1. My Version of a Balanced Scorecard
The balanced scorecard was a concept introduced by Kaplan and Norton to balance a company’s determination to exploit intangible assets and the ability to manage physical assets (75). It was considered revolutionary because it allowed organizations to set and balance all goals in compliance with their mission statements. While the balanced scorecard focuses on the broad definition of a company as a single entity, each company is divided into several departments. Therefore, a balanced scorecard is useful to determine the goals of the entire organization while each department is responsible for translating its objectives and strategies on their own scorecards. If I could design my own version of a balanced scorecard, I would follow the system proposed by Kaplan and Norton because it is a proven and effective system that allows companies consistency in following their objective (85).
When a system works, it should stay consistent with the original model, so I would use the four perspectives and processes to define and translate the mission statement. The vision and strategy of the company would remain the central point that all departments would have to follow. The balanced scorecard would include financial objectives, internal business process objectives, customer objectives, and learning and growth objectives (Kaplan and Norton 76). The balanced scorecard would contain those four aspects because each department would be considered accountable for reaching objectives related to their duties. For example, if a company sets a vision to double the profit within 5 years, departments that do not work with customers or shareholders directly will not understand their objectives and duties clearly. That is why the balanced scorecard would clarify the duties of each department through classifying objectives for reaching a common goal into four distinct business aspects.
Monitoring those four aspects of business would allow the company to monitor development from all relevant perspectives rather than focusing only on financial gain as a method of business evaluation (Kaplan and Norton 76). Furthermore, defining clear objectives will enable the management to distribute assignments equally among departments and maintain relevant objectives when translating those statements on team or individual levels. The classification of objectives into four aspects is the only method to support harmonious development without neglecting essential aspects that define a successful company. Although intangible assets are defined as invisible, their measurements define the value of the company, so the focus of objectives should expand from pure financial goals into developing internal processes, learning, and growth.
Effective collaboration between departments and different levels within an organization determines the company’s success, so the implementation of objectives and interventions would start from higher levels and proceed to individual levels of the company. Because there are many levels in organizations, the most important aspect of implementing a balanced scorecard is to understand that it works both ways in a company because that is the only way to regulate the planned process of achieving a common goal (Kaplan and Norton 80). Rather than translating it only from upper management towards teams and individuals, the individuals should always provide feedback that will help the management monitor and adjust goals to keep the company on the desired trajectory of development and growth.
2. Six Sigma Risks and Benefits in the Human Resources Department
The Six Sigma techniques were designed to both reduce costs in manufacturing and increase revenue. However, the same tool is often overlooked in the Human Resources (HR) department because the HR is rarely included in sales and pricing. An analysis of the Six Sigma model in practice indicates that there is no reason to apply it in the HR department. For example, a case study of Acme indicates that the pricing department and sales department play the most important role when resorting to the Six Sigma techniques (M. Sodhi and N. Sodhi 137). Other participants included the vice president (VP) of IT, the VP of finance, and the VP of marketing, but the entire case study fails to mention the HR department in any aspect of increasing performance and revenue (M. Sodhi and N. Sodhi 137). However, the HR department plays an important role when it comes to increasing revenue because it holds employee information that influences customer satisfaction.
The customer-employee relationships are the main concern in modern businesses (Fleming, Coffman, and Harter 114). While Six Sigma is mainly used by the sales and pricing departments, the HR department holds data on employee well-being, and the HR can measure employee well-being to study the outcome of their relationships with customers. According to Fleming, Coffman, and Harter, low customer and low employee engagement are assigned a baseline value, and high employee engagement without customer engagement is only 1.7 times more effective than baseline while high engagement from both sides yields 3.4 times more benefits than low engagement from both sides (112). If the HR can measure and evaluate customer-employee relationships, they can manage those relationships to increase the company’s revenue.
Although case studies show that the most loyal customers are those who form emotional bonds when communicating with the company’s employees, using the Six Sigma to measure employee-customer relationship can be unreliable (Fleming, Coffman, and Harter 109). It is obvious that the customer-employee relationship is a two-sided relationship. However, while a company can influence an employee’s well-being and behavior, it cannot support customer engagement directly. Most importantly, drastic changes in the HR management strategies are often required when companies implement the Human Sigma techniques. Although the positive outcomes of emotional satisfaction is empirically proven, some companies will have to evaluate their short-term and long-term abilities to allocate resources and change their HR policies regarding employee selection, promotions, performance appraisals, and performance recognition (Fleming, Coffman, and Harter 114).
The analysis of risks over gains indicates that potential waste of resources is higher than actual benefits, but it is possible and desirable to implement the Human Sigma techniques in the HR department. The only possible drawback is the obsession with objective data and empirical research on the effectiveness of the Human Sigma. Employee well-being is obviously subjective because it can be measured only with self-reported data. Furthermore, forcing any engagement from the customers’ side can easily turn into manipulation or privacy invasion, and that cannot create emotional satisfaction. However, the HR department should be familiar with those limitations to prevent potential obsessions with creating a perfect system. When limitations are respected, the HR can focus on factors they can control and accept the variability of factors they cannot control. With that approach, resources will be wisely used to increase revenue, so the HR department should implement the Human Sigma techniques because every increase in revenue will benefit the company. Most importantly, that is the only empirical method to monitor customer-employee relationships, and that relationship can be considered the most relevant factor for business success in the modern and competitive market.
Works Cited
Fleming, John H., Curt Coffman, and James K. Harter. “Manage Your Human Sigma.” Harvard Business Review, July-Aug (2005): 107-114. Web. 04 March 2012.
Kaplan, Robert S., and David P. Norton. “Using the Balanced Scorecard as a Strategic Management System.” Harvard Business Review, Jan-Feb (1996): 75-85. Web. 04 March 2012.
Sodhi, ManMohan S., and Navdeep S. Sodhi. “Six Sigma Pricing.” Harvard Business Review, May (2005): 135-142. Web. 04 March 2012.
