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    In this article – the last of a four part series – author, management consultant and Balanced Scorecard expert Paul Niven discusses the need for a Learning and Growth Perspective in a Balanced Scorecard. The other three parts focus on the Financial, Customer and Internal Process perspectives.

    The author begins by focusing on the need for a Learning and Growth Perspective. Organizations that seek to create a culture of performance management typically wish to create flawless processes, fulfill customer expectations, and create value for financial stakeholders. To achieve these goals, organizations need a strong foundation. People, the author argues, provide this foundation. The knowledge and talents of people are the intangibles that account for upward of 80 per cent of value creation in modern organizations. In the ultimate analysis, committed and capable people dictate the success or failure of an organization.

    The author then proceeds to examine the three focus areas for developing measures under the Learning and Growth perspective. The three areas are 1) Human Capital, 2) Information Capital, and 3) Organizational Capital. Together, they bring into focus an organization’s skills, knowledge, the collective capability to leverage information, and the ability to put heart and mind into the work.

    When companies monitor these three areas of capital under the Learning and Growth perspective, they will build a foundation for excellence in performance, ensuring success today and tomorrow.  

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    In this article – the third of a four part series – author, management consultant and Balanced Scorecard expert Paul Niven discusses the need for an Internal Process Perspective in a Balanced Scorecard. The other three parts focus on the Financial, Customer and Learning and Growth perspectives.

    The author begins by pointing out that, with the Internal Process perspective, the focus of performance management shifts from the “what” of value creation to the “how” of value creation. Specifically, the Internal Process perspective describes how an organization will achieve outcomes envisioned in the Customer and Financial perspectives.

    The author points out that the Internal Process perspective tends to generate the highest number of performance measures because every organization relies on numerous processes. Hence, the selection of Internal Process measures is critical for putting together elements of strategy into a unified whole.

    Paul Niven then discusses a framework of four process ‘clusters’ that organizations typically employ to narrow down measures in the Internal Process perspective to a manageable number. The four clusters are Operations Management, Customer Management, Innovation, and Regulatory and Social. 

    When companies identify and monitor measures in these four clusters, they ensure that Internal Processes actually result in satisfied and loyal customers and create value for shareholders. 

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    In this article – the second of a four part series – author, management consultant and Balanced Scorecard expert Paul Niven discusses the need for a Customer Perspective in a Balanced Scorecard. “The remaining two parts focus on the Internal Process, and Learning and Growth perspectives.” 

    The author begins by discussing the explosion in the options available for a consumer’s choice. A century and more ago, producers of goods and services enjoyed great power over customers who had extremely limited choices in the market. Today, the scenario has reversed, with customers exerting far greater power in the purchase transaction. Technologies like the Internet increase customer knowledge and insight and deliver greater bargaining power to customers. This makes it absolutely vital for companies to have a well-defined Customer Perspective.

    The author then moves to explain the three questions companies must answer when developing a Customer Perspective. These questions are: 1) Who are your customers?, 2) What do those customers expect or demand from you?, and 3) What is your value proposition in serving your customers?

    Answers to these questions help companies understand the target segments, the aspects that motivate customers, and decide whether they will pursue one of the three traditional value propositions of product leadership or customer intimacy or operational excellence. Here, the author advises that companies need to offer all three – innovation, outstanding customer care and flawless execution – because of today’s hyper-competitive environment. Only then can companies meet customer expectations and succeed at performance management that translates into leadership in the marketplace and customer minds.  

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    In this article – the first of a four part series – author, management consultant and Balanced Scorecard expert Paul Niven discusses the need for a Financial Perspective in a Balanced Scorecard. The other three parts focus on the Customer, Internal Process and Learning and Growth perspectives.

    Typically, the mission and vision statements of organizations do not refer to their financial aspirations. However, companies need to have a Financial Perspective so that they can answer shareholders who require a return on their investment.

    Companies must ensure that a focus on customers also leads to improved financial results. Financial performance also enables investment in people, processes and technology so that customers can be served successfully.

    So, how do companies know if they are performing well financially? The Financial perspective of the Balanced Scorecard gauges financial success from the perspective of a company’s shareholders and gives the company the tools to track success over time.

    The author then provides a look inside the Financial Perspective, highlighting the critical elements that companies focus on. The foremost measure is value created for shareholders. Performance management focused on value creation for stakeholders leads to measures like revenue growth, maximizing productivity, lowering costs and asset utilization. In essence, the Financial Perspective focuses on objectives and measures relating to a company’s effectiveness in delivering shareholder value. Here, the author cautions management that they must take a balanced view of all the objectives and measures, even if they are competing measures. Only then can companies succeed at performance management, create the value shareholders demand, focus on customers, execute their strategy and achieve their vision.  

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    When it comes to enterprise performance management and improving organisational performance, organisations have a bewildering array of approaches, frameworks, methodologies and models to choose from. Two of the most popular approaches are the Balanced Scorecard and the EFQM Excellence Model, which was created by the European Foundation for Quality Management.

    This resource is a case study of Inland Revenue, an experienced user of the EFQM Excellence Model, and was created when the Balanced Scorecard was introduced in the organisation.

    The purpose of the research was to examine how EFQM and Balanced Scorecard can be used together to enhance organisational performance and delivery. The resource forms one of the first major practical researches into the issues around the uses of both models. As part of the research, four big companies were studied – Siemens Communications, Swedish Customs, Northern Ireland Electricity and Royal Sun Alliance. These companies are all noted users of excellence models and the Balanced Scorecard.

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    This resource is a case study of Inland Revenue, an experienced user of the EFQM Excellence Model, and was created when the Balanced Scorecard was introduced in the organisation.

    The Part 1 of this 3 series article looked at the literature on the use of both models and the limited literature on combined use. Part 2 shows how internal research with senior directors and the department’s quality community was then undertaken to form a benchmark for any recommendations. The main research was conducted with four comparator organisations who are all noted users of excellence models and the Balanced Scorecard. Complementary research was also undertaken, along with interviews with a number of leading quality professionals and academics.

    Part 2 tell us how the organisations integrated the use of EFQM and Balanced Scorecard in the strategic management process, making them an essential part of the planning cycle.

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    The paper demonstrates how EFQM and Balanced Scorecard models can be used together in a manner that maximises the strengths and minimises the weaknesses in the use of each. The paper also identifies critical success factors and the kind of broader strategic management frameworks necessary for successful use of the EFQM Excellence Model and Balanced Scorecard.

    The final part of the series concludes by suggesting that the best practice is to use the models in a strategic management process based on solid Plan, Do Check, Act principles actively managing the organisation.

    A number of critical success factors common to each of the comparator organisations were identified like top team commitment, corporate problem solving, learn and do mindset, and partnering. Organisations seeking to improve long-term performance capability and delivery need to complement the use of EFQM/BSC with appropriate strategic development processes and agreed corporate problem solving approaches.

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    Focused measurement of performance in the right areas plays a big role in successful performance management. However, issues like data overload, a misguided focus on routine variation, and the lack of an overarching framework that connects people, departments and operating units undermine performance measurement and performance management.

    This resource, a case study, describes how the Automobile Association of the UK successfully tackled many of these issues and went on to set a new industry benchmark and provides its customers with the highest level of satisfaction of any major provider, according to the JD Power’s UK Roadside Assistance Study in 1999, involving 25,000 drivers.

    The authors begin the case with the introduction of Statistical Process Control (SPC) in the Association to interpret management information. While doing so, the Association tweaked the concept to keep it staff-friendly. A successful pilot attempt encouraged the Association to extend the SPC across the organisation.

    The case then provides an in-depth view of how SPC is used by the Association to handle data overload in a simple yet powerful manner. The tools, built around key performance indicators, are used to separate events requiring special attention (signals) from the normal everyday fluctuations (noises). Detecting and separating the signals from the noise enables the more efficient, effective and economic use of resources.  

    The article also throws light on the emphasis placed on employee buy-in, training, rollout and cascading of the SPC methods from the boardroom to the point of service delivery. Furthermore, it also discusses the focus that was maintained on ensuring harmony between measurement according to SPC and the organisation’s culture.

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    The article traces the origins and development of personnel administration. Frederick Taylor’s principles of scientific management dictated the way jobs and work were defined and managed. Later, companies began to believe that a concern for employee welfare would translate into increased worker efficiency. The quality management movement carried forward this philosophy, by recognizing the importance of frontline workers in quality and consumer service.

    In the 1990s, reengineering opened the doors for workers to play a broader role at various levels and emerged as a new work paradigm. New practices such as downsizing and delayering emerged. Organizations were also experimenting with the management of people. Ideas like participative management, empowerment, autonomous work teams or self-managed teams, and job enlargement were some of the key developments within the new paradigm. Technology also had a huge impact on the way in which organizations were able to manage. Together, these factors revolutionized the thinking that governs work planning and management.   

    At this point, research was proving that companies taking advantage of what is known about managing people were realizing significant improvements in organizational performance. Much of this research focused on the growing importance of intellectual capital, the impact of new work management practices and the contribution of HR policies and practices. The article then proceeds to examine the lessons emerging from such research and shows how people can be an organization’s source of competitive advantage. It is in this area that the article envisages a new role for the HR function.  

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