BACK TO BASICS
A Tool for Anyone
Balanced scorecard is useful throughout the organization
By Scott A. Laman
The balanced scorecard is used to align business activities to an organization’s strategy and monitor organizational performance versus strategic goals. The scorecard usually contains information related to four categories: learning and growth, internal business process, customers and financial results.1
"Balanced" refers to all of the categories needed to provide a complete picture of the organization’s performance. Financial results are the bottom line, but those results are not likely to be achieved without attention to the other categories.
Any workgroup or team that wants to clearly demonstrate its performance and value can use the balanced scorecard. But the team first needs to understand itself and its purpose.
Written mission, vision and value statements are helpful. The mission describes the group’s purpose, the vision projects what the team wants to be, and the values describe what is important and how the team will function as it achieves its mission. For example, a value may be, "We work with integrity and value honesty over popularity."
An analysis of strengths, weaknesses, opportunities and threats also helps the team characterize itself. Furthermore, a priority list containing the team’s projects and processes is an important foundation for the following activities:
First, define the group’s key work processes. Employees, no matter what level in the organization, can be assigned ownership of a process. The team leader or manager can take on work processes such as budgeting, staffing and overall performance and strategic planning.
Other processes can be assigned to teammates who are committed to collecting information needed for tracking the process performance. The teammates must recognize their peers as process owners, and the team leader must establish mutual accountabilities.
The team’s processes then are related to higher-level objectives within the organization, such as business goals or executive management objectives. For example, a quality engineering team’s product-development support process can be related to the company’s R&D objectives for rapidly bringing new products to market.
Processes also should be traceable to one of the scorecard categories, with all the categories being represented.
Each process might have several metrics based on quality of work, timeliness or cost. For example, product-development support might have "review documents within three working days" as one of its metrics
The time to review documents then could be measured as an attribute (reviewed within three days—yes or no) or a variable (average time to review each document).
The information can be portrayed in tabular form on one page with room for charts and other team information, such as the mission, vision and values. Table 1 is a simplified example of the format and content for a team-based balanced scorecard. Updating the scorecard on a monthly basis is recommended, possibly with quarterly summaries.
There are numerous benefits to using the scorecard. For the team, there is a sense of teamwork, joint ownership and accountability. For management, the team’s performance is highly visible and easy to understand.
- Robert S. Kaplan and David P. Norton, The Balanced Scorecard: Translating Strategy Into Action, Harvard Business School Press, 1996.
Scott A. Laman is the senior manager of quality engineering and risk management for Teleflex Medical Inc. in Reading, PA. He earned a master’s degree in chemical engineering from Syracuse University. Laman is a senior member of ASQ and is certified as a quality engineer, auditor, manager, reliability engineer and Six Sigma Black Belt.