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Time-Relevant Metrics in an Era of Continuous Process Improvement: The Balanced Scorecard Revisited

Summary: [This abstract is based on the authors' abstract.] This article discusses the importance of using performance metrics supportive of continuous process improvement (CPI) and its customer-centered benefits, and finds fault with widespread contrary tendencies. CPI has equipped organizations with a potent set of practices for improving quality and lead times and more capable resources for their delivery—and offers performance measures to match. Cause-effect linkages—practice to result—are short and direct, well suited for operational performance-management purposes. Middle and senior management, on the other hand, are burdened with conventional long-lag-time, accounting-oriented metrics that admit large, confounding aggregations of variables, blurring sightlines to CPI activities and results. The balanced scorecard, rather than providing redress, actually is unbalanced in regard to time. It mixes short, medium, and long lag-time metrics to make up, typically, a monthly review-and-respond set that disregards time relevance. With scorecard management not serving the purpose, what will? The author argues for intensively managing with the strong short-term CPI metrics, thus to keep CPI alive and on track. The weaker medium- and long-lag metrics, on the other hand, are best used not as triggers for monthly corrective interventions, but rather for managerial oversight through multi-period trend watching. These modifications in the roles of upper management help avoid errors of micro-management, while encouraging more frequent visits to CPI action zones, thus to gain detailed knowledge on the ongoing state of the business and to appreciate the value of a strong CPI effort.

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  • Topics: Continuous Improvement
  • Keywords: Scorecards, Continuous process improvement (CPI), Performance management, Metrics, Quality metrics, Root cause analysis (RCA), Quality improvement (QI), Cause and effect analysis
  • Author: Schonberger, Richard J.
  • Journal: Quality Management Journal