A Balanced Scorecard is not positioned as a quality control tool, but regularly I see among our users efforts to integrate quality-related metrics into their Balanced Scorecards, or simply create a KPI scorecards with a bulk of different quality indicators. I've compiled the list of 10 best practices that we've learned from these cases. As always, I'd like to hear your opinion. Do you use quality indicators on your business scorecard? Based on: http://www.bscdesigner.com/10-tips-about-using-business-scorecard-and-kpis-for-ongoing-quality-control.htm

1. 10 TIPS:
BUSINESS SCORECARD AND KPIS FOR
ONGOING QUALITY CONTROL
Based on
http://www.bscdesigner.com/10-tips-about-using-business-scorecard-and-kpis-for-ongoing-quality-control.htm
By Aleksey Savkin

2. 1. BUSINESS CONTEXT
COMES FIRST, THEN COME
INDICATORS

3. ANALYZE YOUR BUSINESS CONTEXT
BSC DESIGNER
FIRST
• Why do you need to measure the quality?

4. ANALYZE YOUR BUSINESS CONTEXT
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FIRST
• Why do you need to measure the quality?
• What aspects of the quality are important to
your customers?

5. ANALYZE YOUR BUSINESS CONTEXT
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FIRST
• Why do you need to measure the quality?
• What aspects of the quality are important to
your customers?
• How exactly the company is planning to
achieve current business goals?

6. ANALYZE YOUR BUSINESS CONTEXT
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FIRST
• What quality-related problems need more
attention?

7. ANALYZE YOUR BUSINESS CONTEXT
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FIRST
• What quality-related problems need more
attention?
• What are the business challenges of your
company right now?

8. USE ANSWERS TO DEFINE QUALITY
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STRATEGY
• The answers to these questions will help you
to align your quality indicators to the specific
business problems.

9. USE ANSWERS TO DEFINE QUALITY
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STRATEGY
• The answers to these questions will help you
to align your quality indicators to the specific
business problems.
• In this way you will start defining your
“quality strategy.”

10. USE ANSWERS TO DEFINE QUALITY
BSC DESIGNER
STRATEGY
• The answers to these questions will help you
to align your quality indicators to the specific
business problems.
• In this way you will start defining your
“quality strategy.”
• There is no separate quality strategy, but an
idea of the quality can be integrated into
other generic strategies.

11. USE ANSWERS TO DEFINE QUALITY
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STRATEGY
• If we are talking about Product Leadership as
a strategy, then the defect rate might be on
the scorecard.

12. USE ANSWERS TO DEFINE QUALITY
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STRATEGY
• If we are talking about Product Leadership as
a strategy, then the defect rate might be on
the scorecard.
• If executives chose to follow a Customer
Intimacy strategy, then a “First time resolution
rate” might work as an indicator aligned with
one of the business objectives from the
“Customers” perspective.

13. BSC DESIGNER
IN BSC DESIGNER
• Go to the “Business goals” tab.

14. BSC DESIGNER
IN BSC DESIGNER
• Go to the “Business goals” tab.
• There you can formalize your business goals
and objectives, specify cause-and-effect
connections between them.

15. BSC DESIGNER
IN BSC DESIGNER
• Go to the “Business goals” tab.
• There you can formalize your business goals
and objectives, specify cause-and-effect
connections between them.
• Later you can align KPIs with these goals and
visualize them on the map.

16. BSC DESIGNER
IN BSC DESIGNER

17. 2. VISUALIZE YOUR
PROCESSES

18. BSC DESIGNER
VISUALIZE YOUR PROCESSES
• Quality control or speaking more generally,
quality assurance, is not only about having a
set of indicators and reporting them.

19. BSC DESIGNER
VISUALIZE YOUR PROCESSES
• Quality control or speaking more generally,
quality assurance, is not only about having a
set of indicators and reporting them.
• The idea is to have an understanding of the
process, its strong and weak points, and trying
to prevent possible quality issues.

20. BSC DESIGNER
VISUALIZE YOUR PROCESSES
• One needs to do a regular analysis of the
quality challenges, their reasons and possible
solutions.

21. BSC DESIGNER
VISUALIZE YOUR PROCESSES
• One needs to do a regular analysis of the
quality challenges, their reasons and possible
solutions.
• The result of this analysis needs to be
formalized in the form of a flow chart.

22. BSC DESIGNER
IN BSC DESIGNER
• Go to the “Strategy Map” tab, create a new
map and use it to visualize your process.

23. BSC DESIGNER
IN BSC DESIGNER
• Go to the “Strategy Map” tab, create a new
map and use it to visualize your process.
• Later you will be able to visualize some KPIs
directly on this map.

24. BSC DESIGNER
IN BSC DESIGNER

25. 3. BALANCE BETWEEN
LAGGING AND LEADING
INDICATORS

26. BALANCE BETWEEN LAGGING AND
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LEADING INDICATORS
• Have a look at the flow charts created in the
previous step.

27. BALANCE BETWEEN LAGGING AND
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LEADING INDICATORS
• Have a look at the flow charts created in the
previous step.
• On each step there is some input used and
some result produced according to the
defined standards.

28. BALANCE BETWEEN LAGGING AND
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LEADING INDICATORS
• You can have quality indicators associated
with those control points.

29. BALANCE BETWEEN LAGGING AND
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LEADING INDICATORS
• You can have quality indicators associated
with those control points.
• There might be leading or lagging indicators.

30. BALANCE BETWEEN LAGGING AND
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LEADING INDICATORS
• Lagging indicators tell you a story of what has
happen, this information is useful, but you are
just observing what happened and you cannot
change anything about that.

31. BALANCE BETWEEN LAGGING AND
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LEADING INDICATORS
• Lagging indicators tell you a story of what has
happen, this information is useful, but you are
just observing what happened and you cannot
change anything about that.
• Leading indicators reflect inputs that influence
the process.

32. BALANCE BETWEEN LAGGING AND
BSC DESIGNER
LEADING INDICATORS
• Lagging indicators tell you a story of what has
happen, this information is useful, but you are
just observing what happened and you cannot
change anything about that.
• Leading indicators reflect inputs that influence
the process.
• On your scorecard you need to have both –
leading and lagging indicators.

33. BSC DESIGNER
IN BSC DESIGNER
• From the viewpoint of calculations, lagging
and leading indicators are the same,

34. BSC DESIGNER
IN BSC DESIGNER
• From the viewpoint of calculations, lagging
and leading indicators are the same,
• The difference is in their business meaning
that you provide as a user.

35. 4. WHAT ARE THE MOST
IMPORTANT INDICATORS?

36. WHAT ARE THE MOST IMPORTANT
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INDICATORS?
• The answer is: “All of them are important!”

37. WHAT ARE THE MOST IMPORTANT
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INDICATORS?
• The answer is: “All of them are important!”
• The question is: are all of them equally important?

38. BSC DESIGNER
ARE ALL OF THEM EQUALLY
IMPORTANT
• Reducing defects number from 0,01% to 0,001%
might slow down the whole production system,
while your clients were happy with a 0,01% defect
rate,

39. BSC DESIGNER
ARE ALL OF THEM EQUALLY
IMPORTANT
• Reducing defects number from 0,01% to 0,001%
might slow down the whole production system,
while your clients were happy with a 0,01% defect
rate,
• And for them the parameter of specific product
function is much more important.

40. BSC DESIGNER
ARE ALL OF THEM EQUALLY
IMPORTANT
• Reducing defects number from 0,01% to 0,001%
might slow down the whole production system,
while your clients were happy with a 0,01% defect
rate,
• And for them the parameter of specific product
function is much more important.
• You need to find a balance and reflect the
differences between how important each of the
indicators on your scorecard are.

41. BSC DESIGNER
IN BSC DESIGNER
• You have a weight property for an indicator.

42. BSC DESIGNER
IN BSC DESIGNER
• You have a weight property for an indicator.
• Check out an article that explained how to use
it.

43. BSC DESIGNER
IN BSC DESIGNER

44. 5. WHAT IS THE
PERFORMANCE OF AN
INDICATOR?

45. BSC DESIGNER
AN EXPAMPLE
• Let’s say you have 1% defect rate,

46. BSC DESIGNER
AN EXPAMPLE
• Let’s say you have 1% defect rate,
• Then you optimized the process and achieved
a 0,1% defect rate,

47. BSC DESIGNER
AN EXPAMPLE
• Let’s say you have 1% defect rate,
• Then you optimized the process and achieved
a 0,1% defect rate,
• Finally, after an introduction of additional
quality measures you got a 0,01% defect rate
on average.

48. HOW WAS THE PERFORMANCE OF THE
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QUALITY INDICATOR CHANGED?
• Was it improved 10 times, and then again
improved 10 more times?

49. HOW WAS THE PERFORMANCE OF THE
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QUALITY INDICATOR CHANGED?
• Was it improved 10 times, and then again
improved 10 more times?
• From a business viewpoint clients might be
unhappy with a 1% defect rate, and really
happy when you have a 0,1% defect rate, and
achieving a 0,01% defect rate may not have
make any visible difference for them.

50. HOW WAS THE PERFORMANCE OF THE
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QUALITY INDICATOR CHANGED?
• In real life some indicators have a linear
performance function,

51. HOW WAS THE PERFORMANCE OF THE
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QUALITY INDICATOR CHANGED?
• In real life some indicators have a linear
performance function,
• Or the performance of an indicator might
grow slowly in the beginning and then the
function converts into an almost flat line,
meaning that further improvements don’t
improve the end performance.

52. HOW WAS THE PERFORMANCE OF THE
BSC DESIGNER
QUALITY INDICATOR CHANGED?
• In real life some indicators have a linear
performance function,
• Or the performance of an indicator might
grow slowly in the beginning and then the
function converts into an almost flat line,
meaning that further improvements don’t
improve the end performance.
• Remember this when you design your
indicators and set targets for them.

53. BSC DESIGNER
IN BSC DESIGNER
• There is an “Optimization” drop list, where you
can change linear optimization function to a
more relevant one for the measured aspect of
the quality.

54. BSC DESIGNER
IN BSC DESIGNER

55. 6. THE TOTAL SCORE OF THE
QUALITY SCORECARD

56. THE TOTAL SCORE OF THE QUALITY
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SCORECARD
• When you have 50+ indicators on your quality
scorecard, each with its own performance
function, benchmarks, values, and weights,

57. THE TOTAL SCORE OF THE QUALITY
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SCORECARD
• When you have 50+ indicators on your quality
scorecard, each with its own performance
function, benchmarks, values, and weights,
• Then theoretically you can calculate the
performance of each category and then the
performance of the whole scorecard.

58. THE TOTAL SCORE OF THE QUALITY
BSC DESIGNER
SCORECARD
• When you have 50+ indicators on your quality
scorecard, each with its own performance
function, benchmarks, values, and weights,
• Then theoretically you can calculate the
performance of each category and then the
performance of the whole scorecard.
• As a result you will have a single number (in
this case we might call it a “quality score”).

59. GROUP INDICATORS INTO CATEGORIES
• Some top managers ask for a single quality
score, but in the most cases it won’t make any
sense, as this number aggregates too much
data.
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60. GROUP INDICATORS INTO CATEGORIES
• Some top managers ask for a single quality
score, but in the most cases it won’t make any
sense, as this number aggregates too much
data.
• It looks nice in the reports, but it won’t give
any meaningful information for a top
manager.
BSC DESIGNER

61. GROUP INDICATORS INTO CATEGORIES
• Some top managers ask for a single quality score,
but in the most cases it won’t make any sense, as
this number aggregates too much data.
• It looks nice in the reports, but it won’t give
any meaningful information for a top manager.
• The better option is to group indicators into
categories and report the performance of each
category.
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62. BSC DESIGNER
IN BSC DESIGNER
• The program can calculate the performance
figures for a container and for the whole
scorecard, but the end usage is up to you.

63. BSC DESIGNER
IN BSC DESIGNER

64. 7. PLAN YOU ACTIONS

65. BSC DESIGNER
PLAN YOU ACTIONS
• Be sure that you have (preferably in writing)
some plan aligned to each quality indicator.

66. BSC DESIGNER
PLAN YOU ACTIONS
• Be sure that you have (preferably in writing)
some plan aligned to each quality indicator.
• What will you do if this indicator gets into the
red zone?

67. BSC DESIGNER
PLAN YOU ACTIONS
• Be sure that you have (preferably in writing)
some plan aligned to each quality indicator.
• What will you do if this indicator gets into the
red zone?
• Are there any routine procedures associated
with this indicator?

68. BSC DESIGNER
PLAN YOU ACTIONS
• How often do you need to revise this
indicator?

69. BSC DESIGNER
PLAN YOU ACTIONS
• How often do you need to revise this
indicator?
• Who is responsible for an indicator?

70. BSC DESIGNER
IN BSC DESIGNER
• Select an indicator or business goal,

71. BSC DESIGNER
IN BSC DESIGNER
• Select an indicator or business goal,
• Click “Initiatives” button, attach some relevant
documents,

72. BSC DESIGNER
IN BSC DESIGNER
• Select an indicator or business goal,
• Click “Initiatives” button, attach some relevant
documents,
• Choose a person responsible, and specify
required update interval for an indicator.

73. IN BSC DESIGNER

74. 8. BUILD A QUALITY
DASHBOARD

75. BUILD A QUALITY DASHBOARD
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• Dashboards help to visualize quality
indicators.

76. BUILD A QUALITY DASHBOARD
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• Dashboards help to visualize quality
indicators.
• For some of them you will need to use a
gauge-style chart,

77. BUILD A QUALITY DASHBOARD
• Dashboards help to visualize quality
indicators.
• For some of them you will need to use a
gauge-style chart,
• For others the best option is to display time
chart with a trend line.
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78. BUILD A QUALITY DASHBOARD
• A well designed dashboard will give you a top
level view.
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79. BUILD A QUALITY DASHBOARD
• A well designed dashboard will give you a top
level view.
• Use it together with indicators visualized on
the map.
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80. BSC DESIGNER
IN BSC DESIGNER
• You can create a number of dashboards to
visualize your indicators or business goals
there.

81. BSC DESIGNER
IN BSC DESIGNER

82. 9. TRACK THE TREND

83. BSC DESIGNER
TRACK THE TREND
• Even if you check your indicators regularly you
might miss out on a negative trend.

84. BSC DESIGNER
TRACK THE TREND
• Even if you check your indicators regularly you
might miss out on a negative trend.
• For that purpose track indicators’ value for
longer periods of time.

85. BSC DESIGNER
TRACK THE TREND
• For example, taking a 3 month period as a
base for calculations you might see that an
indicator is trending into a red zone.

86. BSC DESIGNER
TRACK THE TREND
• For example, taking a 3 month period as a
base for calculations you might see that an
indicator is trending into a red zone.
• This will serve as an excellent early-warning
signal for your team.

87. BSC DESIGNER
IN BSC DESIGNER
• “Time” chart has a trend line on it.

88. BSC DESIGNER
IN BSC DESIGNER
• “Time” chart has a trend line on it.
• Also, you can use “Forecast Analysis” on
“Analysis Tab” to forecast indicators’ value.

89. BSC DESIGNER
IN BSC DESIGNER

90. 10. MAKE SURE YOU GET
BAD NEWS EARLY

91. BSC DESIGNER
MAKE SURE YOU GET BAD NEWS
EARLY
• If some quality indicator has gotten into the
red zone and this indicator is critical for the
ultimate quality (if it is not, why is it on your
quality scorecard?),

92. BSC DESIGNER
MAKE SURE YOU GET BAD NEWS
EARLY
• If some quality indicator has gotten into the
red zone and this indicator is critical for the
ultimate quality (if it is not, why is it on your
quality scorecard?),
• Then make sure that all of the stakeholders
get a notification about the problem
immediately.

93. BSC DESIGNER
IN BSC DESIGNER
• On “Alerts” tab one can setup alerts that will
be sent to the person responsible, or to the
manager if an indicator is in the red zone.

94. BSC DESIGNER
IN BSC DESIGNER

95. GENERAL
RECOMMENDATIONS ABOUT
QUALITY METRICS

96. GENERAL RECOMMENDATIONS ABOUT
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QUALITY METRICS
• On the Internet you might find some ready-to-use
quality metrics.

97. GENERAL RECOMMENDATIONS ABOUT
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QUALITY METRICS
• On the Internet you might find some ready-to-use
quality metrics.
• Be careful about using these indicators, they
aggregate some best practices about
measuring quality, but your business does not
necessary need them.

98. GENERAL RECOMMENDATIONS ABOUT
BSC DESIGNER
QUALITY METRICS
• On the Internet you might find some ready-to-use
quality metrics.
• Be careful about using these indicators, they
aggregate some best practices about
measuring quality, but your business does not
necessary need them.
• The best approach is to pass through the steps
1-3 as described above and create indicators
that are specific for your business.

99. Find more insightful
articles about the
Balanced Scorecard
in ”Articles” section at
www.bscdesigner.com
BSC DESIGNER
MORE ABOUT THE BALANCED SCORECARD

100. BSC DESIGNER
THANK YOU!
Feel free to send us your questions using the contact form at
www.bscdesigner.com