BALANCED SCORECARD-FINANCIAL KEY INITIATIVES

Steven Cesare, Ph.D.

A savvy business owner from Michigan called me the other day to talk about her company’s annual strategic plan for the new year. Fueled by optimism, while overwhelmed by creativity, the business owner sought some meaningful structure to organize her thoughts, specify performance goals, and package the overarching plan in an easy-to-understand framework for her team. With strategic intent positioned indelibly at the forefront of any clairvoyant exercise, I have long maintained that all organizational strategic plans, business models, and performance audits be configured within the context of the Balanced Scorecard.

Theoretically strong and pragmatically convenient, the Balanced Scorecard postulates that organizations must have equitable, synergistic focus on four concurrent goal quadrants to enjoy sustainable success:

Financial: An organization’s financial performance and use of financial resources. In the Green Industry, this goal quadrant typically addresses revenue from all available sources (e.g., maintenance, design-build, irrigation, trees, installation, snow, plant health care, enhancements, pest management).
Employee: Human capital, culture, and other capacities that are key to breakthrough performance. In the Green Industry, this goal quadrant normally tracks field employee staffing levels, position turnover, and Foreman retention rates, as well as the number of fully-trained field employees, average days to fill a staffing vacancy, bench strength percentage, and myriad organizational culture measurements.
Process: The quality and efficiency of an organization’s performance related to the product, services, or internal business procedures. In the Green Industry, this goal quadrant usually tracks the gross margin percentage for each revenue source identified in the Financial quadrant, though it can also monitor: revenue per employee, labor efficiency, average DSO, outstanding purchase orders, days to implement a new system (e.g., BOSS, IT, CRM, purchasing), debt-to-equity ratio, and equipment repair.
Customer: Organizational performance from the perspective of the company’s customer base. In the Green Industry, this goal quadrant normally addresses maintenance job retention rate, job quality ratings, or customer portfolio diversification; though it can also track customer service feedback, YELP reviews, sales capture rates, and percentage of new clients added per year.

Given that overview, here are the most common key initiatives that most landscapers consider when addressing the Financial quadrant. Parenthetically, the next three Tuesdays with Steve will share information on the remaining three quadrants of the Balanced Scorecard (e.g., Employee, Process, and Customer) independently.

Financial

Based on the rolling three-year average, establish monthly revenue goals for each department
Determine the Marketing budget, with a written Marketing Plan, and an adjoining Marketing Calendar
Have monthly meetings aimed at improving the quality and quantity of lead generation
Improve the quality of all marketing documents and sales proposal materials
Double the number of new sales proposals, enhancements, and change orders distributed each week
Increase pricing (e.g., billable rates, materials costs, service fees, mark-up)
Revise the company web site to be more entrepreneurial, promote SEO, interactivity, video content
Create a Sales War Room; install a push-pin wall map; populate and leverage the Sales Matrix
Meet with each Business Development Manager weekly to track his/her Sales Pipeline Report
Require each Business Development Manager to make at least five cold calls per day; log the calls
View all prospective maintenance contracts in light of potential enhancements opportunities
Adopt a three-tiered approach to sales commission rates with an adjoining bonus program
Create SOPs for developing a new sales proposal, selling enhancements and change orders
Implement monthly Social Media Campaigns (e.g., Twitter, Facebook, Instagram, LinkedIn)
Consider adding a new revenue stream (e.g., irrigation, plant health care, subcontracting)

As a capitalist, three non-negotiable factors are interwoven throughout all these initiatives, solely intended to achieve desired financial goals. First, the incentives, commissions, and bonuses attached to each metric must be undeniably lucrative to motivate the employees. Second, focus primarily on the weekly procedures designed to achieve the results, not just the monthly outcomes. Third, hold your employees accountable for their individual progress. If you don’t do all three of these components, stop wasting your time and that of your employees, convince yourself that you are too busy, and just do what you did last year.

If you have any questions or comments about this topic or anything else related to human resources, Sign Up for Steve’s HR Helpdesk!