Balanced Scorecard applied to Services Providers

Your journey to Operational Excellence starts with the DRIVE concept.  In this example we will explore the use of the Balanced Scorecard in an organisation that provides services, either ‘business to business’ (B2B) or ‘business to consumer’ (B2C).  What’s important in either option – indeed in many applications of the scorecard – is that the centre goal is to align the organisation behind providing the best services at the level the company wishes to position itself in the market place.

The service industry can be very challenging, because what the consumer ‘buys’ is very often only delivered by a few members of staff in the front line, however, in reality the whole organisation is needed to actually create and deliver the service.  In the next few minutes we will explore the concept of the balanced scorecard and how taking a balanced view of your organisation can deliver sustainable improvement in your performance and ensure that service doesn’t just rest on the shoulders of the driver, engineer or call centre operator, but represents the best efforts of all staff.

Let’s first start by understanding the components that make up the DRIVE concept

• D covers the Direction your service organisation is taking or needs to take
• R is the financial resources that you need to finance your organisation
• I is about focusing on Impressing your customers past, present and future
• V covers all of the processes you use to delivery your services to your customers
• And finally E, the Evolution Engine that helps understand the impact of passion, performance and people in your organisation

In previous videos we have covered a more in depth explanation of the DRIVE concept.  Now let’s consider a simple, practical application to a service organisation.

To do this, visualise a pyramid containing each of the elements of DRIVE stacked as shown.  We have already discussed that the best outcome is where strategy is driven down through the elements and performance is DRIVEN up.

This pyramid will be a visual map that can become our template for defining the areas of the organisation to be analysed and monitored. It will also highlight themes that need to be addressed in order to create significant improvements.

Let us consider each level of the pyramid in a bit more detail.  The diagram is simplified for an organisation, showing 12 areas to be reviewed.

The process starts with the goal of the organisation, which tends to be related to increasing financial wealth.  Ultimately this is the goal that the entire organisation will be aligned behind.

Next are the financial resource measures.  Measurement around effective financial management and return on investment in capital equipment to enhance your services will be critical in maximising your service levels.

The following layer considers what the customer values in the organisation’s offering.  This is a very key area for a service organisation, on the basis that the reason a customer will engage with you is because they either don’t have the skills or don’t have the time to perform the task themselves.  Your organisation is basically freeing them up to concentrate on their core business and therefore they will be looking at your offer as a way of adding value to their own business.  The range of services that you provide and the price you charge for them will be of critical importance to the customer.  Your reputation and image in the market place will also be key as the customer looks effectively for a business partner.  Finally, customer relationship is about how you perform, both when things are going well and not so well.

Next is the Vehicle of your organisation, and the way in which you deliver your services to the customer.  Again three areas need to be considered: 1) those processes directly involved in delivering services to the customer, 2) all those departments, processes and services that, whilst not directly involved with providing the service, play a very important part of the overall care provided, and 3) the management of safety, quality and environment throughout the organisation.

The final part of the pyramid is the part that will deliver the biggest element of change, again split into three areas of consideration.  First is passion, which covers the level of morale in the organisation and the effectiveness of the communication, both are inherently linked.  Next is the pipeline, a funnel to channel innovation through from concept to completion, which may look to contain ideas in terms of future services, efficiency improvements or capital investment.  What is of imperative importance is the continuous flow of ideas and considering the latest technology in your field that will enhance your service offering to the customer.  The final area for review is the skills capability of every staff individual, from temporary staff to the CEO.  A detailed skills matrix considering technical and soft skills, industry and local knowledge will highlight skills gaps that collectively could be having a significant impact on the effectiveness of your services.

This template will now enable a process of reviewing and monitoring a diverse set of measures that collective will highlight themes running through the Organisation which if managed effectively will DRIVE the Quality of the services being provided.

Having considered the detail of the DRIVE concept and a simplistic application, let’s reflect on what the benefits would be to taking a DRIVE approach.

If you take decisions purely on financial information, you are reacting to past events.  In an industry where you are providing a service to your customer, reacting too late can lose you a contract very quickly.

Because you business is delivering services, rather than physically creating something, it is sometimes very difficult to judge the effectiveness and value of the service being provided.  By making sure that the business is measured across a number of areas you will quickly identify positive or negative trends.

The key to success with the DRIVE concept is to understand what you customer demands from you and how well your processes and people can meet that need.  Aligning your entire organisation behind your goal and the customer’s needs will start your journey toward business excellence and becoming the leading service provider in your field.

Learn more about the Balanced Scorecard on the Inspired Change website.

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