Balanced Scorecard – What would you include in the Internal Business Process Perspective?

Posted on: 4th April 2011 by Rob

The internal business process perspective is the area that most operational managers feel comfortable with. This is the area where measurement takes place on things they know and manage on a daily basis. The key to these measures is that they form the foundation of the Vehicle to Drive the business forward and deliver what the customer needs. So let’s consider what measurement might make up the Internal Business Process Perspective.

The Inspired Change approach to the Internal Business Process Perspective is to consider it in three elements, these being Corporate Social Responsibility, Direct Processes and Indirect Support Processes. Let’s look at each in turn.

Corporate Social Responsibility

Corporate Social Responsibility for many companies is not just about compliance or requirements to be a supplier, but is a statement demonstrating Business Excellence to their target market. The main areas covered under CSR are Health, Safety & Wellbeing, Environmental impact, Quality Management and Ethical Trading. All of these areas of critical importance to any company. They cover the safety and wellbeing of staff, contractors, visitors, consumers/customers and also the planet.

There are legal requirements for companies to manage a number of these aspects, but in addition to these minimum requirements there are also recognised International standards in Safety, Environmental, and Quality Management namely ISO 18001/14001/9001. Other standards also exist for specialist industries. Nearly all these standards focus on best practice and continuous improvement of procedures and management of those procedures and to this end CSR fits nicely into the Internal Business Process Perspective.

Direct Processes

Measurement of Direct Processes is really keep an eye on those things that directly deliver a product or service to the customer. In a manufacturing environment this could include production efficiency measurement such as OEE (Operating Equipment Effectiveness) which measures the availability, performance and quality of units produced from a production area. In the service industries this could include track performance again Service Level Agreements and how quickly work is performed to a required standard. It would not be unusual for a company to already have these measures in place. The opportunity is joining them together with other measures across the company to clearly understand cause and effect on the company.

Indirect Processes

Quite often measures are created for those areas directly involved with serving the customer or producing saleable units, but the importance of those indirect process, departments and activities are missed. The purpose of having these in place is to support the direct operations and make sure they function to their full potential. With that in mind it makes sense to monitor the performance of the indirect processes and departments to make sure that they are not impeding on the direct operations. Areas to be considered in this area would include purchasing, maintenance, marketing, HR, IT and Finance.

Rob Whitwood is a Balanced Scorecard Consultant working with companies and organisations across the UK. Get in touch with Rob today, head to the Inspired Change Balanced Scorecard website or read more Balanced Scorecard articles here.

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