Business Development Metrics

One of the hallmarks of leading-edge organizations - be they public or private - has been the successful application of performance measurement to gain insight into, and make judgments about, the organization and the effectiveness and efficiency of its programs, processes, and people. However, leading organizations do not stop at the gathering and analysis of performance data. Rather, these organizations use performance to drive improvements and successfully translate strategy into action. In other words, they use performance measurement for managing their organizations.
Organizations that distinguish themselves usually:

• Have agreed-upon measures that managers understand
• Balance financial and non-financial measurements of performance
• Link strategic measures to operational ones
• Update their “scorecard” regularly; and
• Clearly communicate measures and progress to all employees.

A major measurement system that has gained in importance over the past few years is the Balanced Score Card (BSC).
What is the Balanced Scorecard

The Balanced Scorecard (BSC) is a tool that translates an organization’s mission and strategy into a comprehensive set of performance measures that provide the framework for a strategic measurement and management system. It is basically a visual representation of an organization’s strategy. The BSC is designed to focus an organization’s efforts to deliver results.

The BSC is a way of:

• Measuring organizational, business unit or department success
• Balancing long-term and short-term actions
• Balancing different measures of success - Financial, Customer, Internal Business Processes, Human Resources Systems & Development (learning and growth), and
• A way of tying strategy to action measures

The role of the Human Resources Department in a measurement organization should be to indicate how much each employee contributes to the organization - such as revenue generated minus the cost of salary, benefits and training. The HR department needs to look at the rest of the enterprise as its customer. It can achieve this by developing the human capital within the organization, which it can measure by setting up its own balanced scorecard strategy. People management is an important function of the HR Department and can play an important role in an organizations’ financial performance as well as the service it offers its customers. People management includes managing recruitment & selection, turnover issues, employee benefits, and acting as an information resource in HR issues for the organization. The HR department can also respond proactively to the organizations needs by evaluating the strategies of the different departments as well as what their goals are and evaluating how the HR department can help the different departments meet their goals particularly as they relate to employee issues.

There are five characteristics that distinguish truly effective approaches to measuring human performance:

• Lead from the front - Leaders exercise a kind of gravitational pull on behavior.
• Use integrated measures - A measurement approach that does not touch employees at all levels on a day-to-day basis is not likely to be effective.
• Keep it simple and personal - e.g. individual performance assessment.
• Build measurement into culture - Integrate measurement into the organization’s culture.
• Be honest - Keep promises made to employees.

In implementing a balanced scorecard system an organization goes through four-phases:

Strategic Focus - Refine and commit to the organizations’ strategy
Assessment - 4 steps are involved in this phase

• a) Audit measures
• b) Develop new measures as needed
• c) Apply new measures
• d) Analyze and report

Change Planning and Implementation - Implement improvement plans
Continuous Improvement

• a) Track metrics
• b) Continue improvement
• c) revisit scorecard cascade.

There are several barriers to establishing an effective measurement system:

1. Unclear objectives
2. Unjustified trust in informal feedback systems
3. Entrenched management systems
4. Too many measurement systems within an organization

The Balanced Scorecard system is an important tool for organizations because a strong measurement foundation, leads to a better managed, disciplined, and more successful organization.

You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.