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Balanced Scorecard for Manufacturing—Focusing on Organizational Capacity to Drive Results

In my last blog utilizing the Balanced Scorecard (BSC) methodology for manufacturing, I focused on the external perspective of Customers. Specifically, I described how companies can use target marketing to acquire and retain customers and thereby, drive results. The next step in Balanced Scorecard alignment involves initiatives in the internally focused perspective. In particular, Organizational Capacity, or Learning and Growth, drives customer support while delivering quality products and services by the employees of your organization.

Businessman on the start line and ready to run

The Satisfaction of Both Customer and Employee

A key concept in business and leadership training is that your employees’ satisfaction drives customer satisfaction. Without employee satisfaction it is almost impossible to satisfy your customers and affect the customer experience. According to a recent report prepared by Forrester Research on the customer experience, those organizations that focus on customer experience obtain consistently higher revenues on the S&P 500.

Below you will notice some metric examples used by companies to drive Learning and Growth.

Perspective Focus Metric Examples
Financial Stewardship (External)
  • Revenue
  • Expenses
  • Number of orders / $ per order
  • Product profitability
  • Budget comparison
Customer / Stakeholder Satisfaction (External)
  • Customer acquisition / retention
  • Customer complaints / returns
  • Survey feedback
Internal Business Process Efficacy (Internal)
  • First pass yield (effectiveness)
  • Throughput (efficiency)
  • Data quality
  • IT projects
Organizational Capacity (Employee) Learning and Growth (Internal)
  • Training rollout
  • Communications
  • Employee satisfaction survey

 

Such metrics are too high level for most companies to wrap their heads around and to determine initiatives to support the perspective. Then, how do companies tackle this perspective? To begin, companies must ask themselves the following:

  • What are our organization’s plans for acquiring and retaining customers?
  • How does this impact our financial model?

Once those answers are defined, you can begin determining what will be needed to drive internally focused perspectives.

Learning and Growth Initiatives

If your company wants to increase revenues and profits while maintaining the Customer Experience, then consider these as your next initiatives for Learning and Growth:

  1. Perform a skill set needs analysis across the organization including executive and managerial levels.
  2. Perform a skill set inventory and gap analysis of existing employees.
  3. Develop training and hiring plan to fill gaps.
  4. Create a reward system to encourage and reward specific customer service behaviors that drive excellence in customer experience as well as employee satisfaction.
  5. Ensure your employees’ skills are marketable. Based on my experience, making sure your employees know they are being trained with skills where they can get a job anywhere makes them want to stay put. At one company I was with, there was less than 1% turnover in 5 years using this approach.
  6. Consistently conduct employee performance evaluations to stay in contact with employees. Focus on learning and growth for the employees as a part of the plan to raise skill levels to drive results.
  7. Create a communications plan for any training rollout plans, and encourage the culture of employee learning and growth to drive profitable revenues and positive customer experience.

In my next blog, I will delve into how the Internal Business Systems perspective drives results.

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