Summary
The paper demonstrates how EFQM and Balanced Scorecard models can be used together in a manner that maximises the strengths and minimises the weaknesses in the use of each. The paper also identifies critical success factors and the kind of broader strategic management frameworks necessary for successful use of the EFQM Excellence Model and Balanced Scorecard.
The final part of the series concludes by suggesting that the best practice is to use the models in a strategic management process based on solid Plan, Do Check, Act principles actively managing the organisation.
A number of critical success factors common to each of the comparator organisations were identified like top team commitment, corporate problem solving, learn and do mindset, and partnering. Organisations seeking to improve long-term performance capability and delivery need to complement the use of EFQM/BSC with appropriate strategic development processes and agreed corporate problem solving approaches.
EFQM and Balanced Scorecard for improving organisational performance - Part 3 of 3
Conclusions
Using EFQM and BSC
The use of EFQM and BSC can add value to the performance of an organization both in public and private sector. The two models may stem from the different schools of Quality Management and Performance Measurement, but effective use is possible by building on the commonalties of each, most importantly, the shared goal of performance improvement.
Value is optimised where the models are used in a complementary approach to reduce the apparent weaknesses in each, rather than attempting to develop an artificial new construct.
EFQM can helps managers understand the principles of organisational excellence necessary to meet customers rising expectations, and take a more holistic view to performance improvement. It helps in understanding the principles of causality that underpin a Balanced Scorecard. It also counters the more narrow, organizational-specific focus of a BSC.
In turn a BSC helps focus performance on the objectives of an organisation and makes a clear link with the processes needed for achievement. It addresses the lack of results focus within EFQM and better communicates understanding of strategic objectives and enables a more effective employee contribution.
Strategy Development
Use of both models is not the complete answer. EFQM, like a number of quality systems, does not do strategy; it addresses operational excellence. If the company strategy is flawed, failure may still result. Heller, reporting on quality approaches in Europe, used a medical analogy to highlight the potential consequences:
'The quality of the operation was successful, but the patient still died'
The BSC may reside more in strategy but in the definition and communication rather than the creation. If its the wrong strategy, but better understood and more quickly followed, organisational failure may be heightened not lessened. The lessons from most research into BSC make depressing reading, with failure rates reported in the order of 70%.
The external organisations recognised the need for an additional approach, in terms of developing and reviewing an effective strategy. Swedish Customs had also made strategy development a feature in their BSC through use of a futures perspective.
The fact that both models are only a partial answer does not negate their use, but creates a context for assessing their effectiveness. In terms of practical application the external organisations had sought to introduce complementary tools rather than develop a whole new organisational approach.
Critical Success Factors
A number of critical success factors were evident in the external organisations use of both EFQM and BSC.
SINGLE TEAM OWNERSHIP OF QUALITY AND PERFORMANCE MEASUREMENT
This was a major factor in the success of EFQM/BSC use. Each of the organisations had a single team who owned the strategic, planning and business improvement process. They develop a deep understanding and competence in organisational capability and performance. They may also provide continuity on such issues particularly when Board personnel change.
The team acts as both experts to the Board in facilitating understanding and ownership of performance and quality management, and as the focal point in communication to the rest of the organisation. They are able to direct the Board in raising crucial performance issues.
TOP TEAM COMMITMENT
Top level ownership is a prerequisite to lever the benefits of both models. It requires a transformational style to effectively lead the organisation and a need to understand the nature of improvement approaches. This was commonly achieved by top managers actually being trained in the use of both models and additional process improvement approaches. For instance at Siemens, the whole Board had been trained in Kepner Tregoe (the corporate problem solving approach).
The presence and support of a single quality and performance team also helps develop and maintain top team ownership.
‘LEARNING’ MINDSET’
A corporate willingness to learn and develop is also important. The organisations had learned from their initial approaches to model use, particularly in relation to EFQM. They had generally moved away from operational self-assessment towards a more corporate approach, relying on an understanding of EFQM within the organisation. The organisations were also ready to implement new ideas quickly and learn as they went along.
People in the organisations were also engaged and entrusted to improve things, facilitated by a clearly communicated corporate strategy. The need to effectively leverage knowledge, as a core value-adding process was both recognised and managed.
PARTNERING
Partnering was a key competency. The organisations have strong relationships with external partners including their customers, suppliers, academic bodies, and stakeholders. They routinely seek out new partnering opportunities. These arrangements are the way they lever mutual business benefit not just something that is ‘nice to do’.
The best practice organisations were constantly seeking to broaden their understanding of the business environment, both current and future. Their deepening understanding of all these interrelationships will enable them to anticipate future conflicting requirements of customer and stakeholder segments: such developments are also reflected in the new emphasis on corporate social responsibility in the revised EFQM Model.
CORPORATE PROBLEM SOLVING
Moreover, the organisations had quickly realised that EFQM and BSC were only partial answers to corporate success. They had introduced new problem solving approaches to develop organisational performance. Siemens used Kepner-Tregoe, NIE, use six sigma, and Philips had MEDIC.
These tools are non-linear, more complex in nature and designed to address the issues in today’s business environment. Some were the result of the 'learn and do' mindset approach and discovered through partnering. Each of the tools was integrated throughout the organisation forming a common language and maximising the value of improvement activity.
Finally
These conclusions formed the basis of recommendations made to the Inland Revenue Departmental Management Committee on improving the approach and business benefits of quality management. The recommendations included:
-
a clear business benefit approach to EFQM with clear links to improved service delivery,
-
reducing the bureaucracy of EFQM by focusing on managing by the concepts of excellence
-
single team ownership of quality with stronger links to strategic/performance management
-
greater alignment of EFQM activity to support BSC measures
The recommendations were accepted on the 17th December 2002. Work on the detailed implementation is presently continuing with key stakeholders.
There has also been interest from wider Whitehall and the academic community in the findings from the research. The Quality Public Services team is presently examining how the research may be developed for the future.
Main References
EFQM Model
In addition to the range of literature produced by EFQM, Brussels on the model the following main references were also used.
British Quality Foundation, 2000, The Model in Practice, Using the EFQM excellence model to deliver continuous improvement, BQF
Conti, T. 1999, Vision 2000 and TQM/Business Excellence Models, ECO-Q Quality Forum, Athens,
European Centre for Business Excellence, 1998, The X Factor, Winning Performance through Business Excellence
Ghobadian, A. & Woo, H.S. 1996, Characteristics, benefits and shortcomings of four major quality awards, International Journal of Quality and Reliability management, vol. 13 no.2 pp 10-44
Moeller, J. & Sonntag, A.K. 2001, Evaluation of Health services organisations-German experiences with the EFQM excellence approach in healthcare, TQM Magazine, vol. 13 no.5 pp. 361-366
Oakland, J. 1999, Total Organisational Excellence, Butterworth-Heinemann,
Oakland, J. 2000, TQM Text with Cases, (2nd edition, paperback), Butterworth-Heinemann.
Porter, L. & Tanner, S. 1998, Assessing Business Excellence, (paperback ed.) Butterworth-Heinemann
Porter, L. J. Oakland, J.S. & Gadd K.W., 1998, Evaluating the Operation of the European Quality Award model for Self –Assessment, CIMA
Przasnyski, Z.H. & Tai, L.S., 1999, Stock market reaction to Malcolm Baldridge National Quality Award announcements: does quality pay? Total Quality Management, vol.10 (3), pp 391-400
Russell, S. 1999, Business Excellence: from outside in or inside out? Total Quality Management vol. 10 no. 4&5
Samuelsson, P. & Nilsson, L. 2002, Self-Assessment practices in large organisations (Experiences from using the EFQM excellence model). International Journal of Quality and Reliability Management, vol. 19 no.1, pp. 10-23
Seddon, J. 1998, The Vanguard guide to Business Excellence, Vanguard Education, Van der Wiele, T. Dale, B.G. Williams, A.R.T. Carter, G. Kolb, F. Luzon, D.M.
Schmidt, A. & Wallace, M., 1995, Self Assessment: a study of progress in Europe's leading organisations in quality management practices, International Journal of Quality & Reliability Management, vol. 13 no.1 pp. 84-104
Wilkes, N. & Dale, B.G. 1998, Attitudes to self-assessment and quality awards: A study in small and medium sized companies, Total Quality Management, vol.9 (8) pp 731-739
The Balanced Scorecard
In addition to the range of articles and books published between 1992 and 2001 by Kaplan and Norton, the originators of the Balanced Scorecard, the following main references were used.
American Productivity and Quality Center, 2000, Measure What Matters: Aligning Performance Measures with Business Strategy, APQC
American Productivity and Quality Center, 2002, Performance Measurement: Implementing the Balanced Scorecard, APQC
CIMA, 2001(March), The Balanced Scorecard – An Overview, Technical Briefing, CIMA,
CIMA, 2002, (July) Latest trends in Corporate Performance Measurement, CIMA,
Lawrie, G. & Cobbold, I., 2001. (Dec), Strategic Alignment: cascading the Balanced Scorecard in a multi-national company, 2GC Active Management
Nørreklit, H. 2000 The Balance of the Balanced Scorecard,- a critical analysis of some of its assumptions, Management Accounting Research vol. 11 pp. 65-88
Schneiderman, A.M. 1999 (30 Sept) Why Performance Measurement Fails, APQC Consortium Benchmarking Study, Houston, USA,
Schneiderman, A.M. 1999 Why Balanced Scorecards Fail, Journal of Strategic Performance management, from www.Schneiderman.com
Sim, K.L. & Koh, H.C. 2001, Balanced Scorecard: A Rising Trend in Strategic Performance Measurement, Measuring Business Excellence, vol.5, pp 18-26
Combined Use of EFQM/BSC
Andersen, H.V., Lawrie, G., & Shulver, M., 2000, The Balanced Scorecard vs. the EFQM Business Excellence Model – which is the better strategic management tool?
2GC Working paper, Berkshire
Lamotte, G. & Carter, G., 2000, ARE THE BALANCED SCORECARD AND THE EFQM EXCELLENCE MODEL MUTUALLY EXCLUSIVE OR DO THEY WORK TOGETHER TO BRING ADDED VALUE TO A COMPANY? EFQM, Brussels
McAdam, R. & O'Neill, E. 1999, Taking a critical perspective to the European Business Excellence Model using a balanced scorecard approach: a case study in the service sector, Managing Service Quality, vol. 9 no.3
General
Heller, R. 1998, In Search of European Excellence, Harper-Collins
Neely, A. Adams, C. & Kennerly, M.2002, The Performance Prism, Pearson Education,
Pascale, R. 1991, Managing on the edge of Chaos, Penguin
Read More
|
