The Balance Scorecard versus Quality Award Models as Strategic Frameworks

1. The Balance Scorecard versus Quality Award Models as Strategic Frameworks � Dr. Shuki DrorHead, Department of Industrial Engineering and ManagementORT Braude College

2. Agenda Paper objectives Strategic frameworks for performance management Comparison between organizational performance management frameworks QFD Balanced Scorecard Construction Map Illustrative Example Conclusions

3. Paper objectives This paper extends the comparison presented by Wongrassamee et al., by using Otley's five points for comparing three performance management frameworks, i.e. MBNQA, EFQM, and the Balanced Scorecard. A structured methodological approach based on the Quality Function Deployment (QFD) for implementing the Balanced Scorecard in an individual organization is presented.

8. Comparison between organizational performance management frameworks Otley (1999) suggested several topics that have to be considered in the development of an organizational performance management framework: (1) High level objectives (2) Long term programs (3) Processes (4) Targets and performance measures (5) Feedback

9. High level objectives

10. Long term programs

11. Processes

12. Targets and performance measures

13. Feedback

14. The balanced scorecard advantages Sequential objectives Capacity to support long-term programs Potential to select relevant performance measures based on real data Two levels of feedback

15. The balanced scorecard limitations Focusing on learning as the only source for causality No basic guidelines for selecting performance measures No method for setting targets to measures Complex feedback from the financial perspective to the customer perspective and to the process perspective Lack of lag time consideration between causes and its effects

16. QFD To improve the implementation of the balanced scorecard The QFD helps to overcome the two of the limitations: (1) No basic guidelines for selecting performance measures (2) Complex feedback from the financial perspective to the customer perspective and to the process perspective

17. Quality Function Deployment (QFD) Product quality design methodology. The QFD technique was developed in 1972 at Mitsubishi and during the 80's and the 90�s has been gradually and successfully adopted by U.S. and Japanese firms.

18. Quality Function Deployment (QFD) Extract the customers' needs or desires and translate them into demands on technical product characteristics, engineering parameters and ultimately into production systems.

20. Balanced Scorecard Construction Map 

30. Induced Learning Induced learning is training at the individual level and developing/enhancing Information Systems/Technology.

31. Operational & Conceptual Learning Operational learning and conceptual learning are viewed here as combinations of organizational structures and improvement tools. Both operational learning and conceptual learning involve teams.

32. Operational Learning Operational learning as being achieved by means of local teams using rather basic tools such as the seven basic graphical tools or SPC.

33. Conceptual Learning Conceptual learning has a wider scope and as such has to rely on cross functional teams applying more sophisticated tools such as enhanced QFD and advanced statistical tools such as Design of Experiments (DOE).

34. Illustrative Example

35. Cross Functional Team Finance Market oriented Information systems Human resource members Industrial engineers R&D representatives

41. Conclusions It is shown that among the three frameworks the balanced scorecard has important advantages. Hence, it is selected here as a 'fundamental' strategic framework of an individual organization. However, the balanced scorecard has some essential limitations. To improve the implementation of the balanced scorecard in an individual organization a structured methodological approach based on the Quality Function Deployment (QFD) is presented.

42. Conclusions The QFD matrices ensure that every financial performance defined by the enterprise strategy is linked to a set of performance measures in the relevant domains that may eventually influence its future results. Through QFD, priorities for improving performance measures in each of the three other domains are determined.

43. Conclusions The QFD matrices warrant that proposed learning actions are consistent with eventual financial results. The QFD systematic approach assists in organizing the balanced scorecard thus promoting continuous improvement for achieving strategic goals.

44. Reference Dror, S. The Balance Scorecard versus Quality Award Models as Strategic frameworks, Total Quality Management and Business Excellence, 19, 6: 583-593, 2008. Dror, S. and Barad, M. Utilizing Quality Function Deployment to Construct a Balanced Scorecard Map, In Proceedings of the Performance Measurement and Management Conference, Boston, USA, 165-172, 2002.

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