Last week, I explained why measuring only the tangibles can distort perceptions of a company's financial performance. I also made the point that using a balanced scorecard provides a better perspective on long-term business success. Now I'd like to shift the discussion to the question of implementation. There are six things a company must do to implement a Balanced Scorecard system.

Step 1: Deciding What to Measure

When setting out to implement a Balanced Scorecard Initiative, a company must make a crucial decision: What do we want to measure? The "Balance" in the Balanced Scorecard is derived in part from the fact that it forces companies to measure performance from four different perspectives:  

The Shareholders' Perspective: Generally speaking, the chief concern of shareholders is financial performance measured by data from traditional financial statements. Specifically, the shareholders' perspective focuses on profitability and growth during the reporting period. Did the company meet specific goals? If not, what measures must it take to achieve the goals over the next reporting period? For example, increasing profitability might involve cost reduction, revenue growth, higher sales, increased margins and improved cash flow.

The Customers' Perspective: This perspective concentrates on the company's success in acquiring new customers and retaining existing ones. The former involves measuring market share. The retention aspect measures customer loyalty, customer service, customer complaints, customers lost, etc. Targets are set reflecting success in both aspects, such as  20% increase in market share, and 10% decrease in customer complaints through improved customer service training.

The Internal Perspective: The Internal Perspective considers the efficiency of various phases of a company's operations. Again, goals are set based on what the company wants to accomplish - for example, improve core competencies, streamline the process, enhance the use of technology and raise morale. Management must then decide on specific measures to achieve those goals. For example, if the goal is to improve the quality of operating processes and increase sales per worker, management may opt for a combination of measures such as the adoption of internal audit standards, the promotion of more employee suggestions and training improvements that make it easier for workers to use technology.

The Innovation and Learning Perspective: This perspective measures a company's success in creating a climate that supports innovation and growth. Continuous improvement, new product development and improved employee training are examples of goals that could be set in this area. Measuring indicators would include things like the number of new products, percentage of sales from new products and alignment of personal goals with the scorecard.

Aligning the Four Perspectives

For how much does each of these perspectives count? One of the beautiful things about the Balanced Scorecard is that there's no set answer. Each company must form its own balance of perspectives to fit its own individual requirements. And, of course, the goals and measures decided upon to achieve goals within each perspective will vary from company to company.

So, for example, a non-profit charitable corporation won't look at the customers' perspective the way a private for-profit manufacturing company would. Consequently, the goals and methods of measuring customer satisfaction used by an organization like The United Way will differ dramatically from those used by Ford Motor Company. 

Conclusion

I've been told by SafetyXChange to limit the discussion to two pages. And, since I don't have room to talk about the other five steps in the Balanced Scorecard implementation process, I guess I'll have to wrap up the series next week. So I'll wish you all a happy and safe week and ask you to please tune in next Wednesday.

MEMBER REPLY
'Accident' vs. 'Incident': The Debate Revisited

EDITOR'S NOTE: It started innocently enough last September 13 with an article by SafetyXChange Board member Wayne Pardy about "The Real Cause of Accidents." Soon, we were flooded with responses. "Hey, Wayne, call it an incident, not an accident," some of you wrote. "Incident is a cop-out; it's really an accident," responded others. We knew we had hit a nerve. So we "opened the floor" to discussion which on October 4 culminated in a full debate on accident vs. incident.

Last week, a SafetyXChange member expressed disappointment at our failure to include his views on the topic. We should have published the note, I told the member. But I figured it was too late to do anything to correct the omission. Then I read the note. And it's a good one. So what the heck, let's go ahead and run it now. And if any of you wish to reply, go ahead. If we get enough of a response, we'll  reopen the accident vs. incident debate. 

Our Words Directly Affect Our Success in Safety

I couldn't agree more with Greg MacDonald's comments in today's SafetyXChange [Editor's Note: Greg authored a response to Wayne's original article and served throughout the debate as champion of the "incident" position.] Hearing the word "accident" from a respected colleague [like Wayne Pardy] is like running fingernails over a chalk board (I know ... I'm showing my age).

As safety professionals, one of our jobs is to help company and industry "leaders" make a paradigm shift. In that role, we must stress the importance of good planning, communicating clear messages, taking proactive measures and establishing accountability systems to reduce at-risk behaviors and (in turn) the potential for injuries and other safety-related events with negative consequences. 

Per the dictionary in my office, the numerous definitions of "accident" include words and phrases like "unplanned," "unfortunate" and "chance happening." The word "accident" connotes lack of planning and accountability whereas "incident" suggests an event wherein negative consequences can be controlled or eliminated given an intervention, many times by a human being's action.

Using Greg's term, the "uninformed masses" need to be educated in the subtle (but significant) impacts that messages contain. Quite frankly, using the term "incident" in place of "accident" is one of the more useful (and simple) steps we use in getting leaders to demonstrate modified behavior with their associates and workers as we're developing a cultural change in a working environment. It goes hand-in-hand with the shift from safety as a priority to safety as a value. 

We simply should not accept the term "accident" in the safety professional's vocabulary as a synonym for a safety-related "incident." Can all safety incidents be prevented?  Probably not. However, let's send the message that we're going to take control of our collective destiny and make every reasonable effort to prevent incidents from occurring. 

Gary C. Wolf
Wolf Safety Group, LLC
116 Reveille Road
Chesterbrook, PA 19087-5834
WolfSafetyGroup@aol.com

'ACCIDENT' vs. 'INCIDENT'

What the Dictionary Says

Here's how Merriam-Webster defines the words "accident" and "incident."

AC·CI·DENT
Pronunciation: 'ak-s&-d&nt, -"dent; 'aks-d&nt
Function: noun
Etymology: Middle English, from Middle French, from Latin accident-, accidens nonessential quality, chance, from present participle of accidere to happen, from ad- + cadere to fall -- more at CHANCE

1 a : an unforeseen and unplanned event or circumstance b : lack of intention or necessity : CHANCE accident rather than by design>

2 a : an unfortunate event resulting especially from carelessness or ignorance b : an unexpected and medically important bodily event especially when injurious accident> c : an unexpected happening causing loss or injury which is not due to any fault or misconduct on the part of the person injured but for which legal relief may be sought d -- used euphemistically to refer to an involuntary act or instance of urination or defecation

IN·CI·DENT
Pronunciation: 'in(t)-s&-d&nt, -"dent
Function: noun
Etymology: Middle English, from Middle French, from Medieval Latin incident-, incidens, from Latin, present participle of incidere to fall into, from in- + cadere to fall -- more at CHANCE

1 : something dependent on or subordinate to something else of greater or principal importance

2 a : an occurrence of an action or situation that is a separate unit of experience : HAPPENING b : an accompanying minor occurrence or condition : CONCOMITANT

3 : an action likely to lead to grave consequences especially in diplomatic matters incident>

synonym see OCCURRENCE

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