Balanced Scorecard Facilities Management free essay sample

International Shared Services and Outsourcing Advisory Using a balanced scorecard to help measure facilities management performance by Steve Silen, Director, KPMG Advisory Services For nearly 20 years, leading organizations have been using balanced scorecards to strategically measure the financial and non-financial performance of different operational functions within their firms. More recently, they have begun leveraging them to measure the performance of their third-party service providers. In the facilities management (FM) function, use of a balanced scorecard enables companies to evaluate the performance of their external providers against multiple criteria (see Figure 1), help set alignment and focus, identify improvement opportunities, enhance performance reporting, and conduct constructive discussions with their FM providers. Sample balanced scorecard (1 – best, 5 – worst) Evaluation Criteria Cost Customer Satisfaction Service Delivery EHS Performance Compliance Innovation/Continuous Improvement Weight 35 20 20 10 10 5 100 Evaluation Comments Costs were slightly under budget Score based on customer satisfaction survey All SLA requirements were met There were a couple of safety incidents in the cafeteria No fines or violations No initiatives were implemented Weighted Score Score 2 2 1 4 3 5 2. 25 In a sense, the balance scorecard process for FM service providers should be similar to the way in which individual performance is handled – expectations are set, measures to evaluate performance are established, performance is monitored and discussed throughout the year, corrective measures are implemented, and performance is formally documented. â€Å"Just as organizations want their employees to achieve the highest level of performance, they should want the same from their FM service providers. Although there is no set format for balanced scorecards, and they vary from company to company, Figure 1 demonstrates elements many organizations include in those for their FM service providers: †¢ Evaluation criteria – areas measured (e. g. , cost, customer satisfaction, service delivery, safety performance) †¢ Weight placed on each criterion (i. e. , different % for each criterion, totaling 100%) †¢ Evaluation comments – favorable as well as areas for improvement †¢ Evaluation score (e. g. , 1-5 scale) for each criterion and a total weighted score. Note: Evaluation criteria and weights are for illustrative purposes only Shared Services and Outsourcing Advisory / August 2012  © 2012 KPMG International Cooperative (â€Å"KPMG International†). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated. NDPPS 104414. SSOA 6245. When to use a balanced scorecard A balanced scorecard should be prepared for each FM service provider only when it makes good business sense to do so, e. g. , when the amount of FM spend is significant, services are frequently performed, or when the provider works on-site full-time. The balanced scorecard approach works extremely well for companies that operate under an integrated facilities management (IFM) – wherein some FM services are selfperformed by one service provider while others are handled by firms with which it has partnered, all in an integrated manner model – because of the multiple service lines and the breadth of the provider’s responsibilities. But it is also very valuable for firms that do not operate under an IFM model. To view year-on-year balanced scorecard trends and determine if performance is improving or not, organizations often use graphics (see Figure 2). Sample score graph Specific evaluation criteria Cost While all firms track actual costs, they should also evaluate cost performance at a more detailed level with weights and scoring definitions assigned to each sub-category to ensure cost-effective service delivery. Figure 3 on the next page is an example of a balanced scorecard for cost. Many organizations find it useful to assess costs not only in aggregate, as in the above example, but also by type of expense. This enables them to zoom in on specific expenses such as maintenance or energy/utilities, and have meaningful discussions with their providers about whether their expectations are being met. Customer satisfaction Measuring the satisfaction level of those receiving FM services is another critical part of the process. Organizations should use a variety of methods to obtain input directly from their internal customers, including periodic email surveys (e. g. , annual/ semi-annual/upon completion of a service), online or paper suggestion boxes, administrative assistant feedback sessions and # of complaints received. A detailed scorecard, similar to the one in the cost category, should be established to measure customer satisfaction. All of these are excellent ways to â€Å"hear the voice of the customer† and identify areas for improvement. Yet care should be taken to develop and administer surveys that capture relevant information without being a burden to complete, and that feedback sessions do not keep participants away from their jobs for too long. Service delivery Proper operational performance is ensured only when providers meet or surpass firms’ service delivery expectations. Thus, organizations should implement a detailed scorecard to assess service delivery performance for each service line. For example, in the maintenance category, the detailed scorecard may look like the example in Figure 4 on the next page and Figure 5 shows an example of a detailed scorecard for food services. Similar to the scorecard examples, organizations should establish detailed scorecards for their other outsourced service lines, such as janitorial services, call center and mailroom. Figure 2 Evaluation criteria – the basics The evaluation criteria on the balanced scorecard should be tailored for each category (e. g. , cost, customer satisfaction, service delivery, etc. ) as well each major service line (e. g., janitorial services, food services, maintenance, etc. ) and the weight should vary to reflect the importance of each criterion to the organization. Firms typically establish scoring definitions and the means by which the scores will be calculated to minimize subjectivity and provide clarity on how performance will be measured. While some organizations use highly detailed scorecard s to thoroughly evaluate each criterion, the â€Å"right† level of detail for any given firm is dependent on multiple variables including that there is a credible and easy process by which to obtain the necessary information.