Information System for Training and Development
Introduction A successful organization is built on satisfied and trained employees. They are the company’s greatest assets. Employee development is defined as formal education, on-the-job training, previous job experience, personality mapping, and improvement in the current skill sets as to prepare the employee for future. A trained and developed staff will contribute to productivity increase, […]
How Nations, Like Firms, Must Decide What to Make and What to Buy ?
Why Nations are Similar to Firms When Deciding on What to Make and What to Buy Businesses often decide on what to make themselves and what to buy from outside. Indeed, any business must first determine what its core competency is and which sector it would be based in and then, ensure that its processes, […]
Phases of ERP Implementation
Like any other project, ERP implementation goes through various interconnected phases. These phases may be sequential but at occasions overlap. Normally, every phase has entry criteria, which needs to be fulfilled before the commencement of the phase. A phase is deemed to have completed when pre-determined deliverables are achieved. Various phases of ERP implementation, for […]
BPI – Introduction to Process Effectiveness Measurement
The Business environment is highly dynamic and the rules of business are being re written every day. Several changes in the economy, technology and other areas are affecting the way the business is conducted. There exists a need for every Business Organization to keep improvising and adapting to the changes that are taking place and […]
Waiting Line (Queue) Management – Meaning and Important Concepts
Introduction The waiting line or queue management is a critical part of service industry. It deals with issue of treatment of customers in sense reduce wait time and improvement of service. Queue management deals with cases where the customer arrival is random; therefore, service rendered to them is also random. A service organization can reduce […]
The Harvard Business Review in 1992 took the business world by storm when Kaplan and Norton introduced the idea of balanced scorecard.
They argued that even though strategic management was being pursued as an organization wide goal in companies worldwide, in effect they were doing a post-mortem of the business situation at hand.
Measurement was done only on the basis of financial information. Financial information reflected past performance.
There were no indicators of future performance as well as the strategic resources of human capital, intellectual capital as well as streamlined resources that were included in the measurement.
Citing this as the detrimental cause, Kaplan and Norton outlined a framework wherein performance will be measured on multiple dimensions. The weights given to financial parameters be proportional to their importance.
The combined share of factors that predict the future state of business had a greater weight than past performance.
This move was critical as managers would now have to ensure that they do not follow short sighted behavior to make their performance look better.
The number game had been changed to include qualitative aspects as well.
Kaplan and Norton realized that processes were the way that a company performs its operations. The superiority of a company is therefore directly related to the sustainable competitive advantage that its process help it to gain over its competitors.
Hence, not monitoring or measuring the processes would discourage companies to place a continuous focus on improving the processes. The balanced scorecard therefore recommends that processes get equal importance (if not more) as compared to the financial indicators.
This recommendation by Kaplan and Norton and its worldwide adoption by the Fortune 500 companies gave a thrust to the practice of Business Process Management.
Since every manager’s variable pay would, to some extent, depend upon the improvement they bring in the process, everyone in the organization started looking for ways and means to improve the process.
Business Process Management (BPM) was no longer the impetus of a handful of managers and executives located in remote locations.
BPM became the prerogative of each employee. The suggestion boxes that are seen in canteens worldwide are a symbol of this movement wherein the management solicits BPM ideas from all its employees and rewards those ideas which are found good enough to be adopted.
Real time Data: First and foremost is the fact that information becomes available to management when it is most required. A dynamic dashboard can be prepared which is updated real time and managers can immediately identify any discrepancy and work to correct it.
Technology facilitates this real time transfer of data and arranges it in a particular format to create actionable information for the management.
Adding dimensions to the scorecard: A balanced scorecard will not give undue importance to any characteristic of a process. It recognizes that different processes can be measured by different metrics.
For instance, grievance redressal must be fast, even if it is a bit expensive. Hence measuring this process on costs will lead it in the wrong direction.
Most often, the measurement is done based on a combination of metrics designed each process and given weights.
Instead of giving weights arbitrarily, technology is harnessed and Analytic Hierarchy programming (AHP) is used to come up with appropriate weights that will ensure that no one factor gets undue emphasis and tilts the organizations focus.
The Balanced Scorecard therefore brings the concept of BPM to the strategic level. Also it provides a good mechanism to measure whether the process improvements are taking the organization in the correct direction.
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Continuous Improvement and Business Process Re-Engineering
February 12, 2025
