The Need for a Balanced Scorecard Refresher
Simple FAQ: Monthly Balanced Scorecard (BSC) Check
What is the Balanced Scorecard (BSC)?
The Balanced Scorecard is a visual representation of several processes coming together to help us act and adjust every thirty days in order to meet or exceed our annual targets for improvement.
What processes are coming together at the Balanced Scorecard?
The top row (Metrics) and the bottom row (support) represent the results of the current year’s Annual Planning process, which has produced an Annual Plan for improvement and has validated the improvement portion (the net change between last year’s improvement targets and this year’s targets). The visualizations in the top row represent the current annual objectives, adjusted for any missed targets the previous year. The two middle rows, Top Three Problems and Problem Solving, represent the processes of selecting our biggest problems and the problem solving processes associated with each of them.
How does the Metrics row and the Support row represent Annual Planning process?
The annualized targets are expressed in periods of “months”. For example: let’s say we have a goal to be number one in quality. One of our objectives supporting that goal is to improve our internal defect rate by 3% each year for the next six years. Last year, we only improved 2%. This year we would need to improve our expected 3% per year AND another 1%, which we failed to attain last year. Our improvement portion would be 3%+1%, or 4% for this year. We know that we won’t attain 4% right away, so we set our target based on the current state – let’s say that is 30% today. This year’s target would start at 30% and move linearly down to 26% (the 4% improvement portion) in twelve months or a 0.027% decrease each month. The monthly target is very specific, very measurable, very attainable, very relevant, and very timed. We build a chart and place that chart in the top row in the Quality column; our chart would be one of two or three. Now, let’s say that we know that our internal defect problems last year came primarily from moving inventory around in our warehouse. Every time a fork truck picks a bale or a box, we risk damaging the product. Our Annual Plan for improvement includes a project to reduce defects caused by handling the product in the warehouse, maybe by introducing 5S+1 and an improved “pull” system using kanban. In the Support row in the Quality column, we may choose to create a visualization of warehouse related internal defects to see the effect of the improvement project(s)
So the Top Three Problems should be selected using a process?
Yes. Each functional area might determine the top three problems for its Balanced Scorecard. Those Top Three Problems are good candidates for the next higher level’s Balanced Scorecard. Or, by looking across similar functional areas that report to you, you – as a leader – may see a set of symptoms that point to a larger, more complex problem that you might choose as one of your Top Three Problems in a particular priority.
How should we interact with the Top Three Problems?
The Top Three Problems also have associated problem solving sheets in the Problem Solving row. You meet at the Balanced Scorecard daily. Theoretically, you could check the status of problem solving for all of your Top Three Problems for each priority every day. Most likely, though, you will determine another checking period that fits the problem: weekly, bi-weekly or even monthly during your (you guessed it) Monthly Balanced Scorecard check.
What is the Monthly Balanced Scorecard check?
The Monthly Balanced Scorecard check is part of the Plan-Do-Check-Act (PDCA) cycle that you have constructed around the processes we mentioned earlier: Annual Planning, Annual Plans for improvement (detailed master plans for improvement projects), Selection of your Top Three Problems for each Priority and the Problem Solving Process for those top three problems.
How do you conduct the check?
Meet at the Balanced Scorecard as a complete team, standing in a circle, but able to see the BSC. The responsible (“R”) person for each priority makes a briefing, noting only the exceptions where we as a team have failed to attain a target. The “R” person notes the top three problems in his or her priority by reviewing the problem statement, the root cause(s), the solutions (including who is doing what and by when), and the current status. If there are questions, the “R” can refer to the Problem Solving row, find the associated problem solving sheet and provide the details needed. The “R” person may also make a report on any Supporting metrics from the Support row.
How long should this meeting last?
The meeting should last about 45 minutes to an hour, depending on the skill of the team (exception reporting, briefing problem solving, etc.).
If I am on more than one team, should I go to each team’s Monthly Balanced Scorecard meeting?
Yes. For the team’s you are on (your team, the team above if you are a leader), you should attend each team’s Balanced Scorecard meeting.