Using Service Scorecards: An Interview with Authors Rajesh Tyagi and Praveen Gupta
There is no better tool than a Balanced Scorecard to determine if a vision for an organization is becoming a reality. And as explained by Rajesh Tyagi and Praveen Gupta in their book A Complete and Balanced Service Scorecard: Creating Value Through Sustained Performance Improvement (FT Press 2008), a Scorecard is particularly useful in the service industry. In this interview, Tyagi and Gupta discuss the ways all businesses can benefit from a Service Scorecard.
Define a Balanced Service Scorecard.
A Balanced Service Scorecard helps in identifying opportunities to increase value realization and predicting the expected performance in the future with some confidence. The Service Scorecard is relevant in terms of organizational structure and makes it familiar to employees and improves its acceptability and visibility in the organization.
Why target the service industry?
Traditional models and frameworks fail to take into account the intricacies and specificity of services. Corporate performance measurement needs have also been impacted by the transformation of manufacturing-based economies to service-based economies. The challenges associated with this transformation are listed here: inherent variation among customers, servers, time periods and service processes; prominently including the engagement of employees; including the service innovation dimension; maintaining a partnership focus; and existing in a solution-dominant world. A Service Scorecard should address these specific challenges.
Who is in charge of executing a Scorecard?
Top-level leadership is responsible for the implementation of Service Scorecard. The leadership element is critical to set the bar and helps align the organization to achieve business objectives. Leadership inspires employees to excel, and acceleration drives improvement. A decision by leadership may lead to action by all employees, resulting in a significant impact on the performance. Thus, the leadership decisions are weighted at 30 percent of the total forming the Service Performance Index (SPIn).
What are some of the challenges of implementing a Scorecard into a business?
The challenges associated with the implementation of the Service Scorecard are: lack of demonstrated leadership commitment to the implementation; applying a cookie cutter set of measures and dashboards; identifying metrics without understanding the business context (in terms of size of the company, stage of the firm’s growth and service sector); lack of relationship between Scorecard architecture, corporate structure and performance; and lack of usage of a Scorecard for managing performance.
In your book you mention that seven key elements are necessary for a successful Scorecard framework: growth, leadership, acceleration, collaboration, innovation, execution and retention. Why are these elements key?
These elements represent soft and tangible elements of a corporation, and thus directly affect corporate performance. Moreover, stakeholders can understand these elements in the holistic context of the business. The relative importance of these elements will vary based on the industry; however, these seven elements apply to practically any service business.
How did you update outdated Manufacturing Scorecards and make them applicable to the service industry?
Our Service Scorecard provides a great launching pad for corporations to start measuring their performance in a predictive manner. As they improve their SPIn, they can replace specific measurements associated with each element of the Scorecard. So, the framework is practically universally applicable; however, measures within each element can be adapted to the performance level at a given time.
What is the one piece of advice you hope readers take away after reading this book?
The Service Scorecard has been developed to assist executives in monitoring performance with leading indicators and manage it for superior performance. We hope that the Service Scorecard will drive out any concerns regarding effectiveness of measurements. These measurements will work.
Interview by Jessica Livingston, managing editor