to Customer. ♦ Measure the resultant – the net effect of the pools and their flows on the creation of value to the organization. on page 12. Figure 2. works – “What gets measured gets done. pg 12 5 you to get some traction … I offer a range of approaches in Thomas Stewart. Forbes . Intellectual Capital. The flows are: Human to Customer. Customer to Human. Doubleday.PerformanceMeasurement. “The biggest issue behind measuring your Intangible Assets is understanding what they are. Value is created by the flows between any of the pools. Open Business School (U. my goal is to share ideas that Hubert St Onge 9 I have found interesting and to be a catalyst to your own Ibid 10 thinking. Norton. Fortune and in several business books including The Strategy Focused Organization by Drs.” Begin integrating these concepts into your performance measurement scorecard and your organization will naturally begin the journey of leveraging this untapped resource and harvesting the incredible benefits. I’ve made Hubert St Onge. and Structural Capital) and what the key value driver is (the flows between these pools). Summary The biggest issue behind measuring your Intangible Assets is understanding what they are (Human. In some cases public/not-for-profit organizations Ibid 11 might consider some alternative measures – I have provided Ibid some examples.K. End Notes: 1 Professor Keith Bradley. So how to harvest this opportunity? The same adage that we all know.” How Can You Apply This? My suggestion is this – think about each of the three pools and six flows outlined above and consider: 1) Does this pool apply to you? 2) What measures do you currently have that would serve as proxies for measuring this pool? Just to be clear.) 2 James Brian Quinn. 11 . Doubleday. Remember – there is no right answer – just the right answer for your organization. velocity and quality of flows across the pools.A.. Human to Structural. Customer and Structural Capital). Structural to Human. pg 33 7 processes that build. Kaplan & David P.) 4 measures that we have developed over the years may help Thomas Stewart. Intellectual Capital. “Intangible Assets are probably the largest untapped differentiator and value-adding element in your organization. Open Business School (U. Learn more at www. and Structural Capital. Customer to Structural.” What to do about your Intangible Assets? Intangible Assets are probably the largest untapped differentiator and value-adding element in your organization – even greater than quality and cycle time were a decade ago. Figure 3: Value creation depends on the volume.

time or course sessions ♦ Turnover ♦ Number of years in profession ♦ Average age ♦ Seniority ♦ Professional turnover rate Customer Capital Pool Pool Characteristics. citizen groups. regulatory. etc. competence and product builders vs. Size and Growth Most Organizations: ♦ Revenues from highly satisfied customers ♦ Customer mix: image builders vs. competence builders and product builders vs. views ♦ Use of fax-back.Examples Human Capital Pool Pool Characteristics. intranets Customer to Structural Flow ♦ On-Line customer/stakeholder orders Structure to Customer Flow ♦ Web statistics – page hits.There’s More to Your Organization Than You Can See Figure 4: Intangible Assets . profit builders ♦ Organic growth ♦ Sales per customer ♦ Devoted customer ratio ♦ Market share ♦ Number of customers Public/Not-for-Profit Special Measures: ♦ Satisfaction levels from key budget-influencing stakeholders ♦ Stakeholder mix: image builders vs. budget builders ♦ Devoted stakeholder ratio ♦ Share of total available financial support ♦ Number of direct contact stakeholders Pool Value Creation Most Organizations: ♦ Profit per Customer ♦ Satisfied Customer Index ♦ Win/Loss Index ♦ Customer Rating Public/Not-for-Profit Special Measures: ♦ Budget per stakeholder ♦ Satisfied stakeholder index ♦ Stakeholder rating Pool Renewal Most Organizations: ♦ Proportion of big customers ♦ Length of customer relationship ♦ Number of customers lost Public/Not-for-Profit Special Measures: ♦ Proportion of key stakeholders ♦ Length of stakeholder relationships ♦ Number of stakeholders lost Structural Capital Pool Pool Characteristics. Size and Growth Most organizations: ♦ Investment in internal structure ♦ Customers contributing to internal structure ♦ Image enhancing customers ♦ Proportion of support staff ♦ Values and attitudes measures ♦ Brand presence ♦ Technology per employee Public/Not-for-Profit Special Measures: ♦ Number of stakeholders contributing to internal structure ♦ Image enhancing stakeholders ♦ Department presence vs. other departments ♦ Department performance vs. automated telephony systems 12 .) ♦ Cross-departmental experience ♦ Number of years in department Pool Value Creation ♦ Value added per professional ♦ Value added per employee Pool Renewal ♦ Rookie ratio ♦ Training cost. private sector Pool Value Creation Most Organizations: ♦ Number of internal IT customers ♦ Support expense per customer ♦ Orders filled without errors Public/Not-for-Profit Special Measures: ♦ Budget allocation for building structural capital ♦ Self-help transactions Pool Renewal Most Organizations: ♦ R&D ratios ♦ Number of new product launches ♦ Revenue from new products Public/Not-for-Profit Special Measures: ♦ Budget allocation for service enhancement ♦ Interaction with other departments The Flows Between the Pools Human to Customer Flow ♦ Days spent visiting customers/stakeholders ♦ Number of customer/stakeholder-touches ♦ Customer/stakeholder partnerships Customer to Human Flow ♦ Customer/stakeholder visits to your organization ♦ Solution partnerships with organization Human to Structural Flow ♦ Growth of knowledge bases ♦ Computer literacy levels Structure to Human Flow ♦ Utilization of IT systems. Size and Growth Most Organizations: ♦ Classification of professional competence by degree of responsibility ♦ Professionals who improve co-worker competencies ♦ Number of years in profession ♦ Level of education ♦ Proportion of professionals ♦ Competency-enhancing customers Public/Not-for-Profit Special Measures: ♦ Competency-enhancing stakeholders (government.

And yes. with managers “As conditions change. and team problem solving. must be constantly nurtured for a significant period before it takes root within the culture and ongoing management practices of the organization. Is there ever a point at which you can stop and say. Without a person (or team) leading the refinement and continued development of the Scorecard system. The Balanced Scorecard could pay the price of their fatigue through a lack of attention and modeling necessary to set the proper tone throughout the organization. there’s nothing left to conquer. The Scorecard is malleable enough to handle such changes and will serve as a valuable tool while you navigate the changing course that is your business. current strategies will be severely tested. and new strategies may be called into action. All of these forces will affect your Balanced Scorecard. More than anything else. collaboration. your Scorecard will require some business never really complete because your business is never really rules. and Processes The title of this section reminds me of the old command and control days of business that featured a heavy emphasis on rules and process controls to ensure strict adherence to steadfast procedures. Change agents will be discussed further in the “Key Roles” section of the chapter. putting the right people in place to further the transition to this new method of management. however. 13 . processes. as Kotter reminds us: “Whenever you let up before the job is done. Of course. “Well this is it. Software that simply will not work as guaranteed and inexperienced consultants who promise more than they can deliver are just a couple of examples of unfortunate circumstances that may conspire to sabotage your carefully planned efforts.”2 The Balanced Scorecard is Never “Complete” Renowned leadership expert John Kotter has written extensively on the field of organizational change and what it takes to sustain a major change initiative. and new strategies may be called into action. a technology project. it can easily be derailed. “Major change often takes a long time. is lack of maintenance. sheer exhaustion on the part of leaders.” No. because the environment in which you operate is constantly changing. we’ve done it all. nurturing. This care and feeding is comprised of establishing business rules and processes for effective Scorecarding operations. with many important initiatives on their plates. current strategies will be severely tested. Each of these items will be examined in this chapter. Strong relationships thought to exist among measures may prove specious and necessitate the adoption of new indicators.Maintaining the Balanced Scorecard An Excerpt from Balanced Scorecard Step-by-Step By Paul R. Unfortunately. the Balanced Scorecard is the organization. simply developing a Scorecard will not magically transform your organization into a paragon of enlightened management practice. Establishing Balanced Scorecard Policies. The Scorecard. how do we ensure that the Scorecard remains a viable tool and is fully entrenched in the management system of your organization so that it can be looked to as a guiding and trusted compass during periods of change? Maintenance. To become part of everyday life in Beyond sustaining momentum. In his book Leading Change . and procedures to ensure smooth functioning. even bad luck can victimize Scorecard efforts. empowerment. The question is.”l The Balanced Scorecard is not a metrics project. the Balanced Scorecard represents a major change initiative and as such can fall prey to any of the issues suggested by Kotter. Many forces can stall the process far short of the finish line: turnover of key change agents. can become overwhelmed with the tides of change. As conditions change. Procedures. 2002). but in fact that could be its chief identifying characteristic. he says. Perhaps the single biggest Scorecard pitfall to be avoided. and employees insist on satisfying and challenging roles that make a real contribution to success while simultaneously providing quality of life. Executives. like any major change. and building on the current Scorecard base provides the answer. or bad luck. the wide and swift availability of knowledge is causing customers to be more demanding than ever. complete. New competitors enter the marketplace rapidly and from all over the globe. or a human resources program. and finding a home for the Balanced Scorecard. the Scorecard is more representative of the new business paradigm characterized by open information sharing. Key change agents are critical to the success of any effort but are absolutely vital to the hopes of institutionalizing the methods of the Balanced Scorecard. looks like smooth sailing ahead. but fortunately this tool is not only capable of flexibility. critical momentum can be lost and regression may follow. Niven President Primerus Consulting “Managing the Balanced Scorecard” originally appeared as a chapter in Paul Niven’s Balanced Scorecard Step-by-Step: Maximizing Performance and Maintaining Results (John Wiley & Sons. This is critical work.” slipping comfortably back into their former practices. especially in big organizations.

gathering the supporting data is another. This absent data should not dictate any delay in reporting the ♦ Roles and responsibilities. The first issue you face is whether or not the data is even available. Do not wait until the last minute to put together a schedule. however. The wide distribution of Scorecard production dates is critical. surprising already overworked managers around the firm. measures. Only in clear cases of a misguided objective. Under what circumstances will you allow a midyear change in any of these performance indicators? Targets are especially vulnerable since many organizations lack a strong target-setting competence. measure. assuring it will remain is to err on the conservative side at least in the first year. Have you ever considered a career in law enforcement? I ♦ Thresholds of performance. My recommendation role in the process on a go-forward basis. Performance planning. Creatures of habit that we are.” Like the highway patrol officer pulling over a contrite 14 . There is a strong possibility that at least some of your Scorecard data will not come directly from source systems. What is the role of the meeting or exceeding the target. a areas to address once your Scorecard system is up and best-in-class number. thresholds are bound to stir a little controversy. Focus on the measures you do have and spend the for administering the Scorecard system in the organization and necessary time and effort to develop processes for acquiring the accompanying responsibilities. Identifying these service representative? If you want to use the Scorecard indicators is one thing. This topic will be examined in greater detail when we discuss “Updating the Scorecard’s Core Elements” a little later in the chapter. organizations compare actual their Scorecard data you may feel like the “Balanced Scorecard performance against a predetermined benchmark. and initial attempts are either too difficult to achieve or too easy. “At least annually. is designed to be a flexible and dynamic tool. This will be discussed in outstanding data. ‘Yellow” may represent an Balanced Scorecard in the organization’s long-term strategic actual amount within 10 percent of the target. of managing before imposing strict thresholds demanding ♦ Annual Scorecard development. while others counter that they are slack Work with your strategic planning team to define the Scorecard’s and do not promote breakthrough action. greater depth in the “Key Roles” section of the chapter. Specific comparative may be a budget amount. At the very least. Consider it the Balanced Scorecard “master plan” describing where you expect to take the Scorecard in the future and the requirements to make that happen. or target should changes be permitted. and a customer “missing measures” that drive future results. Determine who is accountable Scorecard. Compose a timeline early in the process giving everyone involved ample time to formulate a Balanced Scorecard that thoroughly displays how they contribute to overall success. a midlevel manager. consider them too strict. you should have a plan for future development. ♦ Timetable for Scorecard linkages to management processes. At least annually. whether it is automated or not. adjusting to the changes occurring in your business. Give people the opportunity to become accustomed to this new way the key tool in effective execution of strategy.Maintaining the Balanced Scorecard especially in the early stages of implementation. so don’t be shy about including that veiled threat in any correspondence you produce when Gathering and entering data into your Scorecard reporting on the hunt for data. You You may not have the systems or tools in place to harvest the will have to grapple with terminology issues earlier in your data at the outset of your implementation. after initial development of a Scorecard. and targets. last year’s number. a change may be warranted. When using the Scorecard ask because when attempting to have measure owners submit as a measurement system. the dialogue to facilitate future transformation should be taking place. the relative ranges of performance must be established. your Balanced Scorecard should be tweaked to describe the continuing saga of your strategy. Does the word objective have the same strongest benefits of the Scorecard is its ability to highlight the meaning for an executive. estimates vary implementation. however. You may or may not wish to cascade the Scorecard and link it to budgeting and compensation during the first year of your implementation. One of the ♦ Terminology. Regardless of the running include: comparative you choose. Some will some organizations will revert back to their previous methods. some but you can probably expect to be missing between 20 and 30 folks may tend to migrate back to previous definitions. Perhaps the calculation of a measure is leading to dysfunctional decision making or the target’s perceived difficulty is demotivating to employees. system can often present unique challenges. and “red” could planning efforts? It should be at the forefront of strategic mean anything greater than a 10 percent variance. Those responsible for providing data must be aware of the timelines associated with reporting and the importance of timely and accurate data submission. In these situations.” ♦ Reporting dates. or a stretch target. it should. to create a new language of measurement. Even if linkages are not occurring during year one. Perhaps “green” performance is anything ♦ Long-range strategic planning. In fact. Your executive team Gathering Data for the Balanced Scorecard will be relying on the data. That data will need to be collected and entered into your reporting system. percent of your data as you begin to report results. ♦ Changing objectives. That Police. your Balanced Scorecard should be tweaked to describe the continuing saga of your strategy. The Balanced Scorecard exemplary performance.

1 Balanced Scorecard Data Collection Form Measure Owner: Data Owner: Measure Name Number of calls received K. and send the form back.500 Sept 3.1 is a data collection form you can customize for your performance measures. Even if you are using a relatively low-tech reporting solution. data is requested for the month of September. Once completed. the form should be sent by e-mail back to the Balanced Scorecard System Administrator. measures.3 Make the annual Scorecard “Develop a form for each owner of Balanced Scorecard measures.750 Commentary Call volume is steadily increasing as anticipated. “Aliens studying twenty-first century earthly organizational practices beamed down and stole it. or read barely decipherable faxes. Measures and Targets As previously discussed. Using this simple form and taking advantage of your e-mail system for distribution greatly reduces any burden on measure owners. They simply open the e-mail attachment. In that extreme case you would likely develop a new strategy for your organization and likewise select new and corresponding objectives.000 calls per month by year end. July 3. who will enter the data into the Scorecard reporting tool. Advanced training and the addition of one staff person should enable us to handle up to 5. Chezenko Perspective Customer Description Total number of calls logged in the call center during the month. and targets. In the study 62 percent of participants updated their Balanced Scorecards annually. Results of a best practices benchmarking study suggest a majority of Scorecard practitioners do just that. you can always print the forms and distribute them using the interoffice mail or via fax. Tobin S. it is a very good idea to critically examine the Scorecard at least annually and determine if its core elements are still appropriate in telling an accurate strategic story. Exhibit 12. the Balanced Scorecard is designed to be a dynamic tool. Designing and distributing a customized measure template will go a long way toward assuring compliance among data owners. however.” “I’m waiting for one more number from accounting. you can expect a number of changes to take place within the realm of your objectives. Result is deceiving. persuading. Rather than attempting to translate data scribbled on the back of business cards. and distribute it electronically for completion. while 23 percent updated every three months. and even threatening will only go so far. In this example. The only reliable method of ensuring a smooth data-gathering process is to make it as painless and simple as possible for those affected. measures. however. Updating the Scorecard’s Core Elements – Objectives. and depending on the functionality offered by the program you may even Exhibit 12. Fifteen percent updated every six months. flexible and capable of change as necessitated by business conditions. you would not expect to make wholesale changes to objectives. Should you choose an automated solution to report Scorecard results. measures. the administrator can easily transfer data from a common form to the reporting tool.000 Aug 3.” “I was on vacation last week and am still catching up!” Some are legitimate and may signal that a redesign of processes is necessary. Number of one-call Customer resolutions Number of customers for which all issues were resolved during the first call. “The source reports haven’t been produced yet. you will hear every excuse in the book. you can build automated links into the gathering process. Over time. previous submissions are also displayed to provide relevant background and facilitate a performance commentary. making it easier for those involved to send their much-needed data. Even with today’s shorter strategic shelf lives. If you don’t have an e-mail system.Maintaining the Balanced Scorecard speeder. and targets that acted as direct translations of the updated strategy. However. and targets each and every year.” further distribution to a data owner. Develop a form for each owner of Balanced Scorecard measures. Not only does the process make it easier for those responsible to supply data. and distribute it electronically for completion or have the capability to directly import the narrative supplied in the commentary columns.” Cajoling. while others are downright outrageous. 50 60 45 15 . this is a result of fewer complaints being registered by callers. you may be able to import data directly from the form into the software. A lower number of one-call resolutions was logged during September. At the far end of the possibility spectrum you may decide to abandon a strategy you have pursued based on Scorecard results that disclaim much of your hypothesis. fill in their performance information. but Scorecard administrators will also appreciate the existence of just one form of template.

and learning about the value proposition you have put forth. In this example. The senior executive team would assess the high-level organizational Scorecard. and can those results be shared with all employees? look to develop future iterations of their Scorecard.” Updating your performance objectives. Let’s revisit a number of those roles within a new context—making the 16 . as evidenced by her comments. for example. Objectives may be reworded to more accurately represent their core purpose or to clarify potentially confusing terminology. Scorecard results are not stimulating organizationwide discussions. Surveying employees is an excellent method of gathering their feedback on Scorecard use and potential improvements. Total Score Score 5 5 4 3 4 4 3 4 4 2 38 “Any change in a measure has a potential impact on the corresponding target. measures could be subject to changes in the method of calculation to better capture the true essence of the event under investigation. not simply as defects in need of remedy. the survey also includes a space for employee comments and recommendations for Scorecard improvements. For example. rather you would simply change the reporting period to something more amenable to measurement. As stated in Chapter Six. How are results reported. In addition to asking questions. Organizations engage in strategic planning. the caveat regarding such changes is this – don’t alter your measures simply because you don’t like the current crop. In our group we review Balanced Scorecard results on a regular basis. budgeting. it is also clear this employee is not happy with the reporting tool being used. or the results are not what you expected. learning about the assumptions you have made to win in your marketplace.2 displays a 10-question survey that can be administered to employees at least annually to ensure the critical feedback and knowledge they possess is collected. and business planning every year. something more challenging. Our measures are linked in a series of cause-and-effect relationships. Key Balanced Scorecard Roles Chapter Three introduced the critical roles necessary to make the Balanced Scorecard implementation a success. Customers and suppliers also have a stake in your performance and would probably be flattered and impressed should you consult them regarding possible updates to the Scorecard. the cause-andeffect linkages are not clear and. Our measures represent an appropriate balance among the four Balanced Scorecard perspectives. Expect many subtle changes to be made with objectives and measures as experience is gained using the Balanced Scorecard system. Exhibit 12. The Balanced Scorecard is about learning – learning about your strategy.Maintaining the Balanced Scorecard review process part of the normal planning cycle that occurs at most companies. It also appears this group reviews their results on a regular basis and uses the information to identify future improvement initiatives. but the logistics of gathering the data simply proved too challenging. Discussing Balanced Scorecard results with colleagues has increased my knowledge of their function(s). Exhibit 12. Analyzing Balanced Scorecard results allows our group to identify potential improvement initiatives. targets may change to reflect more realistic goals or conversely. Employees should answer the survey questions with their specific group or department in mind. the composition of the scores provides as much insight as the aggregate. Managers and employees are held accountable for Balanced Scorecard results. you may have attempted to track employee satisfaction monthly. In that case. the Scorecard appears to be working very well in its intended capacity of informing employees about organizational strategy and providing a line of sight. You may also change the frequency with which you collect performance data. In this case. Similarly. The reporting tool we use is efficient. Our group’s Balanced Scorecard measures clearly demonstrate how we contribute to the achievement of overall organizational goals. the surveyed employee gives her group’s Scorecard 38 out of a possible 50 points.2 Balanced Scorecard Survey Question Use of the Balanced Scorecard in my group has helped increase my knowledge of the organization’s strategy. My input was sought during the development of our group’s Balanced Scorecard. and targets is yet another way to tap into the collective knowledge of your organization. The Scorecard can be slotted in with these activities and take its rightful place as a key management process. Be sure to involve as many employees as possible to ensure any changes reflect organizationwide interests. Any change in a measure has a potential impact on the corresponding target. Any total over 35 would be considered positive. This input is invaluable as managers and employees Additional Comments: I would like to know about the use of the Scorecard in other groups within the company. however. you would not abandon this important indicator. but your challenge is to use these deviations from plan as opportunities for learning. This is especially the case should you make changes to formulas or calculations. However. Sometimes you won’t necessarily enjoy what your measures are telling you. Additionally. or the description may be enhanced to improve employee understanding of operational and strategic significance. measures.

In a word. and continues to supply enthusiastic support for the Balanced Scorecard.”4 The most logical candidate for the role is the individual filling the position during your initial implementation. team members are able to provide a unique perspective on what will be necessary to make the transition a success in their business unit or group. Steering the course of discussions around policies and procedures. Colin Sharp. coaching leaders and managers alike on Scorecard concepts and how the tool can best be utilized to achieve breakthrough results. Balanced Scorecard team members were integral in the original development of the Balanced Scorecard. but the role of this group will change as the Scorecard develops. continuity. Depending on where responsibility for the Scorecard ultimately resides in the organization (see “Who Owns the Balanced Scorecard” below). Unilever is an organization recognizing the importance of this position. Rather than hands-on Scorecard building. maintains constant communication with other members of the senior team. the executive sponsor is counted on to share your enlightened management concepts with colleagues and networks of other executives. But it is more than guiding discussions and setting policies. The clear line of communication resulting from this relationship would ensure the latest Scorecard developments are funneled to the executive suite where swift action can be taken to leverage opportunities and remove obstacles. or at least scale back.Maintaining the Balanced Scorecard Scorecard an ongoing success to maximize your performance and maintain results. is that of happen by constantly engaging other members of the senior the System Administrator. The critical player in the Scorecard’s ongoing development is the Balanced Scorecard champion or team leader. evaluating possible measure changes. executive sponsor. The knowledge. and constant communication offered by the position cannot be beaten. Development and progress must be constantly nurtured in order for meaningful results to be derived. With a unique mix of communication and leadership skills. I am absolutely convinced the assignment of a fulltime Balanced Scorecard champion is a key differentiator of successful Balanced Scorecard implementations. Everything chronicled in Chapter Three regarding this role applies on an ongoing basis as well. Team members are convened on a regular basis and use the opportunity to review what the Scorecard has meant in their units or groups. notes. This term is normally associated with 17 . The executive sponsor works to make this Scorecard. or the distribution of an article about the latest Scorecard techniques. As the Scorecard program grows and matures. All senior executives must share an A role we did not consider when developing the Balanced ownership interest in the Balanced Scorecard if it is to reach its full potential. Strategy into Action project manager. but which is crucial to long-term success. Someone in the organization must be equated with the Balanced Scorecard and seen as both its ambassador and thought leader. This has been a critical role. and issue resolution strategies. The theme running through this chapter is simple—Balanced Scorecards are not necessarily self-sustaining. it would be convenient and beneficial to have the Scorecard champion report directly to the executive sponsor. the task of the team evolves to information and best-practice sharing. effective Scorecard processes. The other truly indispensable Scorecard role is that of executive sponsor. Balanced Scorecard. This person will have already carved inroads in the credibility roadways of the organization and be seen as ‘Mr. it is communication. I have been part of a number of implementations during which the Scorecard champion so enjoyed the role they asked to make the position a permanent move. and providing insight on data acquisition strategies all need a strong leader. When linking the Scorecard to budgeting or compensation. The Scorecard champion is that someone. Some organizations will migrate from a Balanced Scorecard team to a steering committee comprised of the champion. it is the five-minute conversations in the hallway about last month’s Scorecard results. The champion artfully communicates how the Scorecard is making a difference now and can forge new ground in the future through innovative uses as a strategic management system. their former responsibilities probably will not require extensive coaxing. and certain members of the original team. “We’ve created a position to implement the [Scorecard] process and support it through its early years.’ Asking the person to assume the role full-time and give up. the champion is the recognized Scorecard subject matter expert. for example. Everything we have reviewed thus far in this chapter will require leadership. The Sponsor provides new information on strategy and plans. The team should also be used as a proving ground for your latest Scorecard ideas. Valuable input is supplied in the form of tips. team in dialogue addressing the benefits and future direction of the Scorecard. or the presentation to a group of administrative assistants who previously felt out of the “Scorecard loop” that really make the difference. or Ms. other senior executives. This group carries a more formal mandate of establishing Scorecard policies and charting future development.

economic.. with its holistic and collaborative nature. Most commercially available software packages will provide material spelling out in detail the requirements of a System Administrator. Finance may be a great home for the Scorecard in many organizations.Maintaining the Balanced Scorecard erase this perception and it may become solidified in the minds of employees. In one recent study. The System Administrator holds the ultimate responsibility of scheduling results reporting. and internal process activities. the word project connotes an image of something generally temporary in nature that over time. If the Scorecard is thought of as complete. and supply training. Perhaps the strategic planning or human resources Who Owns the Balanced Scorecard? We have considered the roles necessary to ensure the Scorecard is embedded in the management systems of the organization. If that’s the case you will probably find the people-intensive. participants were asked which functional area is responsible for managing their company’s Performance Measurement system. “The information age calls for Finance to play a new role — architect of the enterprise . The vast majority of Scorecard implementations on which I have been engaged concluded with the responsibility for ownership and ongoing development resting with finance. economic targets. providing the Scorecard with a functional home changes the paradigm and shifts the Scorecard to a permanent. fits like a glove in this new finance paradigm. The Balanced Scorecard. ensuring Scorecard data is gathered on a timely basis and entered accurately into the tool.. collaborative features of the Scorecard aren’t a great fit for your finance function. now we must find a home for the Scorecard function. the individual administering a packaged software solution but may also apply if you develop your own reporting solution. Depending on the sophistication of your reporting tools the Balanced Scorecard champion may be able to competently fill this role. provide technical support to users. Sixty-seven percent replied Finance. Team members will continue reporting to their business unit head. The leading candidate in the race for Scorecard custodial rights is the finance function. upgrade to new versions of software. remember that every organization and every Balanced Scorecard implementation are unique. corporate policeman persona in favor of a powerful and dynamic new look that places strategy and business partnership at its core. finance may have always represented a legitimate choice for Scorecard ownership. 5 My experience echoes this finding. shedding the burdensome. but your finance function may still be mired in the old control and compliance framework and have yet to experience the benefits occurring from developing business partnership relationships. Without a solid foundation and clear ownership. it will be very difficult to 18 . let’s consider why it is in fact critical to find a home for the Scorecard function.. is achieved or considered complete.. Before you rush down the hall and place the “Balanced Scorecard Owner” sash over the shoulder of your finance leader. Of course. measures. helping steer the course as conditions inevitably change. knowledge sharing. should you purchase an automated solution an administrator will most likely be required.. strategy. However. The traditional focus on control and compliance activities must be replaced by strategic. the administrator plays an important part in defining the Scorecard’s role in management review sessions. Liaising closely with the Balanced Scorecard champion and executive sponsor. Whether it is transparencies displayed on an overhead projector or the latest Scorecard software.”6 It’s clear that finance professionals have begun embracing new roles in the organization.” Recent developments in the field have made their bid for Scorecard ownership even stronger. and more specifically the champion and System Administrator. and often non-value-added. “The leading candidate in the race for Scorecard custodial rights is the finance function. In contrast. and Performance Measurement leadership. Why Finance? Finance has the highest level of access to information. and targets). but to whom will the champion and System Administrator report? Before we answer that question. the technology that supports Scorecard reviews must function properly to bolster credibility for the new process. But as we have seen the Balanced Scorecard is never really complete since it must flow with the changing tides of your business. and with significant effort. With its place at the center of the organization’s information processing and distribution function. legitimate business operation on its way to becoming ingrained in the fabric of everyday organizational life. At this point in the process the Balanced Scorecard may still be viewed as a “project” and not an ongoing way of managing the business. the desire and incentive to report results and use them in making business decisions is greatly reduced. and the executive sponsor remains in her senior management position. and over time serious gaps may develop in measurement and reporting. They also make changes to Scorecard elements (objectives. tactical.

Niven is an author. not the functional title. August 2001. it is the characteristics of the leader. accurate reporting of Scorecard results. and help shape ♦ Annual Scorecard development the future direction of the Scorecard as a key strategy execution ♦ Reporting dates tool of the organization. many companies will make changes to End Notes: 1 performance objectives.Maintaining the Balanced Scorecard function fits the bill in your organization. Balanced Scorecard Step by Step: must be developed if the tool is to be accepted and used by Maximizing Performance and Maintaining Results was released employees. 3 Best Practices Benchmarking Report. A new function emerges 6 Mark J. NC: Best Practices. Summary By viewing the Balanced Scorecard as a one-time metrics or systems project some organizations fail to take advantage of the many attributes the system has to offer as a strategic management system. Making this transition requires the The finance function is the predominant home of the Balanced consideration of how a number of Scorecard-related tasks Scorecard in most organizations. The Balanced Scorecard champion’s 4 Charles Birch. and employees alike on the Institute of Certified Public Accountants and Lawrence S.” Australian Accountant. management consultant. and evangelize the tool. As both a practitioner and consultant. Developing the All the key players involved in the initial design and Balanced Scorecard (Chapel Hill.com. managers. The bottom line (pardon the finance function pun) is this: you’re looking for a home in which the executive leader believes in the management theory captured by the Scorecard and is willing to actively support.” Strategic Finance. strategic planning. Leading Change (Boston. 133. Morgan. in its ongoing evolution. p. measures. These include: and economic events. As conditions change and Scorecard learning intensifies. information and with their unique view into strategy.. manufacturing. the data gathering process is enhanced by the use of through his website at www. Balanced Scorecard methodology. customized collection templates. 50. “Balancing Act. and ♦ Thresholds of performance noted speaker on the subjects of Performance Management and ♦ Changing Scorecard elements the Balanced Scorecard. develop. 19 . or a simple Business School Press. ♦ Terminology ♦ Roles and responsibilities for Scorecard development Paul R. place Scorecard responsibilities there. processes. The adjustments John Kotter. If so. this function often makes a very logical choice. MA: Harvard could reflect a change in strategic direction. the ultimate test for Scorecard ownership is ♦ The Scorecard’s role in long-range strategic planning an executive willing to actively use. and targets. benefits to be derived from an even greater reliance on the Maisel.primerusconsulting. and loading performance data into a Scorecard reporting tool not-for-profits. Whether or not an automated Scorecard solution is by John Wiley & Sons in March of 2002. 2 clarification to an otherwise confusing indicator. Strategies for effectively and efficiently collecting and including Fortune 1000 companies. “A New Role For Finance. public sector agencies. on an annual basis. His latest book.amazon. Architect of as the Scorecard grows – the System Administrator. 2001. However. role takes on expanded prominence as this individual uses March 2001. Through proper guidance and maintenance. or finance. This individual controls the vital function of ensuring timely and the Enterprise in the Information Age.com. The right person could be in human resources. marketing. He can be reached pursued. Balanced Scorecard Step by Step is available for purchase A majority of Scorecard practitioners update their Scorecard at www. 1999). refine. 1996). As always. support. As the purveyors of company will fit into current and anticipated management models. communication skills and Scorecard knowledge to coach 5 Performance Measurement Survey by the American and train executives. the Scorecard will become the cornerstone of the organization’s management system. ♦ Linking the Scorecard to management processes he has developed successful Performance Management systems for large and small clients in a wide variety of organizations. Ibid. that really matter. development of the Balanced Scorecard have a role to play LLC.

” January-February 1996).” How a Customer-Driven Performance Measurement System Creates a Customer-Driven Organization Premise: If an organization can establish and implement a customer-driven Performance Measurement system. Finally. Harrigan and Ruth E. Newport. This premise is based on the insight that structure influences behavior. it refers to a systemic structure. NUWC Division Newport has used the Balanced Scorecard (BSc) approach for four full years and continues to use it. Isolating only the theoretical perspective leads to an academic reading that presents the ideal scenario. without considering that the BSc application in an organization is a chaotic. Miller Naval Undersea Warfare Center Division. The organization has found that the BSc methodology allows the leadership to communicate strategic direction both externally and internally throughout the organization and to measure progress toward strategic goal attainment on a systematic basis. to effect cultural change.3 If this insight that “structure determines behavior” and the premise are accepted. This article discusses how the Division established and implemented a customer-driven R.000-foot view or they neglect to take time for reflection. Rhode Island system. This article is organized as follows. the authors intend to provide an informative and practical discussion. Section 4 is a discussion of the effort to achieve strategic alignment both external and internal to the organization. and “Using the Balanced Scorecard as a Strategic Management System. Section 2 is a description of the development of the NUWC Division Newport Performance Measurement Naval Undersea Warfare Center. people. Naval Undersea Warefare Center Division Newport began a “Journey of Change” to respond to key customer feedback. Section 5 provides the “next steps” for the scorecard: how the system could be applied to create a “learning organization. By combining the two perspectives. which is concerned with the key interrelationships that influence behavior over time.” January-February 1992. The goal of this article is to present an integrated view of the theoretical and practical application of the BSc. Feedback loops form the central structures that control change in all systems. and to position for the 21st century. and by their book. “When placed in the same system. Exhibit 1 illustrates this relationship by describing the steps an organization takes to develop G. Section 3 provides the evolution of the scorecard and the results of two significant improvement efforts. Translating Strategy into Action: The Balanced Scorecard. All change takes place within the control of feedback loops. Peter Senge 1 noted. it will have made great strides toward becoming a customer-driven organization. and complex job. 2 This systemic structure is created with interconnected information-feedback loops. Miller Performance Measurement system that is critical to its mission and strategic plan and used it to define and communicate the business culture of the organization to support the Journey of Change. Considering only the practitioner’s view leads to a list of events because practitioners are so inundated that they often act without the 40. then it follows that a customer-driven organization is the result of a customer-driven Performance Measurement system. Norton (“The Balanced Scorecard – Measures that Drive Performance. Kaplan and David P. “Putting the Balanced Scorecard to Work.A Journey of Change Managing Change Through an Aligned and Cascading Balanced Scorecard: A Case Study By Georgia M. Section 1 is a general discussion of the relationship between a customer-driven Performance Measurement system and a customer-driven organization. messy. Division Newport 20 . which will help other organizations apply the BSc methodology to their strategic planning and Performance Measurement initiatives. The systems perspective tells us we must look beyond personalities and events and into the underlying structures that shape individual actions and create conditions in which a type of event becomes likely. tend to produce similar results. Harrigan Introduction In 1996. however different.” September-October 1993. The Performance Measurement system was heavily influenced by articles in the Harvard Business Review by Robert S.” The term structure does not mean the logical structure of a carefully developed argument or the reporting structure shown by an organization chart.

Each metric has an associated targeted value toward which the organization strives. and strategic goals are defined. The organization defines actions (which Kaplan and Norton refer to as objectives) to further translate the goals. The actions (objectives) are grouped within five perspectives: financial. This 1994 initiative laid the groundwork for later BSc introduction and implementation throughout the Division’s line and staff organizations.e. in turn affecting customers. vision. employees. which required federal agencies to: ♦ strategically plan how they would deliver high-quality goods and services to their customers. Although the GPRA was intended only for the top. employees. and stakeholder. direct reports to Congress (i. these targeted values are developed from the perspectives of the customers. With this in mind. The strategic goals translate the vision into specific outcomes that the organization must create to realize its vision and close the gap. employees.” Each specific action has one or more metrics associated with it. 21 . DoD) and not for all organizational levels of the government.. The concept of enterprise Performance Measurement was deployed organizationally through the Division’s annual planning process. employees. Comparisons between the actual measured values and the targeted values reveal a delta. so the organization must consider the gap between today’s organization and the desired future state – then it must develop strategic goals to bridge the two. internal business.” The GPRA was not the only legislation passed. stakeholders external factors internal factors gap today's organization strategic goals mission (customer-focused) feedback actual measured value products & services metrics actions (objectives of balanced scorecard) vision (future state) and implement the system. customer. The actual measured values are gathered by feedback from customers. and strategic goals are defined. The GPRA stated: “. and stakeholders by considering their needs and expectations. hence a customer-driven organization is created. and stakeholders. and partners. the “Once the mission. The measures and values cause “internalizing” of the customer needs and expectations. an organization defines its desired future state. that mission is implicit to an organization because a mission is an organization’s reason for being and must be clear and coherent. and ♦ specifically measure their programs’ performance in meeting those commitments. NUWC Division Newport used the law to build internal support for its Performance Measurement initiative. most notably the Government Performance and Results Act (GPRA) of 1993. To achieve a customer-driven organization. inadequate information on program performance. Once the mission. when performance reporting emerged as a major focus of the 1990s throughout government agencies. Development of the NUWC Division Newport Performance Measurement System NUWC Division Newport began exploring “Performance Measurement linked to enterprise performance and goals” around 1994. Both internal and external factors define today’s organization and determine what conditions or actions influence its ability to meet its mission. employee/learning and growth. and . spending decisions and program oversight are seriously handicapped by insufficient attention to program performance and results. vision.. its vision.. In a customer-driven Performance Measurement system. there was the Government Management Reform Act of 1994 and the Information Technology Management Reform Act of 1996.federal managers are seriously disadvantaged in their efforts to improve program efficiency and effectiveness. congressional policymaking..A Journey of Change Exhibit 1: The Process of Creating a Performance Measurement System targeted value delta (customer perspective) customers. stakeholders... it is not enough to have a customer-focused mission. the customer-driven Performance Measurement system can be developed. The actions (objectives) provide a framework for many critical management processes and influence the operation of the organization and the delivery of products and services. the customer-driven Performance Measurement system can be developed. because of . Significant legislation was passed during those years. From 1994 to 1997. This analysis becomes available for the next iteration of defining the current state of the organization – it becomes an internal factor. which provide an understanding of the status or the evaluation of the action.

objectives or measures linked in August of 1997 as part of the yearly planning process to each other. and matrices. measures were gradually being added to the (already “too many measures”) original scorecard. It was develop their directorate or department scorecards. Successful implementation requires more than administrative structures. CA. Integral to the Division’s BSc customer. There was no mechanism to discern whether a new For each perspective. several of the NUWC product lines continued to was the initial process used to develop the scorecard. realities. the leadership was asking that only the top-level measures. employee. The scorecard is not a substitute for a sound strategy. are developing faith in the organization’s ability to achieve the goals. The quarterly assessment reports were well received throughout the organization because before that time.A Journey of Change Division collected and reported quarterly “Key Performance Indicators. Employees and work were being transferred and relocated to NUWC Division Newport from New London. clear focus. Norfolk. motivating it to do so. This was contrary to the process of considering the mission and defining objectives and measures that support the strategy of the organization. The first step was to begin linking the of developing the set of measures at the executive level for objectives within each perspective. Furthermore there was a paradox: on one hand. The objectives were linked inclusion in the Division’s strategic plan. fifth perspective to the NUWC Division Newport BSc proved To date. but on the other hand. management of the organization. As challenge to craft a common culture from the distinct cultures the leadership and the external environment changed. and focusing its attention long enough to internalize new capabilities. Adding the weaknesses in the process and key areas of improvements. VA. It also became clear that the employee and product. NUWC Division Newport to surmount the initial hurdle and start the learning/experiential process. for example. while addressing the the ad-hoc fashion in which measures were being added. clear focus. the leadership was adding measures. by focusing on employees. First drafts done perspective by perspective and there was no consideration of these scorecards were submitted to Division management to defining how the perspectives. The workshop sessions consisted of a short lecture and discussion on the background. This was just the beginning of the implementation. the process was to develop an measure should or should not be added. The absence of the linkage chart between the (five-year plan). iterative process in which continuous improvement is a critical and constant objective. It was expected that through the use of the scorecard the “extra” measures would fall out during use or in the review process that is built into the strategic planning process. In March 1997. FL. and Orlando. and the Division later realized that it was the “easy part” of the process. getting started and documenting the measures enabled the learning-and-growth perspective should be one perspective. In September of to define the cause-and-effect relationships. be included. After these number of measures continued to grow. which require direct action on their part. and learning and growth) and a process is a yearly assessment of the BSc – identifying problems/ government-added fifth perspective. The goal of the assessment was to provide a single-page presentation of the health of the organization in an effort to improve organizational efficiency and effectiveness. the key weakness identified San Diego. NUWC Division Newport was introduced to the BSc concept and held workshop sessions to further the The Evolution of the NUWC Division Newport understanding of the BSc concept. During the first yearly assessment. hiring decisions could now be made by combining core competencies of the workforce with the business data forecasts to target employees with certain abilities. although the data were always available. and strong alignment energies within the organization. Although it of them were truly related to the overall strategy and mission was agreed that there were too many measures in this initial of the organization. organization. This exercise helped 1997 the scorecard was accepted by the senior leadership team the team to further define the objectives and to consider which and incorporated into the FY98 Strategic Plan. The Division expected that the scorecard To build the scorecard. A Division-wide Balanced Performance measures and objectives was what had allowed the ad hoc Measures Team was formed in July of 1997 with the objective addition of measures. The challenges to the organization. NUWC Division Newport accepted that defining the measures Then. the teams looked at five perspectives: had to evolve if it was to be a viable and useful tool for the the traditional four perspectives of the BSc (financial. and specifically to top management. The root of the problem workshops. teams formed and actually began developing scorecards to truly reflect the organization’s strategy and vision is an – outcome measures and action plans. was trying to minimize the disruption. Leadership werethe increasing number of measures and. the information was not routinely synthesized for use in decision-making. new joining the Newport site. CT.” 22 . and strong alignment energies within the organization. plans.” The quarterly assessment consisted of eight metrics. this yearly assessment process brought about two of to be essential at that time because the Base Realignment and the most significant impacts to the evolution of the NUWC Closure activities were impacting at least 50 percent of the Division Newport. more disconcerting. and techniques involved in measuring what the organization does and how it relates to its goals and objectives. and consequently the objective related to the organization’s mission. Scorecard theory. The quarterly assessment report provided a cohesive look at the data. internal business. which were primarily financial in nature but included several human resources and innovation measures. “The scorecard is not a substitute for a sound strategy.

product. The An unexpected outcome of the hypotheses and the linkage measurement system should make relationships (hypotheses) chart was the emergence of three organizational themes: among objectives in the various perspectives explicit so that innovation. and customer first. for example. Because NUWC Division Newport’s mission involves national security. These themes. The unexpected customers?" outcome was that through this automation process we were able to gain a deeper understanding of Internal Perspective “To satisfy our • Decrease Time our scorecard and the measurement process. and the U. making it more efficient. and support • Continuous internal processes. Data from the NUWC Division Newport’s model cannot apply the traditional Executive Business Information System is now automatically imported. as it relates to the mission.. The pbviews system’s architecture “Stakeholder” Perspective “To achieve our • Purpose made it easy to view the progress to our strategic mission.S. It has also expanded the number of people with “first-hand” contact with the actual Exhibit 2: Tailored for NUWC Division Newport BSc Model scorecard process. This linkage defines the organization’s strategy organizations. but customers are better described as the organizations and program managers that actually The second significant impact to the evolution was an pay directly for the products and services offered by NUWC unexpected outcome to our effort to improve the efficiency Division Newport (e. of validation and additional merit to the Balanced Scorecard However. This alignment provided the team with a sense stakeholder had been combined with the customer perspective. Furthermore this “rating” was then Financial/ Budgetary Perspective Customer Perspective enhanced because the measure owners then “To achieve our “To succeed how • Purpose • Balanced Budget provide analysis. affordability. Kaplan and Norton state: “The strategy is a set of hypotheses about cause and effect. The architecture was developed. which were not prescribed. and action plans mission. the organization.” 23 . NUWC Division Newport is part of the Navy Working Capital Fund and has to The next critical step in the process was to link the operate more like a business than do traditional government perspectives. was the emergence of three organizational themes: innovation. However. how must must we look to our • Service • Revenue Sources we look to our constituents? • Quality • Value (as required) for each measure.A Journey of Change Although emphasis on employees is a basic tenet at Division government model where the financial perspective (i... The Fleet and the sailor can be included as customers. include the Fleet. Key personnel were industry model.”4 of the three themes signaled to the team that the system of measures was fully aligned with the strategic direction of the The process to develop the hypotheses for the model that Division and represented a critical validation of the scorecard best describes NUWC Division Newport reconfirmed the construct. are the team’s earlier decision to combine the employee and learning essence of NUWC Division Newport meeting its mission and growth perspectives. because it is not viewed separately from the learning-and-growth perspective. However implementing the Employee/ Learning & Growth software helped us focus on the importance of “To accomplish our • Innovation target performance comparison and has led to the mission. the team realized that although some customers may methodology. where the financial perspective is the key introduced and trained in the use of the pbviews software driver (top of the cause-and-effect diagram). what Learning establishment of more challenging performance kind of staff and info • Intellectual Assets systems do we need?” goals. and customer first. This model differs from the traditional as possible. budget) Newport. there are stakeholder interests that are vital for the success of the organization and are not entirely included in the customer perspective. which were then compared to current The Mission Statement Fiscal Year Targets and Stretch Targets (goals five years out). how must • Service we look to our goals. The data were the measure results. In Fiscal Year 2001 NUWC Naval Sea Systems Command). the only expected outcome was the • Productivity must we excel at?” • Cost increased efficiency. taxpayers. and reporting as much shown in Exhibit 2. Data from Customer and Employee Surveys was input.. Program Executive Officers and the in administering the scorecard. maintenance. The emergence they can be managed and validated. Division Newport embarked on a BSc/ Panorama Business Views (pbviews) pilot program whose purpose was to automate The hypothesis that NUWC Division Newport accepted is BSc data collection. what Lag business processes to this effort. Stakeholders. Up to this point. The team also discovered a missing and represent the fundamental strategy concerns for the perspective: the stakeholder perspective. commentary. through an intuitive “Red Yellow Green” • Quality Stakeholders?" Scoring. Prior customers. the objectives are inherently linked and cannot be is the foundation of the organization. Congress. there were clearly two different perspectives.g.e. the sailor. an “institutionally funded” organization. affordability. “An unexpected outcome . have been dual-hatted as stakeholders.

and offensive and defensive weapon systems associated with undersea warfare. The BSc methodology also supports external alignment. and systems that are operationally superior so our Sailors and Marines can protect and defend our national interests and. engineering and fleet support center for submarines. As a management instrument that translates an organization’s mission and strategy into a comprehensive set of performance measures and also provides a framework for strategic measurement and management. fielding. An effective Performance Measurement system can provide the necessary understanding. fight and win. NUWC Division Newport has found that the BSc methodology allows the leadership to communicate strategic direction internally throughout the organization to achieve top-down alignment. Exhibit 3 shows how the NUWC Division Newport mission and vision are linked to the missions of the organizations that are above NUWC in the hierarchy. Be our Nation’s provider of choice for Undersea Superiority satisfying today’s needs and meeting tomorrow’s challenges. to fight and win. will continue to serve the Nation by developing. NUWCDIVNPT Mission “UNDERSEA SUPERIORITY: TODAY AND TOMMORROW. to deter conflict and. if require. development. modernization. especially those entrusted with and expected to achieve performance goals and targets.” Exhibit 3: NUWC Division Newport Mission Statement Links to Other Missions and Begins the BSc Process Vertical Alignment and Empowerment There is a widely accepted dichotomy between formulation and implementation of the organization’s top-level goals. acquire. and the lower levels are expected to achieve them. and supporting technologically superior and affordable systems for Navy. Without a clear understanding of the organization’s top-level goals and of the outcomes that are expected. test and evaluation. Marine Corps. acquiring. research. Our products allow the operating forces. The results of the Employee Opinion Survey (EOS) provide data supporting the topto-bottom alignment of strategy that has been Exhibit 4: Cascading BSc’s Align and Empower Organizations and Employees achieved using the BSc methodology. as in the Division’s case. Development and Acquisition Team.” NUWCDIVNPT Vision “PROVIDE END-TO-END USW SOLUTIONS. ordnance. to train.” “ The NAVSEA Mission develop. Joint and Allied forces. in support of the Unified Commanders. there are no scorecards above the organization. by considering the missions of the organizations above. Organizations need a clear and cohesive Performance Measurement framework that supports both the objectives and the collection of results. However. if necessary. the BSc can provide needed definition and structure to the organization. They must clearly understand how success is defined and what their roles are in achieving that success.A Journey of Change RD&A Mission Naval Research. and maintenance of systems that ensure our Navy’s Undersea Superiority . More often. development.” “We NUWC Mission To operate the Navy's full-spectrum research. All levels of the organization must understand the framework. autonomous underwater systems. In an ideal world the process of NUWC Division Newport’s BSc development would have started with direction from higher Navy and higher Department of Defense scorecards. modernize and maintain affordable ships. employees are not positioned for success in attaining the goals. Senior managers formulate the goals. 24 . in partnership with Industry. NUWC Division Newport was able to develop a scorecard that aligned with those of the external organizations once they developed their own BSc’s. We provide the technical foundation which enables the conceptualization.

the strategies are not linear or stable. the ASN (RD&A) has an objective to “decrease direct maintenance man hours per platform.” Because this is not directly applicable to NUWC Division Newport. For example. The authors advocate that it is unnecessary to have a one-to-one correspondence of each objective throughout the organization. measure. The Division has been able to align the objectives and perspectives for increased understanding of the actions it must take to contribute to the overall ASN(RD&A) strategy. and to consider the implications of achieving goals and objectives established in this ever-changing non-linear environment. It occurs when managers question their assumptions 25 . then failure to achieve the expected outcomes is a signal that the theory underlying the strategy might not be valid. and the BSc provides a framework for gaining an understanding of them. Using the scorecard for organizational learning In this turbulent and competitive environment. the general idea is similar. For example. The challenges are to continue to learn how each objective. but it could also result in an adjustment to the quantitative values of the strategic measures. the measures must have direct links to the strategic goals of the organization and must be focused to direct the attention of managers and employees to those factors that are expected to lead to competitive breakthroughs. It is important to understand that the performance measurement system or BSc is not created – and does not exist – to control or measure the strategy. even though it is not monitoring this measure on the top-level organization’s scorecard. the ASN (RD&A)’s goal is to decrease direct maintenance man-hours per platform. all aligns from the stakeholder perspective. and targeted value on the scorecard interacts with every other one. it would not make sense to force-fit an objective for the sake of uniformity. There are complex dynamics. if employees and managers have delivered on the targeted measured values.” Next Steps The Balanced Scorecard initiative at NUWC Division Newport is an evolving effort that will continue to present opportunities and challenges for improvement. the Division is able to become aware of ASN (RD&A)’s priorities and can check to ensure that organizations in the hierarchy are not pursuing projects that could have conflicting objectives. should include maintenance man-hour measures in the product criteria so that they do not deliver products that increase direct maintenance man-hours per platform. This could result in reaffirmation of their belief in the current strategy. Although the terminology and the perspectives are different from NUWC Division Newport’s. The team might conclude that they need a different strategy. even though the measure is not explicitly on the scorecard. customer value propositions. The ASN (RD&A) has incorporated the BSC methodology in the 1999-2004 Strategic Plan. In other words. AT&L) to ASN (RD&A) to the Naval Sea Systems Command to NUWC Headquarters to NUWC Division Newport to a NUWC Division Newport Technical Department. organizations can use the scorecards of organizations above them as guidance for their work. it allows management to evaluate the validity of strategy and quality of its execution. However. from the Undersecretary of Defense for Acquisition. where it is reasonable. With its specification of the causal relationships between performance drivers and objectives. To do this. measure.5 “The challenges are to continue to learn how each objective. So by ASN (RD&A) providing their scorecards to NUWC Division Newport. The best Balanced Scorecards tell the story of the strategy so well that the strategy can be inferred by the collection of objectives and measures and by the linkages among them.A Journey of Change Exhibit 4 provides an illustration of how the Balanced Scorecard in our chain of command. The BSc allows the organization to think systemically about the strategy. so NUWC Division Newport. the Division should have supporting objectives to contribute to the success of the Navy and Department of Defense. Managers should take such disconfirming evidence seriously and should reconsider their conclusions about market conditions. This has often been described as “cascading” scorecards. and internal capabilities. and targeted value on the scorecard interacts with every other one. competitors’ behavior.5 This learning that produces a change in people’s assumptions and theories about cause-and-effect relationships is referred to as double-loop learning. Technology and Logistics (USD. however. but rather acts as a lever to streamline and focus the strategy for overall breakthrough performance. stimulating the managers to learn about the viability of the strategies.

These initiatives include two time iterations.D. Translating Strategy Into to effect change initiatives and to bring the entire workforce Action: The Balanced Scorecard (Boston. Division leadership chose 52. In creating the strategic feedback system. NY: implementation and assessment of planned organizational change. the BSc has Chris Argyris. Miller has a Masters of Business Administration from the University of Rhode Island’s Executive MBA Program and an undergraduate degree in Political Science from Tufts University. Senge. in the area of Technology create and then look for the most immediate cause to create Insertion Strategies and Knowledge Management initiatives. NY: Doubleday 1990): 42. Morecroft and J. The Fifth Discipline: Mastering the Art s t r a t eg i c m a n a g e m e n t p r o c e s s p r ov i d e d t h e l eve r f o r and Practice of the Learning Organization (New York. The inclusion of the BSc in the NUWC Division Newport 2 Peter M. 6 used within the strategic management process. “Teaching Smart People How to Learn.W. Computer simulation is a means to accelerate double-loop learning.” “A strategic feedback system can be designed to test. Rhode Island. the BSc has enabled the definition of a road map and markers to effect the desired change. which includes strategic planning. 5 Robert S.P.A Journey of Change and reflect on whether the theory under which they were desired changes. Ms. Georgia M. Newport. Kaplan and D.” Harvard and business environments. organization’s ability to keep learning and developing will ensure that it continues to make excellent use of its resources. Harrigan leads strategic initiatives in the The human mind is also limited. supplier. Harrigan and Ms. 26 . observation. and through only one or Center Division. As a strategic management tool Business Review (January-February 1995): 75-85. It is an essential element of the Division’s “Journey of Change. such as Doubleday 1990): 44. 4 R. End Notes 1 Peter M. and these shifts occur only through experience over time. Kaplan and David P. both within the organization and externally. is limitations these trigger points and insights will most likely responsible for the NUWC and NUWC Division Newport’s be counterintuitive. Norton.” enabled the definition of a road map and markers to effect the Harvard Business Review (May-June 1991): 99-109. both in time and in space. and people can deal with organizational transformation of the Naval Undersea Warfare only three or four variables at a time. operating is still consistent with current evidence. Oregon: Productivity Press 1994): downsizing and consolidation of defense assets. and the resultant Organizations (Portland. strategic management processes. “As a strategic management tool used within the strategic management process. Modeling for Learning the end of the Cold War era.” Ms.” Left to its own devices. and because of human Ruth E. An at a number of government and industry conferences. and modify the hypotheses embedded in the strategy. Dynamic computer simulations are required because cause-and-effect relationships are often far removed from the symptoms. which limits the usability of simple correlation analyses. 3 J. Dynamic computer models can help with degree in Mathematics from Boston College. Most of us focus on the effect we want to support to the Office of Naval Research. to redefine customer. validate. double-loop learning can take a very long time because it involves shifts in basic assumptions and beliefs. 54. and that it will be appreciated by tomorrow’s customers. operational planning. budget realities.S. that effect. goal setting. A strategic feedback system can be designed to test. Harrigan has a Masters of Business Administration degree management’s view of the market. MA: Harvard Business along on the journey. the emphasis is on constructing cause-and-effect relationships. separated in time and place from the desired effect. the environment. “Using the Balanced that is not complacent about the need for continuing adaptation to an accelerating rate and scope of change in the technological Scorecard as a Strategic Management System. and the from the University of Rhode Island and an undergraduate competition. It is a customer-driven organization. Norton. Miller. Senge. Sterman. and modify the hypotheses embedded in the strategy. Miller have been invited to present the Computer simulations will assist in the continued refinement and reflection on the balanced performance measures and are NUWC Division Newport experience with the Balanced Scorecard part of the organization’s continuous improvement goals. The computer simulations can be used to play back Ms. Today the Division is an organization that has made tremendous positive change and is an organization School Press 1996): 30. the Director for Strategy and Planning. however. and stakeholder relationships and experience. Rather than take a reactive posture. resource allocation. validate. Much of the change derived from externalities.6 that are key to future organizational success. The Fifth Discipline: Mastering the Art Summary and Practice of the Learning Organization (New York. Performance Measurement. the discovery of other trigger points.D. and the design and implementation of change strategies.

easy handling seminars. by using various management tools. for which we chose – after comparing various alternatives – pbviews. Louis Schwendener implemented the Balanced Scorecard into his organization. Gold Coin Group Gold Coin Group is a privately held family company in Asia. doubled production capacity and increased profitability substantially. with brands like Omega. If we were people clearly understood what they had to do. defining measures Perform: Why did you feel the need for the Balanced and weighting them. Swatch. two fishmeal factories and several trading subsidiaries in nine Asian countries. conducted by Naresh Makhijani. Longines. with the help of our consultant. Director & Group CEO. Louis Schwendener. I immediately to start over again. Schwendener on his experience of implementing the Balanced Scorecard in Asia. There. Magazine conducted with Mr. Schwendener. In 2000. In 1994 Gold Coin appointed a new Group CEO for Asia – Mr. Tissot. This was followed by the selection of Scorecard? supporting software. which is understood by virtually everyone in the entity. however. I came out of it [these and ultimately best price/value ratio.) and was in charge of all of Swatch’s operations in Asia. but possibly with a higher focus on the to be effectively implemented at all levels. Rado. I really felt that I had found the answer P: What were the challenges in the implementation? to one of my biggest problems.Implementing the Balanced Scorecard in Asia An Interview with Mr. The group has operations in nine Asian countries and has constantly been growing faster than its market. a Swiss national. In addition to this. he expanded their operations. identities). P: How was it implemented into your organization? LS: Once the working and benefits of the Balanced Scorecard were understood by our senior management team. Today. namely the difficulty or near inability to convey my vision and strategy in an understandable LS: We probably were a little over ambitious in trying manner all the way down the hierarchy. Louis Schwendener: During my business career I always read a lot of management books and attended many different We chose pbviews because of its simplicity. we proceeded. across 21 feedmills. we would likely begin with a reduced recognized that this was the tool that allows Vision and Strategy number of measures. Louis Schwendener. To ensure that to cover each and every angle of our business. to get middle and lower management levels to the same degree of excitement that we were at. Gold Coin is LS: It is simply the best tool available to ensure that Vision the undisputed industry – and in most countries. built nine new mills. seminar. more often than not. most important ones. After taking over Gold Coin in 1994. had worked previously for the Swatch Corporation (the world’s largest watch manufacturer. seven P: What is the Balanced Scorecard (in your words)? flourmills. We based it on our existing Vision and Strategy and started to build the structure of the Scorecard. market and Strategies are translated into a language (measurable – leader. “I immediately recognized that this was the tool that allows Vision and Strategy to be effectively implemented at all levels. etc. engaged in production and distribution of compound feed for livestock and aquatic animals.” 27 . Thereafter we aligned seminars] with a feeling that I had not learnt anything new. in Singapore [in October 1999]. and integrated our budget process and finally the group’s But this changed when I attended my first Balanced Scorecard incentive scheme. it is also a sophisticated tool in helping The following are some excerpts from an interview Perform to guide and control the progress of targets set.

the benefits of the Balanced Scorecard for the group and Scorecard software with our new finance and accounting software.” P: How is the Balanced Scorecard used in your company? P: What would your advice to others be? LS: Don’t think of starting Balanced Scorecard if top management is not convinced and fully behind the idea. we are now able to act much faster (rather than react) to changes in the marketplace. Indonesia. as a OTI.Implementing the Balanced Scorecard in Asia Additionally. As a result. ♦ Allow ample time to ensure that middle and lower management is trained very well and understands the “personal” benefits to themselves. 28 . Furthermore. it is simple enough to be managed and understood by such as gaining new customers. ♦ Increase in profits by 50 percent. something we had not done so much before. particularly to lower and middle management. P: What would you attribute to the success of your Balanced Scorecard implementation? LS: This is an all-encompassing tool. software structure. but ensure that achieve instant success in driving certain aspects of business.sg. ♦ Reduction in customer complaints by 40 percent. P: What have been the results so far? LS: The most noticeable result is the fact that we are able to ♦ Choose software suitable to your needs. It really provides a holistic view of the whole organization. and strict adherence to conduct regular meetings to appraise the achievement of targets set. result of a substantial increase in sale of higher margin contributing products. There will be further improvement in eliminating manual input of data by linking various other software in the organization to the BSc. we plan to fully integrate our Balanced convincing. in light of changes in the marketplace. LS: The Balanced Scorecard is an integral part of our regular board and senior management meetings and is used as the key instrument in directing and assessing the performance of the company. Some specific results have been: ♦ Reduction in delivery lead time by 50 percent. “This is an all-encompassing tool. ♦ Prioritize and limit the number of key performance indicators to a manageable number. It really provides a holistic view of the whole organization. P: What would be the next steps for getting full results? It is also advisable to spend ample time explaining and LS: Over time. It allows you to link the whole chain of events from vision over to strategy down to results (P&L). and increasing speed of delivery. it would have been more appropriate to train and convince our people and was also very helpful in the focus on stronger integration with our existing financial process of implementation. we were For further information please contact Naresh Makhijani at also able to increase our gross margins significantly. reducing customers’ complaints your salesman or storekeeper as well. It allows you to link the whole chain of events from vision over to strategy down to results. at naresh@pacific. ♦ Link performance to reward. ♦ Increase in new customer acquisition by 20 percent. By having performance related benefits linked to our Balanced Scorecard. We had a very good consultant who took the time to understand our business. We particularly look at lead indicators.net. there is a need to constantly reassess targets and measures set. There is a need to continuously emphasize discipline themselves.

Meat Processor Slaughters Outmoded Culture By Jeremy de Constantin Managing Director EMTEK Sydney Located in Young. He was also a key player in the Burrangong program. with a their level to drive management’s objectives (individual teams recurring 10 percent annual reduction in cash operating costs. Experience has proven this a very powerful technique in other like projects. This article was reprinted with permission from the author. commencing in August 2002.com. agree on performance measures for the business objectives. and. with a weekly throughput averaging 10. sales and livestock. enable In addition. NSW. in lunchrooms and in the main administration building on site. Graphical representations of monthly performance will be posted on the slaughter floor. identify the company’s stakeholder needs and agree on key business objectives.” Edmonds says. but can construct their scorecard of performance measures. with clients ranging from a small fibre testing laboratory in NSW to the largest mining and exploration company in Western Australia. Burrangong has committed to installing pbviews Performance Management software. Under the program. 4. Grant Edmonds. administration The key to success will be making visible all the good work and OH&S. He can be contacted at jeremy. decide which of the drivers of create an atmosphere of mutual respect where everyone performance are key. their performance. Australia. This is all about identifying appropriate performance measures Burrangong’s founder and MD. Australia 29 . sign off on the performance measures for bigger picture. The first part of the program involves identifying. completed during the program by using simple-to-understand software. Burrangong employs more than 300 people and is said to rank as one of the most profitable and efficient meat processors in Australia. has recognized at the operational level. and embed performance measures in tracking software. the organization has been divided into four teams: management. and. “I want people to believe they have a contribution to make. New South Wales. the teams are given productivity while putting into practice the statement: our responsibility and autonomy in finding their performance people are our greatest asset. The project team will explain and communicate the key Edmonds has set himself and his team five-year goals business objectives and how they will be measured. it is taken to each administration and operations team in turn so that they It is early days for Burrangong Meat Processors. and tracking software to ensure action is taken as a result of Performance Measurement. this Australian meat processor aims to dramatically boost Although this appears “top-down”. often come up with up to 50 breakthrough ideas). “I want to the drivers of performance.500 lambs/sheep. War rooms will also be provided for those users without access to a computer terminal.au. the opportunities that best practice offers. not to park their brains at the abattoir gate when they Each team runs through the following steps: identify come to work every morning. and processing. agree on performance measures for at Burrangong can readily see how they contribute to the the key drivers. implement a formal review process supplier performance and employee morale. Jeremy de Constantin is the lead consultant from EMTEK. sign-off on top-level performance measures. designing and implementing performance measures that act as foundations for the rest of the operational teams. Burrangong Meat Processors in Young. drivers and performance measures. by applying techniques from other industries overseas. embed the performance measures for the key drivers. The formal steps to be undertaken by the management team are: group the company’s main product offerings. the company’s new team-based system will provide them to develop and implement local level measures to assess instant performance indicators on customer satisfaction. With a career of over 20 years in banking and finance.500 pigs (15 percent of the state’s processing throughput) and 600 cattle. Cascading the process down the organization this way ensures a unity of purpose. Once the management team’s scorecard is complete. a Sydney-based consulting and software development firm.deconstantin@emtek. coach to double growth with continued capital investment and individual team members on how they can identify actions at identification of new domestic and export markets.” the key drivers.

fewer delays. and between the different units Electric’s Hawthorne plant. fewer mistakes. Performance Management is management by fact. efficiency and cost.” 30 . Yet. By combining customer feedback with statistical there be consequences for both exceeding and failing to meet measures to understand shortfalls in the process of delivering those objectives. but it is revolutionary. Performance Management requires Reform bill of 1999. Performance Management provides the necessary base to ensure the customers of government. Performance for the Illinois Department of Employment Security. it can drive future budget and resource allocations Management possible because it forces managers to focus to improve the equity and accountability of a program or on the processes they use and understand the timing of those service.State of Illinois Performance Review Purpose of Performance Management By Ed Harmeyer Deputy Director Office of Statewide Performance Review State of Illinois Costs decrease because of less rework. elements of each are contained in Performance Management. for organizations that do not wish to invest in their Ed helped shape and pass included the Single Factor Sales bill employees. Performance Management requires that managers focus on And the greatest reward of Performance Management is that quality at the front end of a process because quality control at it is real. and through the efforts of affect that process to allow everyone to take pride in their W. efficiency and quality demand Performance Management. “Performance Management requires that managers focus on quality at the front end of a process. Edwards Deming to rebuild the broken Japanese economy work. contact Ed Harmeyer by email at they offer. Shewhart. Ed holds an M. snags. in communicating with them to allow every worker to take ownership Comparative Government and is a published writer in the fields of their actions and pride in their work. nor is it easily done. Performance Management makes Just in Time a service. requires workers and managers both to constantly focus on quality as the means to improve work processes and the services For further information. to the writings and statistical of an organization. Performance Management gives program Performance Management can be traced back to Frederick managers and decision-makers the information they need to W. Two pieces of legislation cannot lead. for its successful use. Ed’s background is primarily in business issues and budgeting. better use of machine time and materials Improve Quality Productivity Improves Popular government demands equity and accountability. although of Japanese Science and Engineering. Ed. This chain reaction of improving quality leading to companies adopting Performance Management include Ford productivity improvements was predicted by Walter A. Prior to joining Gov. Before that Ed served as Fiscal Officer managers to manage people and work processes.state.A. More recent American examples of reduces costs. It allows those who work within a process to techniques of Walter A. Performance Management requires that managers are dealing with that reality to improve a program’s the managers have and understand clear objectives.us. Properly implemented. Ryan’s staff. efficiency and quality. Shewhart Motor Company. and is currently serving the Ryan Administration as Deputy Director of the Office of Statewide Performance Review. the reality of today and how the back end is too late. processes. American Society for Performance Management is not Total Quality Management. or Just in Time Management. 1931. Performance Management holds many rewards Performance Management is not new. 1980) and subsequently verified by the Union Management By Objective.. Equity and accountability demand leadership. Leadership. Ed lobbied the issues of taxation and education reform for the Performance Management is not the tool for managers who Illinois Manufacturers’ Association. receive equitable treatment easy. or for anyone not interested in the quality of the work for calculating Illinois corporate taxes and the Chicago School and service they provide. and that operations. and Director of Appropriations for the by properly training them. Taylor’s writings in the early 1900s as he created the judge the issues of customer service. It focuses on the present. ed--gov_harmeyer@gov. a $250 Management requires the organization to invest in its employees million state agency. through the famous experiments at Western between manager and worker. Educated at Colorado State the limitations imposed upon them by the work processes. It forces everyone involved to focus on quality and thereby after World War II. Performance Management of taxation and philosophy.il. It is much easier to manage by and that their government is accountable to the people it serves. It is not the taxpayers and service recipients. control or fiat or to manage on the basis of belief. It concept of scientific management and the modern field of public alerts managers to training needs and opens up communication administration. and by University and Western Illinois University. superstition or tradition. treating them fairly by recognizing Illinois House Republican Caucus. Ed Harmeyer has been working in and around Illinois State government since 1985. repr. Quality Control. in his book Economic Control of Quality of Manufactured Product (Van Nostrand.

and can be almost immediately applied to the organization at hand. Power of Performance will help your company identify issues it is facing. Mark A. NEC. designed to embed the human resources system within an organization’s overall strategy. Using examples from leading companies. and will give you the tools you need to apply those ideas to your organization in a meaningful way. Drawing from their own vast experience. Power of Performance Management examines how organizations use a n d i m p r ove t h e i r P e r f o r m a n c e Management system. Strategy. d e Wa a l p r o v i d e s a framework for Performance Measurement without ever With real life examples and clear advice. and KLM Royal Dutch Airlines. The HR Scorecard Linking People. Huselid & Dave Ulrich In The HR Scorecard. It will assist you in understanding the role that management must play in relation to value-creation ability. The resulting book is easy to understand and to follow. The information the book provides is invaluable for the human resources professional interested in the Balanced Scorecard. t h e authors have created a sevenstep process to building and implementing the HR Scorecard. It is a perfect companion for Performance Management professionals. He relies on concrete examples offers practical knowledge and tactical suggestions. and Performance By Brian E. and examples of how companies and organizations have dealt successfully with those issues in the past are provided.Reading Room Power of Performance Management How Leading Companies Create Sustained Value By Andre A. Becker. de Waal’s book becoming too theoretical. The information is ideal for assisting businesses both in the beginning and later stages of their Performance Management implementation. or an established one needing an introduction to the Balanced Scorecard. making the next step of applying what de Waal discusses a much simpler task. de Waal Using some of today’s most prominent and most recognized companies as examples. to demonstrate the Performance Management techniques he advocates. The HR Scorecard is well laid out with useful examples and logical arguments. this book will provide a new way of thinking of HR. 0 0 0 fi r m s . Huselid and Ulrich provide human resource professionals with the information they need to apply Performance Measurement and the Balanced Scorecard to Human Resources. With case studies and examples from such organizations as Sara Lee. Leaders in the field of human resources will find what they need to do to set themselves apart from other organizations. Specific challenges are explored. as well as an on-going study of the human resources departments of n e a r l y 3 . overcoming issues and problems as they occur. and face those challenges. the practical knowledge that The HR Scorecard will truly set apart the new innovators in this important field. With it you will have all of the information you will need to create a Performance Management system that is right for your organization and discover the information technology that is needed to support the framework you have created. Whether you’re an entry level human resources professional. Becker. From learning how to successfully implement a major change project to expanding the Balanced Scorecard project to the rest of the organization. 31 .

pbviews is the ideal solution for performance-driven organizations such as yours. IN AN EASY TO UNDERSTAND FORMAT. Why wouldn’t you have a world-class performance measurement system? NOW YOU CAN ALIGN DAY-TO-DAY ACTIVITIES WITH YOUR CORPORATE STRATEGY. THE BRIEFING BOOK EXPLAINS YOUR ORGANIZATION‛S PERFORMANCE. Web-enabled. OUR INTUITIVE COLOR-CODING WILL HIGHLIGHT ISSUES THAT REQUIRE ATTENTION.You have a world-class bank. Discover pbviews – for your bank. . The World's Leading Performance Measurement and Management Solution To learn more about pbviews and our 1/2.888 -pbviews pbviews is a registered trademark of Panorama Business Views Inc. please visit our website www.com or call Toll Free: 1. The fact is. It’s called pbviews. the world’s leading performance measurement solution. user-friendly and cost-effective. You’ll be in very good company. you can monitor your organization’s key performance indicators. THE CUSTOMIZABLE EXECUTIVE DASHBOARD DISPLAYS RELEVANT MEASUREMENT INFORMATION. With pbviews.day performance management seminars.pbviews. for yourself and for your own peace of mind. over 200 financial institutions and Fortune 1000 corporations worldwide already have such a system. measure them against your strategic objectives and align day-to-day activities with business strategy. The reason for our success is simple: we provide you with the ability to measure the overall performance of your business within minutes rather than hours.

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