Q & A About the Balanced Scorecard

Who should run the Balanced Scorecard (BSC) project?

Because accountants have limited technical interests and because of technical jealousies I suggest economists be used to develop and use KPIs. They have the advantage of training in forecasting and some background often in accounting. They are not used but represent a great potential. They are also likely to be objective.
I believe the finance team, HR, IT, economists, etc, all could participate in the project team, and be the team to monitor this on an ongoing basis. It all depends on the skill level of the individuals. See chapter 9 in Key Performance Indicators, 3rd edition.

Are there large companies you have converted successfully to your method from an already implemented BSC?

My work has been out there for over 10 years. I know organizations are using it from the calls I get. I was asked once to fly to Melbourne to visit a company that was three-quarters of the way in implementing my concepts. I no longer do project consultancy, as it is not my strength. My focus is to sell the vision and offer a practical way forward in which in-house teams can be empowered to operate. My role now is as a mentor and facilitator and I seek to work with other facilitators who will become certified and able to access all my intellectual property. See www.davidparmenter.com

Do you feel that the role of developing a balanced scorecard and relevant KPI / PI should rest more with the IS group or business group?
It rests with the whole organization. Everyone has to be involved. It is a major PR exercise. Please read about the foundations stones in my KPI book.
We’re part-way through a long balanced scorecard implementation which isn’t working. What actions should we take?
First Step – Take the SMT for a 1/2 day session and re look at the CSF, the way the project started, the gaps in between what I say you should be doing what you are currently doing. On reflection, you might say, “I think we have a weakness here” I think it is important that you address these weaknesses during the session and it might be that you freeze the project for a couple months to change the involvement of the team. Perhaps get an external facilitator, etc.
Our balanced scorecard needs revitalising. Do we need to start over from scratch?

Certainly Not. As I’ve said, you’ll never get it 100% right. The BSC is a sculpture that we are making. It is important that if you want to revitalise it, you are happy with the work done on determining the CSFs. In many cases the CSFs hasn’t been determined at all. Then you should reflect back on your scorecards to find areas of our CSFs that have not been measured properly. Then just add appropriate measures in. We then need to look at those measures that are not tied into the CSFs. Do we need to measure these? Are we measuring them appropriately? Many existing measures will need to be removed/refined.

I am interviewing with an organisation preparing for a reorganisation. Currently, management is planning on beginning balanced scorecard development and implementation after the reorganisation is complete. Is that a good strategy or should the BSC development and implementation take place in the earlier stages of the reorganisation? Why?

Number one, I’m against reorganisations in the first place. Why do we reorganise? Is this going to solve the problem? Well it doesn’t, it just makes it worse. Its better to redo the strategy first, determine the CSFs and then find the appropriate measures. I believe your existing structure will perform so much better under this new regime that a reorganisation will not be deemed necessary.
The BSC will help people align themselves with the company objectives. The important thing is how the individuals are aligned to the strategic objectives of the organisation. through the BSC measures, not how the organisation is organised (regionally, branches etc.)
In summary I believe the structure is not important. It is the alignment of the staff to the CSFs factors that is the key, the El Dorado of business.

As a new employee (Director level) can I be considered this external facilitator? I am implementing the balanced scorecard for IT.

A BSC for the IT team should be done after the organisation has rediscovered its CSFs. In other words, an exercise where the 40 or so success factors which are known by all of the SMT, are sorted into a hierarchy with the 5 to 8 top ones being the CSFs. The process of doing the team scorecard is quite straight forward, and there is one available in my KPI book. You can acquire this and other electronic templates from my organisation for an investment of $250 NZD. An external facilitator would be required for the CSF workshop. Your assistance with the team scorecards would be most appropriate.

Why do you use 6 perspectives in a balanced scorecard, when Kaplan and Norton only mention 4 in his books?

Kaplan and Norton in their 1st book did mention the possibility of increasing the BSC from 4 perspectives. They said that you may wish to separate out employee satisfaction. In their recent work, they talk a lot about environment and community and its importance. This last perspective is about being an employee of choice as well as creating positive recognition amongst the community and staff through implementing successful green initiatives. In other words, I am sure Kaplan and Norton had they written their 1st book in 2008, would have expanded from the 4 perspectives. Thus we are singing from the same song sheet. I see my word as underpinning the scorecard philosophy and helping make more scorecards become successful.

How important are external benchmarks when it comes to measuring and understanding employee satisfaction?

You don’t need external benchmarks to find out what is annoying the employees. Its best to find those out and then fix the major issues raised. This is all internal, you don’t need to compare to anything external. Entering into ‘employer of choice’ awards can be a good thing if you are sure of your ground!

To clarify, should the external facilitator be working with the SMT to define the CSFs, or develop them with other folks and present them to the SMT?

It is very important that the SMT attends the 2 day CSF workshop. They have to be at the birthplace of the CSFs. They may not all be there, but its good to get as many as possible. This is where the external facilitator (consultant) is very heavily involved. The consultant facilities the workshop as this gets everyone to participate and involved because they can get around organisational politics.

What are the qualifications for a good facilitator and how/where do you find one?

Certainly what we want is someone who has implemented a balanced scorecard themselves. Whether theirs worked or not is not that important, it is the mistakes they’ve made and learned from, as well as having a bit of experience. I wouldn’t be interested in someone who hasn’t made those big calls. I’d want someone from industry, as someone right out of university just hasn’t had enough experience yet.
I’d suggest you look around online and look for companies that have the experience. But don’t stop there, try and find the individuals within those companies that have been a part of a BSC implementation. Once meeting them, you’ll know if they are right for you or not.

In a family business, should family members be excluded from the KPI project team to prevent bias?

Certainly not. Provided that they can be full time on the project and have the requisite skills. I have set out a checklist in the book for outlining of the characteristics of the team members.

Is there a toolkit (templates etc.) that you would recommend to look at for a start of the implementation?

I have spent 20 years refining a toolkit that was originally developed by Ausindustry (a government department). I hope that the book and associated electronic media I have made available will assist. There are templates and a database of performance measures available for purchase on my website.

In what key ways do you see sustainability reporting and the BSC approach as complementary tools?

Sustainability reporting fits neatly in the environmental and community perspective. Thus I believe it should be a part of the BSC instead of another report. Management don’t have the time to be reading myriads of reports.

Can you recommend literature on combining KPIs and the Hoshin process?

The Hoshin process clearly has many merits working for it. And as with Kaplan and Norton, we are all singing from the same song sheet. My work on winning KPIs certainly is compatible as we are both trying to align daily activities at the workplace with the strategic activities of the organisation. Using a search string “Hoshin balanced score card case study” you will find many interesting articles. One in particular “Balances scorecard and Hoshin Kanri: dynamic capabilities for managing strategic fit” is worth a read.

The learning & Growth perspective seems to be the hardest to measure. Are there standard measurements for training or growing expertise that can be leveraged?

Firstly I do not like the wording  “Learning & Growth”  it should be “Learning and Innovation”.  The best way for getting learning moving into the next stratosphere is to have coaching alive and well. To have recognition’s as a daily/weekly. To have mentor-ship alive and well, available for all senior, middle management, and supervisors. To have a buddy system for all new employees. To monitor, not past training, but future committed training by employees. Because as we all know, 20% of our staff take 80% of our training budget. This misallocation has got to change.