Our previous article focussed on how to develop a strategy. So, what can we learn from others in terms of how we deliver the results we are planning to achieve?
In times of seismic change, the greatest learning can be gained. With the Fourth Industrial Revolution (4IR) in sight, the Internet of Things (IoT) introducing breath taking advancement 24/7, Digitisation where data collection, analysis, application (and resale) is key, with Brexit ahead……… now is the time to be absolutely sure you know what is happening both inside and outside your business.
The Balanced Scorecard: (adapted by valuingYOU)
The Balanced Scorecard was developed by Kaplan and Norton in realisation that businesses needed more than a retrospective review of their finances to understand their business performance. The Balanced Scorecard revolutionised performance metrics by introducing future focus components and inclusion of customers, internal business processes, plus an emphasis on people through learning and growth. This enables businesses to track financial performance whilst reviewing their progress in building the capabilities and intangible assets needed for future growth. As a result, businesses can now more accurately predict future performance.
This method of measurement and review starts with a clear vision and strategy. Tip: this should now include brand within its core.
When writing your Strategy, see previous article here: Tip: keep your measures simple. The Balanced Scorecard does just that. Here is a guide how to develop your Key Performance Indicators (KPIs):
How: define your focus for each of the Balanced Scorecard components by answering the question on the left hand side of each “matrix” for each of the following:
1. Objectives: using the SMART acronym (see below), define the strategic objectives that are key to achievement for each of the components
2. Measurements: identify how each of these can be simply and effectively measured. Tip: avoid adding complexity, review and delete ineffective measurements and reporting. Use RAG reporting (see next page)
3. Targets: Tip: Recommend that these are agreed first before measurements are defined
4. Initiatives: agree the key enablers/drivers for each of these initiatives. These may be projects or areas of focus that are needed to drive success
5. Accountable: Tip: add an additional column to provide clarity about who is accountable for each initiative. This may be by role, ideally specific names should be used
Tip: Given the pace of technology, it may also be appropriate to include a component for this or add a Systems to the Internal Business Process component.
Tip: Don’t keep the scorecard results secret or you may as well blindfold your staff! Be sure to communicate them widely, at least monthly. Recognise individual and collective success. Share mitigating actions for the next month and quarter to provide focus and clarity for all to prioritise.
SMART objective setting:
Objectives and goals should be developed and agreed, using the SMART acronym. Each objective should be able to answer the following:
Specific – what specifically is expected of me/us?
Measurable – describe what success looks like?
Achievable – do we/I have the appropriate skills and expertise?
Relevant – how does this help us achieve our vision and goals?
Timely – when does it need to be achieved by?
Here is an example: Define and develop a plan to imbed the business culture required to achieve our vision. This should achieve a 15% increase in employee engagement and customer satisfaction within 24 months.
For both those reporting on and those reviewing progress, a simple and effective way is to use RAG reporting, with the following definitions:
When amber or red are reported – mitigating actions should also be stated. Communication should also include priorities for the next month and quarter to provide clarity.
Gaining commitment and accountability from Executives, Managers and throughout the business requires investment in face to face communication and involvement.
The Line of Sight depicts how this can be achieved. Every member of staff should be able to identify how their objectives contribute to the achievement of their team and Department objectives and ultimately the business vision and customer experience.
This is best achieved by starting with a workshop at Executive level to populate the Balanced Scorecard. Workshops then flow through the reporting line, Senior Managers working with their Executive, then Managers working with their Senior Manager followed by team workshops.
The aim of these workshops is to share and develop commitment to the vision, the scorecard and to identify how collectively and individually everyone in the business contributes to business success.
Accountability through regular progress reviews:
Every person within the business now understands what is expected of them and has agreed clear objectives with their line manager, based on their role, their expertise, their capabilities, their behaviours and how they contribute.
Tip: Objectives must be both task (action) and behaviour. It is behaviours, aligned to the values and culture, that can have the most significant impact on productivity and business wide performance. A development plan is agreed based on skills and behavioural changes identified.
Tip: This is not an (bi) annual activity! Every manager, no matter how busy they are, should be having a 1to1 with each member of staff at least once a month. Why is it that managers are often too busy to invest their time in staff, but always have time to fix things when they go wrong?
Why? Because each manager needs to invest in their most important asset to understand: how each member of staff is progressing; recognise their achievements, remove barriers to progress; identify and agree development; explore and agree focus for next month; flex, adapt, stop existing or introduce a new objective. They should also seek feedback about their own role and style and share the best practice identified in these reviews.
Tip: Be sure to write up the feedback given and received plus actions agreed. Refer to these when starting your next progress meeting.