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September 27, 2004

Hi  welcome back. 

During times of market expansion, companies need to be 
on the constant lookout for competitive techniques and 
tools that will help them create and maintain their 
competitive edge.

Of all the competitive techniques I implemented while 
in industry, performance management was by far the most 
effective. It helped my teams stay focused on getting 
the job down. 

Today, "The Balanced Scorecard" is the performance 
management system employed by the winners. If your 
company wants to take advantage of the current 
manufacturing turnaround, you'll want to be sure to 
read this week's bulletin, The Balanced Scorecard: 
“Without data, you're just another opinion." 

Have a nice day, keep the faith, and stay connected.

Bill Gaw
Business Basics, LLC
Bg@bbasicsllc.com
760-945-5596

=================================================
BEST MANUFACTURING PRACTICES BULLETIN

Now serving over 6294 subscribers

Competitive Knowledge for Manufacturing People 

=================================================

THE BALANCED SCORECARD
"Without data, you're just another opinion." 

Financial numbers may tell us we're winning the war, 
but it takes performance measurement to show us how 
to focus our energy and efforts to win each of the 
battles along the way.

Bob Gee, a good friend and coworker, once said, "You 
can't control what you don't measure." Imagine trying 
to fly an airplane across the country and the cockpit 
has no dashboard, no gauges and no idiot lights. You 
may get it up off the ground but without performance 
management the chances of getting to where you want 
to go are slim to none. Business success may not be 
a life-death situation but like piloting an airplane 
it takes performance management to get you to where 
you want to go.

MOTIVATIONAL OR DE-MOTIVATIONAL

Performance measurement can be motivational or 
de-motivational. The individual goal setting of the 
80's is a good example of de-motivational measurement.
It tested one individual or group against the other, 
and while satisfying some individual egos, it 
provided little contribution to company growth and 
profit objectives.

Today, the balanced scorecard is a performance 
management system that helps companies pursue their 
key success factors. The scorecard uses both internal 
and external benchmarking and employs a relevant 
cascading method of performance goal setting. 
Achievements are acknowledged and celebrated on a 
"real time" basis and not at the traditional annual 
review.

For a balanced scorecard process to be motivational 
it must provides timely and accurate data. Simplicity 
is a key to the validity of measurements and the 
tractability of problems to their root cause. Data 
collection design must employ simple and easy to 
maintain databases to assure data integrity. 

When people are trained in this process and are 
permitted to participate in relevant goal setting, 
performance management can motivate teams to higher 
achievements - including the exceeding of growth 
and profit expectations.

FIVE KEYS TO BALANCED SCORECARD SUCCESS 

* Establish a "no status-quo" mind-set - if you're not 
winning, you're losing
* Define company "key success factors" - examples: 
cost, speed and quality
* Identify realistic stretch goals that are relevant 
to the company's "key success factors"
* Implement training/coaching programs - education is 
the pathway to excellence
* Celebrate each goal achievements and raise the bar - 
don't wait until next year.

BENCHMARKING

For a mature performance management process, 
"benchmarking" has become the standard for establishing 
performance objectives. Benchmarking is still one of 
the most ill-defined management concepts and is one of 
those words that mean different things to different 
people. Our preferred definition comes from Xerox, 
who describes benchmarking as: "The continuous process 
of measuring our products, services and business 
practices against the toughest competition and those 
companies recognized as industry leaders."

The objective of benchmarking is to build on the ideas 
of others to improve future performance. The expectation 
being that by comparing your processes to best practice 
- major improvements can be realized. You should not 
consider carrying out external benchmarking until you 
have thoroughly analyzed your internal operations and 
an effective system of internal measurement has been 
established.

WHAT'S IN IT FOR US?

So what kind of results can you expect when a management 
team introduces the process of the balanced scorecard? 
First, people will become motivated and focused on the 
continuous improvement of their company's critical 
success factors. Second, personal and team achievements 
will become recognized and rewarded - creating an 
exciting, winning, work environment. Teamwork will 
improve and employee retention will rise. Finally, and 
most important is the company-wide euphoria as "bottom 
line" results improve and financial pressures no longer 
create a stressful and defensive work environment. 

Come discover why and how the winners are mastering the 
6-Basics of Balanced Scorecards:

http://bbasicsllc.com/bsc.htm


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