Balanced Scorecard-Based Business Reviews - What To Look For

As discussed in Building Accountability into a Balanced Scorecard Framework, scorecard-based business reviews are an absolutely essential part of Enterprise Strategy Execution or any meaningful performance framework, for that matter. These monthly “events” keep the attention and focus on performance like nothing else can.

Business reviews definitely evolve and mature as an organization runs them for several months or years. Their content, the depth of analysis, and the amount of improvement they deliver all grow with time and experience. Here are some guidelines for what you should aim to achieve at each level of “business review maturity.”

A good initial business review should focus on the following fundamental areas:

1. Are the right objectives, measures, and targets on the scorecard?
2. Do you have data and, if not, when will you have it?
3. If you do have data and it is trending poorly or missing targets, what are you doing about it?
4. What action items can we capture from this review to make the next one better?

 

As you reach the second level of business review maturity, you should:

1. Have (and follow) an agenda, starting with a review of action items from the last review.
2. Start with these basics:

•  Is the data on the scorecard up-to-date?
• Are there clear explanations for all under-performing measures (i.e., variance reports)
• Are all the variance reports good (e.g., do they explain why the gap exists, what will be done about it, who is responsible, and when improvement will occur)
• Are strategic initiative status reports properly filled out (e.g., do they show budget, timing, % progress, explanatory comments)?

3. Then, dig into the scorecard content:

•  Does the scorecard have the right lagging measures, based on the expected outcomes of the objectives? Does it have the right number of lagging measures (no more than 3 per objective)?
• Are there documented initiatives (improvement projects) that target most of the under-performing measures on the scorecard?
• Do initiatives have a standard look and feel (e.g. all “Process Management” initiatives are standard with attachments, all “Green Belt” initiatives are standard with attachments, all others have a standard approach)

If you are serving as your company’s “internal consultant” on Strategy Execution or “Balanced Scorecard Evangelist” you might also be in the position to evaluate how well the reviewer and reviewee managed the process. Here are some things to look for:

1. Is the reviewer committed, involved, and asking the right questions?
2. Does the reviewer know their way around the scorecard or could they use a little training?
3. Does the reviewer hold people accountable?
4. Is the reviewee committed, non-defensive, and proactive?
5. Does the reviewee have a solid understanding of the scorecard, as well as the concept of cause-and-effect correlation?
6. Does the reviewee strive for lasting results?

As you reach the third level of business review maturity, you should start to address these “stretch topics”:

1. Do scorecard objectives have the right leading measures (where strong correlation can be shown to higher-level lagging measures)?
2.  Are targets for the measures either externally benchmarked or based on Customer Valid Requirements?
3. Can improvement trends be both demonstrated and tied to root cause elimination and permanent process improvement?
4. Have contributing cross-functional leading measures been identified? If so, are they being tracked by another department and are they being improved? These types of cross-functional measures should live on both internal “customer” and internal “supplier” scorecards.

This last set of topics is definitely more advanced and will take some time to be able to tackle, but these are the ones that will help your organization make significant progress.

What business review best practices have worked for you? Please share your comments.