We have found that the most successful scorecard implementations were those where the senior team was engaged
from the beginning, and ensured that both solid groundwork and well-implemented follow-up processes were in place.
Our approach focuses attention on the critical few performance factors that drive success. We eliminate non-essential
metrics that add complexity and cost through a four-phase balanced scorecard approach:
Here we outline the process that we have found to yield excellent results, and have indicated how Metrus can add value to your process.
Balanced scorecards, phase I: strategic focus
Step 1. Define Strategy Specifics
Your specific strategy is the foundation for performance measures. Metrus will work with you to answer three
fundamental strategy questions:
- What are the most important business objectives for the organization to achieve?
- What "driver" results — for example, employee commitment, retention of high performers, and customer
focus — are critical to achieve these objectives?
- What "drivers" — for example, leadership, training, diversity, and values — impact
performance on these driver results?
We help answer these questions through a review of company strategic documents and databases, one-on-one
interviews, strategy discussions, and our proprietary Strategic Focus Survey. This is a survey tool to rapidly:
- Clarify the strategy.
- Align the senior team on strategy issues.
- Find barriers to improvement.
Your organization will emerge with answers to the three critical strategy questions and an agenda for action.
The next step is often implementing a balanced scorecard, because balanced scorecards are an excellent
vehicle for honing a specific strategy, communicating it to the organization, aligning people around the strategy,
and ingraining the strategy into daily decision-making.
Balanced scorecards, phase II: assessment
Step 2. Audit existing measures
Strategic Assessment evaluates your existing measures. Metrus provides:
- An assessment of the fit between your strategy and your existing measures.
- If data are available, a linkage analysis between your employee measures and your measures of customer
satisfaction, financial performance, or other performance measures.
- An examination of the measurement processes in your organization.
The actions taken in this phase will provide a clear indication of the gaps between the measures you now have and the
measures you need to assess performance on key people issues.
Case in point:
A public utility had been measuring employee satisfaction and customer satisfaction for a number of years,
but had never combined information from the two surveys to examine the relationships between employee
and customer satisfaction. As part of their balanced scorecard effort, Metrus Group merged the company's
employee and customer survey data bases, analyzed them, and found that several key people issues predicted
customer satisfaction. The analysis also uncovered several measurement gaps in the employee survey. Based on a
new, shorter survey focusing on strategic issues, even stronger relationships between employee and customer satisfaction
were identified, resulting in clear action steps.
Step 3. Develop new driver and performance measures
Metrus Group will work with you to develop new measures as needed. This may include
an employee survey; we recommend a questionnaire that uses our
employee survey indices on issues that predict key business outcomes. They cover five areas that Metrus has identified
as predicting bottom line results.
- The selection of modules is flexible. Selection is tailored to your business issues and the outcomes you most
need to predict. Wherever possible, your existing measures will be incorporated to ensure continuity.
- Metrus selects modules for your survey based on its extensive knowledge of the measures that accurately predict
business performance. For example, we know that employee commitment, customer focus, clarity of direction, employee
involvement, and innovation/adaptability are reliable predictors of customer satisfaction and loyalty.
- As your survey is tested over time, the measures are refined to best predict performance in your unique situation.
Case in point:
A financial services company developed a set of strategic business performance measures that included people
measures along with measures of financial performance, customer satisfaction and loyalty, and operational
effectiveness. Metrus Group developed an employee survey for the organization focused entirely on its strategic
people measures. Management uses the survey on an ongoing basis to identify progress on strategic people initiatives
and to assess communication of and buy-in to the entire strategic performance management system. It has realized
substantial gains over time on most key people issues.
Step 4. Apply new balanced scorecard measures
Metrus will help you to apply new measures, using tools which make them easy to understand and implement.
In the case of employee surveys, Metrus can provide you with flexible survey administration tools whose results
can be fit into your balanced scorecard's dashboard of performance metrics.
Step 5. Analyze and report
Analysis is a critical element of strategic assessment. At this step in the process, Metrus:
- Performs linkage analyses to identify the relationships between the modules on your employee data and your
performance in key areas such as customer satisfaction, productivity, employee retention, and financial performance.
These analyses will identify the people issues that have the greatest impact on your performance. The result is a People
Performance Index that predicts performance in your organization.
- Calculates the gain you can expect from your investment in people management by telling you how much improvement
you can realize in profitability, customer satisfaction, or other outcomes from targeted levels of improvement on people measures.
- Compares the performance of your organization with industry leaders using Metrus Group's data bases and benchmarking
capabilities. These comparisons will help you set targets by giving you an indication of what the leaders have achieved.
Sample Driver Analysis: Predicting Customer Retention and Financial Performance
Case in point:
The above diagram is from one of our clients, who found that a 2 percentage point increase in customer
retention will increase net income by $1.5 million annually. All other things being equal, a 10 percentage
point increase in customer focus will yield a 2 percentage point increase in customer retention. A 10 percentage
point increase in customer focus can be achieved by 10 percentage point increases in ratings of leadership and values.
Metrus provides easy-to-read survey reports to decision makers that display the findings for the business and
their individual units, and provide a road map for identifying key strengths and performance gaps.
An in-person presentation to senior management that identifies the key drivers of strengths and gaps on key people
issues, and implications for action. This presentation closes the loop from measurement back to strategy, and sets the
stage for implementation.
Balanced scorecards, phase III. Change planning and implementation
Step 6. Implement improvement plans
The senior team is reconvened to:
- Set priorities for action based on strategy, newly identified people drivers of business performance, and
comparisons to high performing organizations.
- Set specific performance targets and timetables.
- Assign accountabilities for improvement efforts.
- Map existing initiatives against priorities, and consolidate action wherever possible.
- Develop plans for specific improvement initiatives.
This process embeds the balanced scorecard and its measures in the day-to-day working life of the organization,
spreads awareness of the impact of effective people management, and initiates the necessary change processes.
Metrus Group draws on a network of specialists in organizational change and performance improvement to help clients
with implementation. For example, Metrus can:
- Train your people to interpret people measures and to facilitate survey follow-up sessions.
- Facilitate follow-up sessions, either on our own or teaming with your people.
- Design initiatives to address people issues.
Case in point:
A Metrus Group survey surfaced a widespread concern about a financial services organization's performance
management system. Several focus groups with employees were conducted to clarify the issues; then a new
performance management system was designed and implemented. A survey conducted one year later
revealed increases of over twenty-five percentage points on issues such as clarity of objectives and getting
ongoing feedback on performance.
Balanced scorecards, phase IV. Continuous Improvement
Step 7. Track improvement with balanced scorecards
Leading organizations continuously track performance on their people measures. Ongoing tracking measures the
short-term impact of improvement efforts and identifies emerging issues quickly.
Metrus Group works with your organization to develop a pulse tracking program - quick, periodic surveys of a
sample population is a cost-effective way to track performance improvement on a specific issue by administering
the module for the issue in question to a targeted sample of the work force. Pulse surveys typically use a few items
rather than comprehensive questionnaires. They may be aimed at a cross-section of the entire organization, but they
are often focused on a specific segment of the work force in which targeted change efforts have been implemented.
A pulse survey administered via this quick turnaround approach can provide instant feedback on progress on key issues
and enables management to implement needed course corrections.
Case in point:
For a multinational corporation undergoing significant culture change, Metrus Group conducted a baseline
culture assessment and then tracked employee perspectives on corporate culture over time using a brief e-mail
survey. We detected significant improvement over a three-month period in several critical aspects of culture
including teamwork, understanding of mission, and innovation.
Step 8. Continuous improvement through balanced scorecards
By re-embarking on the cycle once again, and cascading it down (or across, or up) to other levels, while
continuing to track key measures and re-set goals, organizations can create and support continuous improvement
programs which will provide a long-lasting competitive advantage.
INFORMATION
The following articles are available at our Recommended Reading
page:
- Creating the Measurement-Managed Organization by William A. Schiemann, 2002 Handbook of Business
Strategy, Pg. 207-219
TRAINING
- Business Acumen Workshops — build skills in measurement, strategy and finance
- Measurement Workshops — learn how to create the right metrics for your scorecard
RELATED PRODUCTS
- Strategic Scorecard Development
Contact Us for more information.
