S1 E17: The Balanced Scorecard: A Game-Changing Tool for Building Strong Team Culture and Boosting Team Productivity
Are you tired of feeling like your team is constantly playing catch-up, with priorities constantly shifting and productivity suffering?
Look no further than The Balanced Scorecard, a revolutionary tool for building a strong team culture and boosting productivity.
Join us on our podcast as we dive deep into the ins and outs of this game-changing tool, and how it can help your team stay focused, aligned, and motivated towards achieving your goals. With expert insights and real-world examples, you'll be able to take the first steps towards transforming your team's productivity and success.
Tune in now and start building a winning team culture!
In today's episode I'll be exploring:
What is the balanced scorecard?
The importance of having a balanced scorecard.
What can go wrong when we don't use a balance scorecard?
What are the four perspectives that need to be considered in a balanced scorecard?
The benefits of a balanced scorecard to your organisation
Organisations that use a balanced scorecard
How Marriott, Ford and the NHS all implemented their balanced scorecard
How to implement a balanced scorecard in your company.
Next steps
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SUMMARY KEYWORDS
organisation, balanced scorecard, goals, strategy, nhs, performance, team, aligned, scorecard, clear, understand, company, employees, helps, people, brilliant, culture, business, metric, lead
You're listening to Knowing me, Knowing you, the podcast that explores the art and science of creating, developing and retaining brilliant teams. I'm your host, Emma Clayton. Join me weekly for practical advice, simple steps, and inspirational ideas as we discuss topics that make a difference to leaders and their teams. I'll be sharing all the tools and having conversations that help you to build and sustain by performing. Welcome to the Knowing me Knowing you podcast.
Emma Clayton 00:47
Welcome to this podcast episode that will take your organisational effectiveness and culture to the next level. Are you tired of feeling like your team is working hard, but you're just not seeing the results that you want? Maybe you're struggling to align your team's goals with your organisation's overall vision and strategy. We'll look no further than the balanced scorecard. In this podcast, I will take you through the power of the balanced scorecard and how it can transform team performance and drive your organisational success. This is one of those that is not a sexy subject, but it is a critical component to your success. Without a balanced scorecard. Your teams will be flapping around in the dark, not sure what they're doing, why they're doing it, and who is meant to be accountable or responsible for activities.
And with the right approach, this game-changing tool can help you unlock the full potential of your team and create a culture of excellence. So let me explain what the balanced scorecard does the balanced scorecard fitted when we talk about performance and culture. In the early episodes of how you build a brilliant team, I mentioned you around strategy. Now the strategy is the roadmap for an organisation to achieve its goals. And the balanced scorecard is a brilliant tool that can help you set the strategy and ensure it's implemented and executed. And then it flows down into every single member of your organisation. It outlines all the steps your teams and the individuals need to take to achieve the vision and that strategy. And it is such a powerful overlooked tool. There are so many organisations that do not have a balanced scorecard. It blows my mind how few people do have these. But I've been in organisations that have had this, and it has been crystal clear what every person's role, responsibilities, and accountabilities are. And more importantly, it gives people the motivation to achieve because their bonuses are often dependent on achieving these individual goals that fit into a team goal that fits into the strategic goal.
And as I've already identified, having a clear vision and strategy is crucial for the success of any organisation and for creating a brilliant team. Because it, as I say, helps to ensure all your employees are aligned with the same goals.
You don't get this duplication of effort, this stepping on toes, not, you know, people with sloping shoulders not accountable for their tasks because efforts are directed right towards what has been set out. And that helps with communication and decision-making, and people's motivation. Because when you're clear about your role and responsibility and what your contribution individually as a team as to the organisation creates much greater improved engagement and motivation. And it can inspire your employees and create this real sense of purpose essential to your team members' happiness in the workplace. It just gives them a reason to come to work every day. They have that clarity that motivates them to work towards achieving your organisational goals. Now, this can go very wrong. I've seen this go wrong in many different ways. One common mistake has a strategy that is way too broad or unrealistic.
And it leads to confusion amongst employees and gives a real lack of direction because we're setting a strategy right at the top. That, then, is just totally unrealistic and feasible. When things are not within our reach, or we don't understand how to achieve a very lofty goal, we can become either very demotivated, what's the point, or we all charge ahead. And we don't have that clarity. And then you end up with all of this, you know, jostling for position and roles and wanting to be centre lead of all the activities. The other mistake I see is that we, you know, will create a strategy, but we won't communicate it. And people within the organisation are not aware of it. And so, whilst the exec or leadership team will be aware of the strategy, other employees and teams are not, which can hinder progress. Because, again, it's like an analogy I've given you in a previous podcast, you know, if the general is fighting the war, and he's got all of his troops, and he knows the plan, but they don't, there's going to be a lot of dead bodies on that battlefield. Because if we don't know what the strategy and the tactical rollout of that strategy are, why we're achieving, and going for a goal, how we're going to get there and what the steps are to achieve that, there is no a chance that we're going to succeed. And then also, people might be aware of it, but then it's failing to implement it effectively.
And that's what we're going to talk about today. Now that could be down to a lack of resources, commitment from leadership, or follow through. And it's the follow-through that we'll concentrate and focus on today. Because when we lack a clear vision and strategy, it does lead to that wasted resources and a lack of direction. And employees are not aware of what they're working towards. They become demotivated and feel like what they're doing is not meaningful or impactful.
And it can lead to this lack of accountability or over-accountability, in some cases, because there are no metrics or goals to measure progress against. I've been in companies where I haven't even had any goals set. And so every day, I would wake up thinking, Well, what's coming at me today, because I don't know what my responsibility is against the strategy. And that leads to being completely overwhelmed by all the tasks flung at you, and you're unable to understand which of them is a priority. And so I see a lot of this happening in workplaces up and down, especially in startups and scale-ups where it's all hands on deck. The other thing is we could miss opportunities or make poor decisions because we're not clear on our accountability, which can hinder long-term success. So it's all about the balanced scorecard and how that can help support and mitigate some of those challenges. And for those of you that don't know what a balanced scorecard is, it's a tool that organisations have that aligns their vision and their st, with their goals with the tactical implementation for teams.
And it's a framework that measures progress and evaluates performance against those key metrics and is typically used when planning strategies. I've used these throughout my whole career; when we've been doing product launches, we are one with the managing teams, and it is the map for the business that everybody is measured and sets their focus on. Now, as I say, it's a report, it's a system of management, it can be an Excel spreadsheet, could be a Word document, it comes in all sorts of guises, you can Google for free templates of balanced scorecards, and you'll find lots and lots on the internet.
But it's important to know how you use it in your companies. If you can't, go and get a template and fit your company into it. You need to understand what the balanced scorecard tells you and work out from there. And that's where you need to understand your strategy and then understand the tactical activities within it. So you could even develop your template once you know this. But using this balanced scorecard will help everyone focus and move consistently and cohesively, creating a much more collaborative collegiate way of working. And generally, it will include KPIs, key performance indicators, all the initiatives and the overarching objectives. So it's obvious what each tactic fits into that strategic initiative. And, like I say, This helps people achieve their goals, make better decisions, and stay focused on the important numbers without, you know, overwhelmingly undermining the customer and the employee experience.
So, when you create the scorecard, you must align your company's values, Use vision and mission. Now that's in a separate podcast, which you can go and listen to. But today, we're just focusing on bringing that vision, values and mission into your scorecard. So when you've got all those perspectives together, you'll generally consider putting this into four different categories. The first is the customer perspective. So this is about the value proposition you give your clients; what is the experience? What is the service? What is success? What are those numbers looking like? What are the purchases, the sales, the experience, the engagement, the retention, and the loyalty? What is the value you give to those clients? Focusing on each of those in some metric will help keep your team focused on the most important thing, which is your customers. The second is the business processes perspective. So this is where we look at your company's proper operation and stability.
This is where you ensure that your goods and services meet those clients' expectations. These are all the processes you need operationally to get the services or products out to your clients; what does that need to look like? What are the different aspects that you need to make sure are critical and must be in your balanced scorecard? Then you have your financial perspective. So this is where your strategy enhances the bottom line. This is your profit, loss, gross margins of profitability, head counts, turnovers, retention, all the numbers, how you will implement and execute your strategy financially, and the cost of goods go in there as well. And this is where you start. Many companies will look at financial performance only; it is only one of the four perspectives we should look at in a balanced scorecard.
And then there's learning and growth. So this is all around training your workforce; it's about your employee experience, their engagement, all of your internal surveys, your communications, your engagement, your collaboration; these are the things we need to sustain to maintain that culture. So all of those cultural, experiential, and internal metrics would go in here; it is beneficial to learn how to create that balance scorecard yourself; if your whole team is part of that does design and execution of the BSC, then it really will meet the needs of your business, if you do need help. That is something that you can contact me on at Emma at brilliant teams.org.
And we can talk about how we can support you with designing your balanced scorecard. But you must do this for yourself with external help if you need it. But you need all of your leadership team in that conversation. Because if you can understand the most realistic way to achieve your goals, everybody feels they're part of the business. So you're your chief operation officer, your chief people officer, your chief financial officer, they will all have their perspective to put into this balanced scorecard. And then there will be different teams underneath them, with a higher percentage of delivery against those. So the chief financial officer and their team will have a higher proportion of goals around those financial than the chief people officer, who will have a higher percentage of their goals. And metrics will be around that people's side of the business. And going further and further down, you will break those goals again into further tactical priorities that hit that goal. Now you will have overarching goals. Everybody could be around your values about how you work; you know your mission.
But all need to be measured very smartly. Because when it comes to the end of the year, or appraisals or goal setting at the beginning of the year, it's clear what the proportion of somebody's time, somebody's 40-hour week needs to look like. So they're not all-encompassing on just one goal, but they're spreading their priorities across the goals that have been set that they can influence and shape. So here are some benefits. This is why it's, you know, it's an important critical tool to have in your business, because studies show that companies with a balanced scorecard will outperform those without, so this is a big reason, first of all, your success, but here are some other benefits.
So it improves strategic planning. The balanced scorecard gives an excellent framework for building your strategy. When creating your balanced scorecard. You've got to think about the cause and effect of the relationships, which will help you reach a consensus over interrelated strategic objectives, which means that you can identify all the key enablers of performance in the future in your next year or three years or five years ahead. Generally, balanced scorecards work on a 12-month basis. Your strategy can cover three and five years, but your balanced scorecard is what, immediately in the next 12 months, we can impact. And it's just a structured, logical way to ensure that you've covered all aspects of the company and keep all your objectives in focus. So it is all around supporting and facilitating that strategic direction.
Emma Clayton 15:40
The other benefit is that it goes back to what I was saying earlier in the podcast is better communication of your strategy. So when you're rolling out and communicating your strategy, the balanced scorecard helps everybody understand their role within the organisation and the strategy. And you know how they can help shift the dial personally and gives them a purpose as to why they're coming in for their working week. Now, you can communicate this internally and externally, but generally, balanced scorecards, I believe, work better when the employees understand the strategy. So internal focus, because it helps to engage them.
And it helps all of the stakeholders in the business to review and shift the navigation of the strategy if we can measure in real-time the success or where a market shift has happened, and somebody's goals might change as a result. So it just aligns all departments of the company. And any shift needed is a lot more agile than not having a balanced scorecard. Because it's really clear to say, Well, what comes out and what goes in place of it. So it helps people work together to achieve those high-level goals, but also those daily goals. And it provides employees with a nice navigation for each quarter of the year.
And it helps them to understand their priorities that may not even be in their remit; it's in their peers and their colleagues and other members of the team remit because not all team members will have the same goals or the same proportion of weight on those goals. So it just helps everybody understand, again, going back to know me when you give greater clarity for everybody else's priorities and goals. The third benefit is just around better information management. So this is where you know, this balanced scorecard helps push the organisation; it helps come up with these key performance indicators.
And it just measures what matters. So you see a lot of organisations, and a lot of stuff goes on, which doesn't matter. It doesn't matter. It's not in the balanced scorecard. And again, you can start to judge the requests you get for work, filter out your decision-making, and have more informed decisions around what you should be saying yes and no to. So it helps you manage the workload and your information a lot better. And then it also, as I've already probably covered in the first three, is that an Abels and enhance performance reporting. It just helps you report better, it allows for increased transparency, and how you can meet the requirements of the business. And it helps you come up with meaningful reports and KPIs instead of just noise, which then allows for better alignment and connecting back into those bigger objectives of the company. If you're in a parent company or a franchise, that also helps you to understand how you're part of that franchise or global company connected to the parent company or the global head office company.
So it allows everybody to feel connected right up to the very top. Now, the results of having this are just a way the larger amount of morale, efficiency, and productivity because when we understand these goals, as I've already said, we're motivated and engaged. And actually, here's the nugget in this challenging workplace where we struggle to find talent. The one thing we need to be focusing on is retention, retention, retention. As I've already said, what makes a brilliant team is the performance element of building a brilliant team. A very clear role.
A very clear strategy and very clear responsibilities help retain people. So if you have a high attrition rate in your organisation right now, I would suggest you look to see if you've got a balanced scorecard in a place where people are very clear on what they do daily. What they say yes to, what they say no to because I would bet that the biggest reason that many people are leaving at the moment in this current economic crisis is that they're not clear, they're not aligned to the purpose; they're not aligned to the vision of the organisation, they don't get why they should be slogging every day at work, for what. So I would look at your attrition rates and see if you've got a balanced scorecard because I bet putting this in place will help you to reduce that attrition rate that you've got. Now, I thought it would be really good to look at a couple of examples where some bigger organisations have put a balanced scorecard into their organisation and the results that it created. So we've all heard of Marriott, the hotel chain, the global hotel chain; they introduced a balanced scorecard in the late 1990s, a long time ago. Now, you can imagine that without having this in a great global customer service customer-centric organisation, that would have been carnage. However, their scorecard included those four perspectives financial, customer internal and learning and growth.
And it was able to align its operations with its long-term goals. And they saw that it improved their guest satisfaction scores by 10%. Over those five years, they started to roll it out, leading to increased revenue and profitability; that's a perfect reason to do it. FedEx, again, another global logistics company, you can imagine that a balanced scorecard would be all over; they introduced their balanced scorecard in the early 2000s. And their four perspectives were financial, customer-internal, and, again, learning and development.
And by tracking those key metrics, they were able to improve performance in several areas. So customer satisfaction grew, time delivery grew, and employee engagement. We already know those three factors are critical to business success. If your employees and customers are happy, and you're delivering what you say you will deliver with on-time delivery, you will succeed. And by focusing on the internal process metrics, they reduce the average delivery time by 20%. over that five years, which increased customer satisfaction and revenue. Now closer to home, there is another case study, the NHS put a balanced scorecard in to shape their team performance. And as we know, the NHS is our publicly funded healthcare system for anyone outside the UK. And they implemented the balanced scorecard to improve their performance and their accountability. And that focused on four key perspectives: financial customer internal process, and learning and growth. And their financial perspective focused on sustainability, and financial performance, as you'd expect, and their customer perspective focused on patient experience and satisfaction. And their internal processes look to operational efficiency. Now, they use this to look at how they can align a cumbersome, complicated, multi-level multi-layer matrix within the NHS. And so, they used the balanced scorecard to ensure everybody was on the same page.
And as we started to see these integrated care systems being set up, you've got this devolution of power into the regions. And so everybody must have this equity of success if you like; I know funding is very different. But in terms of outcome, and, you know, what is the purpose of the NHS? So what they did to implement their balanced scorecard framework was just some key steps, which I will run you through now. Because if you are looking to improve or implement a balanced scorecard, you're probably thinking, How do I do this?
So they started the NHS by developing a clear strategy that identified their vision, mission and values. And if you haven't got that in your company, I suggest you go and listen to that podcast episode. And this strategy in the NHS provided the foundation for their balanced scorecard framework, as it does with every other. Then they identified their key performance indicators and KPIs, which aligned with their strategy and goals. And again, that came up with the four perspectives of financial customer internal and learning and growth. And then, they developed a scorecard for every single team, so each team within the NHS was responsible for developing a balanced scorecard aligned with that overall strategy and priorities. This approach ensured that every team performance was aligned with the organisational goals and objectives, which are critical components. So once you've set your direction of travel for the company, you get each of those leaders of those teams to take than what is my contribution in my team to that. And then again, once that team leader within that team understands theirs, they then set as with their team,
Emma Clayton 25:20
that should be a cyclical process that isn't a one-and-done. That is a regular update of regular tracking; there should be some kind of report that goes monthly, probably quarterly to track against that balanced scorecard. And what the NHS then did is looked at how they could monitor that performance using those KPIs. So it would give a clearer picture of tracking the measurement, the results, and how we are doing against the plan. Is it better than a finger in the air? How are we doing? And then you're able to look at continuous improvement? How can you use the balanced scorecard framework to continuously improve performance by looking for areas of improvement? Where are we not meeting targets? Where are we exceeding our targets?
What action plans must we implement to achieve this, so it's a more systematic approach to delivering structure? And as a result, now, obviously, the NHS is in a complicated situation from when they probably introduced the balanced scorecard. And there are lots of external and financial and funding issues. But what it has seen, regardless of what your perspective of the NHS is, right now, as I record this, is they saw improved performance on all four parameters of the scorecard. They saw better alignment. So each of those teams and organisations was better aligned, which allowed them to focus on productivity, instead of, you know, all of that team meeting for a team meeting to understand what someone else is doing and setting out RACI models of responsibility, accountability models, and why are you doing that it was clear from the offset, and that improved their productivity. It also improved their accountability; they could measure and track performance, and everyone was held to account, which we know from previous podcasts.
A major part of the success of a team is being able to be accountable for your goals. And I think the other thing was that it allowed better decision-making. So people could make better decisions based on understanding the priorities and the direction of travel. For the NHS, where are we going? What are we doing? How are we going to get there? And so when health balls came in, which they happen all the time, internally or externally driven, or even competitor drove, which probably isn't the same for NHS, or maybe it is with private companies. Still, you can make decisions quicker because you already have a balanced scorecard. So you can say, well, actually, what is fit for purpose now and what needs to be removed or replaced? So it is such a vital tool. Now, there is one tool that also can help you with the balanced scorecard. And this is looking at the organisational culture survey. Now that is a wider reaching organisational effectiveness. survey tool assessment, if you like, what part of it looks at what you're you know how good you're doing with your mission, your strategic direction, your goals and your vision. And it's from a company called Dennis, and I'm a qualified practitioner.
And so I will ask you some questions that you can answer, yes or no. And that will determine, you know, you can then assess how well you're doing and how much you will need that balanced scorecard. So if I ask you these questions, you can self-assess. So looking at the strategic direction and intent of your organisation? Have you got a long-term purpose and direction set out? Has it been communicated with your teams? Is it everywhere for people to see? Does your strategy help you lead the organisation to change how you do things? How do you compete in the industry? Do you have a clear mission that gives meaning and direction to your work? And is there a clear strategy for the future? So not just the next 12 months, but five years? What what's our big ambition?
When it comes to goals and objectives? Have you got a widespread agreement about your goals? Are your leaders setting goals that are ambitious but still very realistic? Has your leadership clearly stated the objectives they're trying to meet and imparted those to their teams? And are you continue tracking your progress? against those goals as a leadership team and throughout the business. And then lastly, with vision, have you got a shared vision of what your organisation will look like in the future? Where are you heading? What do you want this to be? Do leaders have a long-term viewpoint? Do they share it? Do they talk about it? Do they use it to motivate and inspire? Does your vision create excitement and motivation for your employees? It's okay saying that you want to hit a certain number, a certain metric of financial revenue. But what does that mean for the rest of the organisation?
And can you meet short-term demands without compromising your long-term vision? Now, based on Denison model, you can measure specific characteristics of your culture that drive important business outcomes such as profit growth, sales, growth, customer satisfaction, employee engagement, risk, safety, and quality. And traditionally, these culture surveys have taken a much more behavioural approach. And what I love about the Dennison tool is that it helps you capture the strategic clarity that is so needed. So if that appeals to you, and you're unsure, you can contact me to take that organisational culture survey.
Of this strategy, a balanced scorecard is a part of it takes less than 15 minutes for all of your participants and everyone in your company to complete these 48 standard questions that describe all aspects of your organisational effectiveness, your culture and your performance with tailored recommendations for improvement. So for any information, you can contact me on Emma at brilliant teams.org. Or you can visit www.brilliantteams.org to download a copy of the balanced scorecard. That's it for me. I hope that that's helped. I hope that that has given you some inspiration for how you can create greater alignment, productivity, effectiveness and motivation within your teams. If you've got a high attrition rate and you're asking why you are leaving, and if people say I wasn't clear on my role, then this is something you need to implement in your business. I've loved being with you for another week. I will see you in the next podcast episode. Until then, stay brilliant.
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