The term “scorecard” is becoming more and more common in the business community. But what is a balanced scorecard? To give a little background, the balanced scorecard is a management methodology that was introduced by Robert Kaplan and David Norton in the 1990’s.
A balanced scorecard serves as a strategic management system that translates corporate Vision and Strategy into action, communicates and ties together strategic objectives and measures, helps establish corporate targets and aligns initiatives, and increases feedback and learning.
The balanced scorecard approach proves very effective in tracking and establishing “key performance indicators” (or KPI’s”) from different business units within the enterprise. Business units may include operations, finance, or human resources and allows them to track the metrics that allow those organizations to help achieve their corporate strategy.
Balanced scorecards consist of four generally accepted target areas:
1. Financial – How do our shareholders identify financial success? 2. Customer – How do we appear to our customers in achieving our vision? 3. Process – What processes you must be exceptional at with customers, and shareholders? 4. Growth/Learning – How will we sustain the ability to change and improve over the long term?
In practice the balanced scorecard recognizes that corporate performance measurement is not done by individual function, but a combination working together. The approach highlights the “links” or measures that impact Functional Areas across business functions.
While the balanced scorecard is a good process, other scorecard and scorekeeping system exist that may be a better option depending on your needs.
Developing and testing new business simulations at CMOE is always a lot of fun. It’s a time when the CMOE staff gets free lunches, prizes, and the opportunity to meet countless new people we ask to join us. So in addition to creating or reworking our products, we create a culture of fun.
This past week I was assigned to pick up the food for a volunteer test group. I went to get Pizza and as I was standing at the payment counter, I noticed a computer screen on this wall. In big, black, block print, it read “LEADERBOARD.” I was immediately excited to see this. As I was waiting for my order to be finished, I was trying to identify what was being tracked by the “leaderboard” and how it worked. It was obvious that the leaderboard was networked with other stores and I quickly noticed that the store I was purchasing from was second from the bottom. This piqued my interest further. I decided to speak with the manager to understand how it worked.
Me: I noticed your leaderboard on the wall; it looks interesting. It appears to be tracking certain success factors and percentages. Do you get rewarded when you hit certain levels of performance? The reason I ask is I work for an organization where we use effective management, measurements, and scorecards to drive bottom line profitability.
Manager: Yeah, it tracks just about everything in the store from the time a phone call was placed to the time the order leaves the store for delivery. Corporate can pull up data on just about anything in the store.
Me: It doesn’t sound like you believe it’s a good thing by the way you are speaking. Do you get recognized or rewarded for hitting certain levels of performance?
Manager: No, it basically indicates what you have to do as a minimum to keep from getting fired.
The manager continued to explain that this tracking system was to help employees have higher levels of customer service, reduced mistakes, and shorten production times, among many other things. While those are great focus areas, I was emotionally deflated by the way he explained it. This employee was telling me that the “Leaderboard,” this scorekeeping system, was the worst thing about his job.
If organizations are to succeed against strong competition and have higher levels of profitability, measurement cannot build fear and negativity into employees. Driving bottom line performance with the right measurement will engage people and get people excited and committed to push performance levels. By using our piles of data, managers can help employees sort out measurements that drive individual results.
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The game of golf continues to grow in popularity. I personally enjoy the game and try to play often. I love competing against myself and the game makes me be better both physically and mentally. Whether I play it on my own or with someone else, I always find a motivator to make me want to do my best. I track my effectiveness on a scorecard provided by the clubhouse. It lets me know how well I’m doing.
Some scorecards are very detailed and can inform you about the unique design of the course and about each hole so that each golfer can play to their own abilities. Scorecards in golf provide a lot of beneficial information. The score is the ultimate measurement of your ability as a golfer, but that is just the beginning. I have also seen golfers use score keeping to track not only their score, but track every single stroke they make. The serious golfers track the tee-shots ended in the fairway, how often they reach the green in regulation, how close to the hole their “approach shot” lands, and how many putt’s they make on each hole. There is plenty more, but the purpose is to evaluate and improve their game.
In the exact same way that scorecards are used in golf, they can be used in business – to improve your game! A personal score card in business is the perfect way to track an individual’s performance and contribution to the organization. Let’s draw some lines between the two.
Golf:
At the end of a golf round, I know if I am shooting above par, at par, or if I played really well, then I’m hopefully under par. If I’m under par, I’m winning.
Business:
Much like golf, at the end of the day in business a personal scorecard tells me if I’m winning and how I have contributed to the bottom line. It will tell if I’m making money for the business or if I am spending it.
Golf:
When I track all of my strokes in a golf round on my score card, I know where to focus my attention the next time I go practice at the range.
Business:
When I track my individual performance at work, I can see where I need to focus my attention the next day, week, or month in order to be more successful. If you are not tracking strokes at work, how can you improve your long or short game? You must have a personal score card that speaks to you. You need to know how many strokes you are taking to get your work done. Just as you need to know if your tee-shots are hitting the fairway. You need to know if you are hitting your goals or not. Remember, the least amount of strokes in golf means you are getting the most out of each stroke. There is the same focus in business….do more with less!
Golf:
A common phrase in golf is you “drive for show and putt for dough.” (Dough is referring to money or cash). This means the winners don’t just hit the ball far, but they also have a refined skill to make the precision shots that are so important to their game.
Business:
In business, you have to know if you are “putting for dough.” You need to know what it is that you do that creates profit for your business. Developing your business acumen and using a scorecard is critical to individuals and organizations that are looking to up their game.
Recently, I had the opportunity to hear Rudolph Giuliani speak about his experience as the Mayor of New York City during the terrorist attacks on September 11, 2001 and what he has been doing since that time. I particularly enjoyed hearing about his experience as a mayor and the lessons he learned and now applies them in his life.
Mr. Giuliani spoke about how he was able to reduce the crime rate in New York City. Mr. Giuliani said, “Tracking and finding the areas that need improvement is the first step.” He implemented a system for tracking where, what time, and what type of crimes were occurring in the city. Using this data he was able to identify the areas where more law enforcement was needed and know what time of the day demanded the largest number of law enforcement personnel in the city. Through having the right number of law enforcement personnel in the right areas, at the right time, he was able to reduce the crime rate in New York City by 60-70%. New York City is now considered to be one of the safest large cities in the United States.
Mr. Giuliani then spoke about how he was able to decrease the number of people in NYC on welfare. He began by looking at how the case workers were being compensated for their work. He found the case workers for many years were being paid according to the number of welfare clients they had. Therefore, it was more lucrative for the case workers to have people remain on welfare. He decided to make a change and pay based on the number of jobs the case worker helped find for their welfare clients. Through this change, in a span of 4 years, the number of people on welfare decreased from 1.1 million to 550,000. A decrease of 50%! This improvement in saving the tax payers tens of millions of dollars.
Many times businesses “leave” money on the table because they are working ineffectively, like the New York City was with law enforcement, by not knowing where their people should be and when they should be there. Often they are scared to make some of the simple changes because they have been working the same way for so long, just like the case workers in NYC who were being paid and incentivized to keep their clients on welfare. What if your employees tracked the information that made them successful? What if they not only tracked the information, but understood and used the information as feedback to identify what they could change to be more successful? What if your employees were compensated, motivated, and/or driven to do those things that would add to the bottom line profits of the business? What would be the increase in profits? What would be the decrease in costs and spending?
Bottom Line Leadership is specifically designed to address these questions. It is created to have immediate and long-term positive influence on the bottom line profits of your business. It will increase motivation in your employees by helping them answer the question, “What is it that I do, what do I get paid for?” It will offer the leadership in your organization a better understanding and utilization of key fundamental leadership skills to drive the changes. This program is a “game changing” business solution and for some companies an overall intervention. It has been so successful in providing a Return on Investment that it is guaranteed to pay for itself by the time the program is done. You truly have nothing to lose!
Of those people who work an average of 45 hours per week, approximately 17 hours of their week is considered unproductive. It’s not just one nation or geographical area, but this occurs globally. The Personal Productivity Challenge conducted by Microsoft in 2005 sampled over 38,000 people in 200 countries, in 29 languages about their productivity. The study was based on 18 statements about their working environment and has some unsettling findings.
• People work an average of 45 hours a week; they consider about 17 of those hours to be unproductive.
• More than half the participants, 55 percent, said they relate their productivity directly to their software.
• People spend 5.6 hours each week in meetings; 69 percent feel meetings aren’t productive.
• Only 34 percent said they are using proven scheduling tools and techniques to help them gain more free time and balance in their lives. Likewise, 60 percent said they don’t have work-life balance, and being unproductive contributes to this feeling.
• Women had an average productivity score of 72 percent, compared with 71 percent for men.
• The most common productivity pitfalls are unclear objectives, lack of team communication and ineffective meetings — chosen by 32 percent of respondents overall — followed by unclear priorities at 31 percent and procrastination at 29 percent.
(Source: Microsoft Personal Productivity Challenge)
If you are responsible for Profit & Loss, top line growth, cost management, or higher productivity, this study should have your attention. What type of impact would it have on your organization if you could reclaim the 38% of vanishing productivity? Most organizations would be able to increase profits, drive down costs, and simply get more done with existing fixed costs and resources. Surprisingly, organizations can do this by implementing the right tools and processes that:
• Clarify and communicate goals of the organization in a way that is relevant to each individual. This requires commitment, results based leadership and is the responsibility of leaders, managers, and supervisors.
• Links the contribution of employees to organizational goals and helps them see why they matter to the organization.
• Use communication, feedback and coaching to build motivation and commitment all while helping employee see how meaningful and engaging the drive for increased profits and productivity can be.
Develop your people to be more productive and performance focused.
Many organizations today are finding that they don’t have the right talent or enough talent in their organizations to be successful. If you have experienced this, you know it is frustrating, challenging, and can drain energy and emotion in trying to execute daily business responsibilities.
This past week, there was an article in the Wall Street Journal by Joe Light titled: Leadership Training Gains Urgency Amid Stronger Economy. In the article, Mr. Light discusses how many organizations have cut spending on leadership development initiatives over the past two years during the economic downturn. Now that the economy is starting to recover, these organizations are worried they will experience the exodus of baby boomers and retirees as their investment portfolios start to recover. Many organizations are finding they simply don’t have the leadership pipeline within the organization to fill these leadership roles as companies shift towards a growth focus. This scenario leaves any organization vulnerable to the competition. Add to that the severity of the economic downfall and it only compounds the challenges further.
For individuals who work in the learning and development industry, this news and information is nothing new. For many other individuals this may be a shocking surprise. Organizations need to spend more money to develop talent to drive the business. Remember, half of your assets do not show up on the balance sheet – your people. Organizations spend thousands of dollars on computers, specialized software, mobile phones, and office space. Why not spend a few hundred dollars developing your people to maximize performance and drive bottom line results. If you have not already done so, think plan, and act to develop your high-potential leaders.
I believe there is a correlation between employee happiness, customer satisfaction, and increased profit margin. We all know in order for a company to stay in business it must produce profits. Too often though, the focus is centered around profits and not enough on the drivers of profits, the employees. Employees tend to treat the customers, whether internal or external, to the extent to which they are satisfied and happy with their current position. The question becomes how does a leader create enthusiasm and ensure job satisfaction for their team members.
Most satisfied employees feel empowered. This means they must have the tools, support, training and ability to make decisions. In addition, a leader needs to become more of a coach than a “teller” or dictator. Coaching creates an atmosphere of collaboration, trust, and confidence, where constructive and sincere feedback is accepted. Remember, “The worst feedback is no feedback”.
Employees need to understand how their job function contributes to the bottom line of the organization. Employees will tend to work harder if they feel like their work is meaningful and adds value. My first job in high school was at a dry cleaner. I staffed the front counter taking in clothes, entering the information into the system and creating an invoice for the customer. The job was not exciting and every day I wished for the fewest customers possible. When a customer came in I would get the order entered as fast as I could and get back to doing nothing but wait for the next customer. Looking back, I imagine that not everything was entered properly and those mistakes, although small, cost the company some profits.
I wonder if it would have been different if the manager took some time to explain how my work added value to the company through something simple like a scorecard. What if we created a scorecard review of my key functions so I could see the importance of the work I was doing. Even the “front counter” employees need to understand how important the work is that they are doing.
If employees are happy, customers are happy. When customers are happy, they come back and tell others of their experience. Repeat business and referrals equal greater profit. Sometimes we need to step back and look at our own performance. Are we focusing solely on the profit and forgetting about the people driving the profit? Are we creating an atmosphere where employees are coached or are we a dictator? Do the employees know how important their job function is? Do the employees feel empowered and find their work meaningful? Are we tracking the important functions that help build profit? We need to look at these questions often as we lead for greater profit.
The Value of You We all like to see results. Whether it is in the work we do, our bank account, or other personal activities, results make us feel good. The life of Warren Buffett is a great story about leadership that gets results. He spent decades mastering the financial industry and understanding how to get results. Regardless of how you feel about his approach, philosophy, or business style you cannot argue with the effectiveness and success he and his organization has had. In 2008 Warren Buffets net worth was estimated at $62 billion dollars. Those results were achieve by a lot of focus on the bottom line.
So how does Warren Buffett’s success apply to you? In November 2009, Warren Buffett and Bill Gates participated in a Town Hall meeting at Columbia University. During this event the following question was posed by a student:
Student Question: “Mr. Buffett, Mr. Gates, thank you for being here today. My name is Justin, I’m a second-year MBA, as I get ready to graduate, I was wondering, what’s the one thing that your MBA didn’t prepare you for when you got out into the real world?”
Warren Buffett Response: “Well, I was — it prepared me very well, not the whole degree, but specific professors prepared me very well for what I wanted to go into. I knew I was interested in investing, like I say, from the time I was six or seven years of age. So I was lucky that I found what turned me on early on. And I had these two marvelous professors here at Columbia that just being around — I had read all the stuff they had written. So it wasn’t I was acquiring lots of incremental knowledge but I was getting inspired. They were terrific for me. They treated me like a son. They would take me out to dinner. Ben Graham did the same thing for me. So it gave me confidence in myself. It just propelled me into a field I already love with a terrific tailwind from these professors that believed in me. [APPLAUSE] But let me add one point because — to the MBA situation. Right now, I would pay $100,000 for 10% of the future earnings of any of you. So anybody that wants to see me after this is over — [LAUGHTER] [APPLAUSE] If that’s true, you are a million-dollar asset right now, right, if 10% of you is worth 100,000? You could improve — many of you, and I certainly could have when I got out, just in terms of learning communication skills. You know, it’s not something that is taught. I actually went to a Dale Carnegie course later on in terms of public speaking. But if you improve your value 50% by having better communication skills, that’s another $500,000 in terms of capital value. See me after the class and I’ll pay you 150-thousand.”
Monetary Value of Learning and Communication
This matters because it illustrates the importance of learning and effective communication. As individuals, it is important to develop ourselves. Whether you get an industry trade degree, look at going through a mini MBA program, or complete a Masters Degree at Columbia University, ongoing development of yourself is important to you, your future success, and ultimately your net worth. Investment in learning will pay huge dividends. If good communication skills are worth an additional $50,000 to Warren Buffet, it’s worth far more to you individually.
Heavily Invested
Ask yourself this question. What would an investor ask you at the annual shareholders of YOU meeting? At a high level, you might hear questions such as:
- Do you understand what it takes for you (and your organization) to win today?
- Do you understand where and how we can increase profit margins?
- Are you cutting operational expense to increase profit margins?
- How can you create distance or differentiation from the competition?
- Is the organization focusing on what matters?
If you can answer those questions, you are doing great. If not, look to refocus your efforts. Educate or develop yourself to the point where you can answer them. You are heavily invested in yourself so what do you want your future earnings look like? Are you a million-dollar person? It’s hard to argue against hard results.
Did you pick up your new iPhone this week? Unless you slept on the street for a couple of days, chances are you will need to wait until supply balances out with demand. Isn’t it fascinating that people take time off work and sleep on the ground outside a store just to obtain a $200 device? Why do people put forth so much effort for so little?
It’s ironic that people sacrifice time and wages, lose sleep, and exert a significant amount of physical effort to obtain a unique possession. People are willing to spend money, buy “apps” (applications), and spend large amounts of time to become experts on such devices. Yet we rarely see this type of passion, energy, and motivation in the workplace to drive results and increase profits. Isn’t the time we spend at work more important and valuable?
Dr. George Odiorne, is a well known management expert known for his concept “Management By Objectives.” What if we spin this concept slightly and implement “Management By Motivation.” What if you create the conditions for motivation in your organization. Like a new gadget, toy, or phone, discover what stimulates a behavior change in people at work. Hint: Everyone is a little different. Organization, productivity, and improvement in profits will increase when individuals discover what excites them. If people get excited and involved in their work like it is the latest and greatest gadget phone, organizations will find it truly amazing as to how they can flourish. There is no doubt that excitement and involvement will make a huge impact on the bottom line of any organization.
As I write this article, I stare at my new phone (the latest and greatest) in a box, ready to be turned on. However, I feel enough motivation in my work that writing this content offers more value to me, my team, and my organization than heading to the break room to play with a new gadget. Are your people motivated to work or motivated to head to the break room and play? Let’s get our people excited and engaged to the goals and objectives that benefits everyone.
“Pleasure in the job puts perfection in the work.”
-Aristotle
Every one of us likes to see results; whether it’s in the work we do, our investment portfolio, or other activities, good results make us want to celebrate success. Bill Gates has been consistently ranked as one of the world’s wealthiest men. It’s hard to argue with his track record in business or philanthropy. Regardless of his approach, philosophy, or business style you can’t argue with the effectiveness and success he and his organizations have had.
At a recent Town Hall forum for MBA program students at Columbia University, a Masters student asked Bill Gates the following question:
Student Question: My name is Erica and I am a second-year student. My question is for Mr. Gates. What is the most important thing you do every day?
Bill Gates Answer: Well, I do a lot of variety. I think reading a lot, you know, and continuing to learn. I’m in a lot of new areas in the Foundation, education, health. And I love reading a lot. So I think, you know, arming myself with that knowledge and sitting down with people who live the topic and brainstorming with them, that’s what helps me back the right people and make sure I know what’s going on. So I guess I’d say learning is what is the key thing.
“Arming” yourself and your employees with knowledge is so important. What would organizations look like if we “armed” people to be results based leaders who understand how to increase profit and drive bottom line results? This can be done, by exploring and discovering what really matters and how to properly measure results. I’m not talking about more reports, more charts, more graphs, to bore people with. I’m talking about engaging individuals to measure and do it in a way that speaks to them as individuals. It is about how I fit and why I matter.
Whether you’re looking to drive key results of your business or looking to simply educate employees on finance for non financial managers, arming your people with knowledge to be prepared for battle will ensure more focus around winning as an organization. It’s hard to argue with results.
Me: I noticed your leaderboard on the wall; it looks interesting. It appears to be tracking certain success factors and percentages. Do you get rewarded when you hit certain levels of performance? The reason I ask is I work for an organization where we use effective management, measurements, and scorecards to drive bottom line profitability.
Many times businesses “leave” money on the table because they are working ineffectively, like the New York City was with law enforcement, by not knowing where their people should be and when they should be there. Often they are scared to make some of the simple changes because they have been working the same way for so long, just like the case workers in NYC who were being paid and incentivized to keep their clients on welfare. What if your employees tracked the information that made them successful? What if they not only tracked the information, but understood and used the information as feedback to identify what they could change to be more successful? What if your employees were compensated, motivated, and/or driven to do those things that would add to the bottom line profits of the business? What would be the 
If you are responsible for Profit & Loss, top line growth, cost management, or higher productivity, this study should have your attention. What type of impact would it have on your organization if you could reclaim the 38% of vanishing productivity? Most organizations would be able to 
This past week, there was an article in the Wall Street Journal by Joe Light titled: 
I wonder if it would have been different if the manager took some time to explain how my work added value to the company through something simple like a 
As I write this article, I stare at my new phone (the latest and greatest) in a box, ready to be turned on. However, I feel enough motivation in my work that writing this content offers more value to me, my team, and my organization than heading to the break room to play with a new gadget. Are your people motivated to work or motivated to head to the break room and play? Let’s get our people excited and engaged to the goals and objectives that benefits everyone. 
“Arming” yourself and your employees with knowledge is so important. What would organizations look like if we “armed” people to be 
