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
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.
Business Basics, LLC
BEST MANUFACTURING PRACTICES BULLETIN
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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
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
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.
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
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:
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