THE BALANCED

SCORECARD
APPROACH
PRESENTED BY: Ron Johnson on March 1, 2007
Topics of Discussion

Survey
Balanced Scorecard Overview
Balanced Scorecard Development
Process
Survey
The Weyerhaeuser Example
Summary
Questions and Answer Session
 Todays Objectives

Provide an overview of the Balanced

Scorecard (BSC) Approach
Facilitate the group discussion for our
collective learning
Experiences with the BSC
How this tool can be effective in driving
improved Facility Management
Each of us walks away with 2-3 that we
really needed
Survey

How many of you have experience with

the Balance Scorecard Approach?
BSC Defined

The Balanced Scorecard is

a framework that helps organizations
translate strategy into operational objectives
that drive both behavior and performance.
BSC History
Developed in the early 1990s
Developed by Drs. Robert Kaplan (Harvard
Business School) and David Norton
Provides a clear prescription for what companies
should measure in order to balance the financial
perspective
It is a management system (not only a
measurement system) that allows the clarity of
vision and strategy into action
BSC History
Suggests that we view our organizations from four
perspectives:
- The Learning and Growth Perspective
- The Business Process Perspective
- The Customer Perspective
- The Financial Perspective
Requires us to develop Performance Indicators or metrics
and collect and analyze data relative to each of these
perspectives
Critical Performance Indicators
BSC Double-Loop Feedback
Bottom line of Why Four Perspectives

Measuring financial performance alone

doesnt facilitate the value creation that
companies in our age must make in
terms of investments in customers,
suppliers, employees, processes,
technology and innovation
Key Premise Behind the BSC is that
Measurement Motivates Behavior

The Premise
Measurement Communicates
Values, Priorities And Direction

The Conclusion
Measurement Must Be Linked To Strategy

Strategy
Balanced
Scorecard

Measurement To Communicate, Not To Control

BSC and your Strategy
Financial Perspective
1. The economic model of
Return on

Revenue
Investment
Productivity
key levers driving financial
Strategy Strategy performance
Sources of Growth Sources of Productivity

Customer Perspective
Value Proposition 2. The value proposition of
Price Quality Time Function Image
Relation-
ships
target customers

Internal Process Perspective

3. The value chain of core
business processes
Build the Make the Deliver the Service
Brand Sale Product Exceptionally

Learning & Growth Perspective 4. The critical enablers of

performance improvement,
Staff Climate for
Competencies + Technology
Infrastructure + Action change and learning
 Balanced Scorecard Terminology
Strategy Map: Diagram of the
cause-and-effect relationships
between strategic objectives

Statement of How success

Strategic Objective:
what strategy in achieving The level of Key action
Data Center Uptime
must achieve the strategy performance programs
Financial and whats will be or rate of required to
Profitability
critical to its measured and improvement achieve
Fewer Repairs
More success tracked needed objectives
customers

Customer

Uptime Optimized Price

Objectives Measurement Target Initiative

Internal 99.95% Uptime Downtime <.05% Implement
Effective PM Completion 97% Predictive
PdM Ratio Maintenance

Learning
Data Center
crew
alignment
Balanced Scorecard Example

Strategic Objective:
Objectives Measurement Target Initiative
Data Center Uptime
Financial
Profitability Market Value $ Measure and
Profitability
Report: # of
More Growth % 20% Repairs,
More Customers
Fewer Repairs
Customers Cost of Repairs $ Monthly
Fewer Repairs Growth %
Customer Maximized Uptime % 99.95% PdM
Uptime Optimized Price
uptime Customer #1 Customer
Optimized Ranking (Market loyalty
prices Survey) program

Internal PdM inspection Completion % >95% Implement

Effective completion work order
PdM system

Learning Data Center % crew trained yr. 170% Training

crew alignment on PdM yr. 3 95% program
Data Center
Crew alignment
Crew >85% Certification
certification certified program
Some of the Indicators of a Good BSC

1. Executive Involvement
Strategic decision makers must validate and own
the strategy and related measures

2. Cause-and-Effect Relationships
Every objective selected should be part of a chain of
A good Balanced cause and effect linkages that represent the
Scorecard will strategy
tell the story of 3. Balance between outcome and leading
your strategy in measures There should be a balance of outcome
actionable terms. measures and leading measures to facilitate
anticipatory management
4. Financial Linkage
Every objective can ultimately be related to financial
results

5. Linkage of Initiatives and Measures: Each

initiative should be based on a gap between
baseline and target.
Some Goals of the Balanced Scorecard

Provide a framework to translate strategy into operational terms

Create a systems approach to form an integrated Strategic
Management Process
Provide a clear line of sight to the vision and strategy of the
company
Provide a tool for communicating the:
- strategy, and
- processes and systems required for implementing the strategy
Draw a cause and effect roadmap to stakeholder value
shareholder, customer, and employee
BSC Benefits for Your Organization

Improves management effectiveness by having a

shared and actionable view of the strategy
Optimizes and ensures strategic outcomes for a given
set of resources
Enables employees to work in a coordinated,
collaborative fashion towards organizational goals
Speeds time to value through faster, more informed
decision-making on time and resource allocation
Accelerates the approach, and its accuracy to the
strategic destination
Survey

How has a BSC Approach impacted your

Organization?
 Balanced Scorecard Six Step Development
Process

Step 3
Step 5
Step 1 Determine
Linkages
Develop
Develop a between
Strategic
BSC Plan Strategies and
Initiatives
Objectives

Step 2
Step 4
Step 6
Understand
Determine
your Plan for
Measures and
Strategic implementation
Goals
Imperatives
 Weyerhaeuser Example - Overview

McKinstry Essention provides Facility Management Services (FMS) for

the Weyerhaeuser Corporate Campus in Federal Way, WA

McKinstry Essention FMS includes responsibility for the following:

Facility Management
Asset Management
Project Management
Operations and Maintenance
Cleaning Services
Landscaping and Urban Forestry Management
Space and Move, Add, Change Management
Special Event and Conference Room Management
 Weyerhaeuser Example - Overview

Weyerhaeuser Expectations: McKinstry

Essention must continually meet or exceed
performance goals for agreed upon CPI

CPI measure the quality, speed, availability,

capacity, reliability, user-satisfaction, customer
service, timeliness, conformity, efficiency
and/or effectiveness of the services provided
by McKinstry Essention

McKinstry Essention performance relative to

CPI has financial implications in terms of
agreed upon at-risk fee
Weyerhaeuser Example - Overview

CPI are jointly developed by Weyerhaeuser

and McKinstry Essention each year
CPI performance is reviewed quarterly
- Reported on a Quarterly Dashboard
- Action plans are developed for CPI not
achieving Goals
Continuous improvement process
IFMA Benchmarks are utilized to establish
appropriate Goals
CPI based upon the four perspectives are
measured
 Weyerhaeuser Balanced Scorecard

1st
CPI Weyerhaeuser 2006
Focus Area Objectives Measurement Method Measures Quarterly
# BSC Categories Goal
Result

Operate Commercially
1 Utility Annualized cost/S.F. for WTC Utility Cost per SF
Competitive
Annualized cost/S.F. for
Operate Commercially
2 Utility Weyerhaeuser Campus (minus Utility Cost per SF
Competitive
WTC)
Operate Commercially
3 Cost Annualized cost/S.F. for WTC Cost of Operations/SF
Competitive
Annualized cost/S.F. for
Operate Commercially
4 Financial Weyerhaeuser Campus (minus Cost of Operations/SF
Competitive
WTC)
Financial
Operate in accordance Total Facility Operating
5 Financial Actual Total Operating Cost
with Approved Budget Cost (Actual to Budget)

Operate Commercially
6 Financial Actual Total Cost per Box Move Space Management Costs
Competitive

Operate Commercially Actual Total Cost per

7 Financial Space Management Costs
Competitive Reconfiguration Move

Reduce Operating Provide Sustainable Cost

8 Financial Annualized cost savings
Costs Reduction
 Weyerhaeuser Balanced Scorecard

1st
CPI Weyerhaeuser 2006
Focus Area Objectives Measurement Method Measures Quarterly
# BSC Categories Goal
Result
FMT and McK E Mgmt Team Audit
Consistently meet results % (Total of Meets Internal and External
9 Customer Service Level Expectations&Exceeds Building and Trade Quality
expectations Expectations/Total of Inspectable Assurance Audit results
Customer Areas)
For the "Overall Satisfaction"
Achieve high levels of question, % of respondents who Customer Satisfaction
10 Customer
customer satisfaction responded with "Satisfied" or better Survey Results
satisfaction rating
Institute a disciplined
Organizational
Learning process that
Evidence of the deployment of Positive changes in the
Learning Quality effectively captures
19 those learnings through Quality, Cost, Delivery and
and Growth Assurance internal and external
improvements to processes. Safety of FM metrics.
best practices and
lessons learned from
operations.
Weyerhaeuser Balanced Scorecard

1st
CPI Weyerhaeuser 2006
Focus Area Objectives Measurement Method Measures Quarterly
# BSC Categories Goal
Result

Actual number of hours lost due to

11 Safety Provide Services Safely Loss time injuries
workplace injury

RIR (Recordable Incident

12 Safety Provide Services Safely # of RIR compared to Goal
Rate)
Elapsed time from Request to
Work Order Request to
13 Operational Improve service levels Complete based upon the top ten
Completion Time
most frequent Issue Types
%(Number of work orders
completed/number of work orders
Work Order Completion
14 Operational Improve service levels opened). Measurement will be a
Ratio
based upon the top ten most
frequent Issue Types.
%(Number of PM work orders
completed/number of PM work
orders open). Reporting period will PM Work Order
15 Operational Improve service levels
be from the first day of the month Completion Ratio
that the PM's are due until the 15th
Internal of the following month.
Monthly review of operations with
Number of service
the FMT and a joint determination
situations that cause a
Process Prevent Business of Business Interruptions.
16 disruption to standard
Reliability Interruptions InfoCentre work order will
Weyerhaeuser business
document the results of these
operations.
situations.
Procedures Manual completed by
Complete Procedures December 31, 2006 and in
Process Manual in accordance accordance with development Completion of Procedures
17
Reliability with approved project project schedule. % (on time Manual
schedule completed actions/total actions due
in time period)
Campus-wide Document Library
Complete Document completed by March 31, 2007 and
Completion of Campus-
Process Library in accordance in accordance with development
18 wide InfoCentre Document
Reliability with approved project project schedule. % (on time
Library
schedule completed actions/total actions due
in time period)
 Summary

The Balanced Scorecard is a framework

that helps organizations translate strategy
into operational objectives that drive both
behavior and performance
The Balanced Scorecard is based on the
premise that measurement motivates
The scorecard is broken down into four
perspectives that are linked
The balanced scorecard has benefits
across organizations
 THANK YOU VERY MUCH!

and copies of this presentation are available upon

request
Session References

References
Cotts, David G. (2001) The Facilities Management Handbook
Second Edition. American Management Association, New York,
New York, USA.
Kaplan, Robert S. and Norton, David P. (2001) The Strategy
Focused Organization. Harvard Business School Press, Boston,
Massachusetts, USA
Kaplan, Robert S. and Norton, David P. (1996) Translating Strategy
into Action. Harvard Business School Press, Boston,
Massachusetts, USA
The Balanced Scorecard Institute at www.balancedscorecard.org
Free Management Library at www.managementhelp.org
12 Manage, Rigor and Relevance in Management at
www.12manage.com
Balance Scorecard News at www.bs-news.com
Multiple other internet sites through Google Search on Balanced
Scorecard