In our first article we covered establishing a set of core business processes and hierarchical process maps. Then we discussed creating a dashboard using metrics tied to process performance. Now we look at translating them to metrics for measuring individual performance using a balanced scorecard.
The term “balanced scorecard” originated in the early 1990s by Robert Kaplan and David Norton. They sought to expand the focus on financial results to a balanced focus on both the financial results and the factors that influence it, including process, employee development, and customer satisfaction. Balanced scorecards have evolved to include any set of metrics aimed at summarizing organizational or individual performance in a way that takes a balanced view of desired results and the key inputs to those results.
As we dicussed in the second article of this series, business leaders should create their dashboard using metrics that represent a balanced view of operations. This often involves establishing metrics to measure financial results, customer satisfaction, and employee satisfaction. Other areas of performance such as efficiency may also be incorporated.
In implementing a balanced scorecard to measure performance of teams or individuals, a similar perspective is required. In fact the best place to start is by translating group metrics from a dashboard to apply to individuals. Especially when assessing employees, it is not wise to use metrics that focus on one or two aspects of performance to the exclusion of employees. Using a balanced approach benefits the business overall as well as the individual employees.
For instance, suppose we are creating a performance measurement system for technical support agents. At the department level, leaders want to know how long calls take, because that is directly related to costs, and what the resolution rate is. They should also be concerned about customer satisfaction. These same metrics in combination can be used to represent the whole picture in terms of individual support agent performance.
We wouldn’t want an agent to accomplish a low call handle time by hanging up on customers, and that would be reflected in customer satisfaction scores. We wouldn’t want an agent to have appropriate call times and leave customers feeling they received proper assistance, only to find out they had to call back the next day because their problem wasn’t solved. That would be revealed in the resolution rate metric. Thus the metrics balance each other.
For a sales agent, scorecard metrics might include number of calls handled per day, conversion rate (orders per call) and average order size (dollars per order). These metrics combined produce the overall metric of gross sales, so of course a measure of customer satisfaction is also needed to balance the financial component. If a sales agent also manages others or if cooperation by agents on a team is required, then a measure of employee satisfaction is also important.
In the next article we will tie our dashboard metrics to project selection for a Six Sigma project management dashboard.