Designing balanced scorecard measures for a Shared Service (SS) business model is slightly different than for a regular company. Itâ€™s not that the basic measures will be completely different, itâ€™s more that there is a recognition that the business is different and it feels like there should be different measures. For this reason, many shared service companies have struggled with the ideal type and mix of measures. These dynamics are connected to the relationship and degree of separation with the parent companies and also by industry. I postulate that in most cases a few unique measures should be added from a standard scorecard, itâ€™s more HOW the results are debriefed that makes the shared services scorecard unique.
Corporate metrics are used for several reasons, but itâ€™s important to keep them focused on measuring the implementation of the strategy. On a more granular level, they will be used to measure other aspects of your business (such as output and quality of the work) but this is likely still part of your overall strategy as reflected through the long-term objectives of your client-related focus area. In an environment of accountability, metrics are used to generate behaviors so you need to choose them wisely. They need to be chosen in ways that completely define success for your organization or they will motivate the operational layers of the company in the wrong direction.
What makes a good measure is a different topic, one that Iâ€™d like to discuss on here soon, but Iâ€™ll sum this up by saying that you should choose based on what you are likely to make decisions on and avoid measures specifically for positioning or â€œnice to knowâ€ information. All of that aside, I believe the unique nature of the shared services balanced scorecard is to understand how the complex of measures indicate performance in both of your major arenas, 1) internal and 2) client. Most of the time, it benefits you to consider each focus area as a group, but in this case it warrants a discussion to ensure that your scorecard effectively measures the quality of the business model and self-investment processes.
Most measures donâ€™t tell you the whole story individually. They should be considered as a complex. As with many industries, part of your scorecard will be internally focused, while part of it will be externally focused.
Most companies have some iteration of the following focus areas:
â€¢ Financial performance
At this point, some people will be questioning how this is different than any other industry. Speaking as someone who has worked in the shared services industry for a number of years, I can say that the structure lends itself to a greater degree of scrutiny by the parent companies than a traditional business model affords. I am of the belief that human nature demands that we protect that which weâ€™re responsible for and therefore shared services groups often enjoy less shielding at the executive table than internal departments do. The other dimension of this being that shared services teams are almost exclusively overhead.
Now to the answer: The difference is that shared service groups are created to generate a higher level of efficiency than is often demanded by the profit generating areas of the business. Because of this, it becomes critical that these departments manage their clients with the purpose of ensuring that the IDEAL mix and quality of internal investment and client delivery time/resources are in place. Because the resources for self-improvement (investment in the business model) are often limited, it is critical that this is done more effectively than your clients or parent companies do. You do this by paying attention to what the measures are telling you so that you truly understand the state of the business model. In a high pressure environment, making the right decisions are critical and wrong decisions about the business model create a greater degree of fallout than in a typical corporate environment.
After having said all of that â€“ what are the dimensions to manage? Consider your measures through this lens and think about whether you have the right mix or not: 1) Is what weâ€™re delivering to our clients ideal? This indicates quality of client interaction, output and timeliness. 2) What is the quality of the business model? This indicates whether weâ€™re effectively using the internal investment / residual time and whether we have the ideal amount of residual time.
Regroup your measures from across all the focus areas into these 2 areas and reconsider your mix of measures. Have a good discussion about what measures fit into each group and whether there are any gaps. While youâ€™re at it, talk about how your business is different than your parent companies and what differences should be reflects in how you run your business, and the resulting measures.
â€¢ Do they tell you what you need to know about how well you manage your own business?
â€¢ If you work your people harder than your clients do, what are you doing to compensate for that?
â€¢ Is there a clear correlation between what is agreed to in the service level agreements and the available FTE in your teams?
â€¢ What % of available FTE weeks are billed to external clients?
â€¢ When you consider your measures, are you missing any aspect of the information that might hold you back from confidently making a decision?
â€¢ Do you understand what the ideal mix of time spent internally and with clients is?
Is this whole commentary too simple and obvious? It could be. The bottom line in this arena is ensure that you are measuring the business model and resource requirements in a way that ensures realistic expectations are being placed on the shoulders of the shared services entity. Pay attention to the fact that you are different than every other “internal” department of the company. Treat your business as though you are externally focused, and manage your clients like a consultant.
Overhead is always the place where companies â€œrestructure costsâ€ but this can be done to the detriment of the business if someone isnâ€™t keeping a close eye on the quality of the business model. This is where you come in.
Shared Service groups may well become the wave of the future if they are implemented in a sustainable way. I’d recommend keeping your measures in the existing focus areas, but incorporating this “business model” discussion and analysis into an annual planning forum with your senior staff.