BALANCED SCORECARD-PROCESS KEY INITIATIVES

Steven Cesare, Ph.D.

This is the third installment of a four-part series documenting my response to a Michigan business owner’s request for a practical format of conceptualizing, packaging, and implementing her company’s Strategic Plan for 2025. As stated previously, I recommended the business owner adopt the Balanced Scorecard as the preferred vehicle for delivering all company-wide planning, goal setting, and key initiatives, thereby ensuring goal clarity, communication consistency, and congruence throughout the company culture going forward. Please be reminded the Balanced Scorecard is predicated on the framework that four concurrent goal quadrants to (e.g., Financial, Employee, Process, and Customer) must be equivalently addressed for an organization to maintain significant sustainable success.

It is noted that the Financial and Employee quadrants were presented during the last two weeks’ postings. Accordingly, the Process quadrant is the topic of this week’s column.

The Process quadrant primarily addresses 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.

In short, the Process quadrant focuses extensively on how well the company utilizes its resources, administers its systems, and monitors precise measurement to gauge ongoing progress toward desired procedural goals. Project management, cost containment, and relentless follow-up are essential the success of this quadrant; methodological inaccuracy, empirical indifference, or shareholder immaturity preordain interminable regret.

That point being said, here are some of the most common key initiatives that many landscapers and I frequently discuss when trying to maximize the holy grail of ROI for the Process quadrant.

Process

Develop an annual budget and track results, variances, and accountabilities on a monthly basis
Establish and publish the monthly Gross Margin goals for each field department
Ensure all Managers and Supervisors know the formula, drivers, and impact of Gross Margin
Ensure all Supervisors and Foremen know the labor hours for each job every day
Reduce all overtime hours
Know the Hourly Average Wage for each crew
Calculate and increase the Revenue Per Employee metric for each field department
Know and track the Gross Margin for each job, within each department
Recalibrate field production rates every October
Develop Operating Routines for all Field Supervisors and Foremen to standardize efficiency
Request competitive bids from multiple vendors before purchasing field materials
Calculate the true costs for a full work crew, new customer acquisition, and staffing vacancies
Eliminate all Will-call purchases
Reduce outstanding accounts payable to less than 10% past 30 days
Implement job sequencing, rotation maps, and audit procedures for every job site
Institute estimating and review procedures to ensure all sales/enhancements proposals are accurate
Draft SOPs and flow charts for all key field operations and office administrative procedures
Upgrade the company IT, security, and yard protection systems
Implement rigorous preventive maintenance programs for all field tools, equipment, and vehicles
Bid out all insurance programs (e.g., GL, vehicle, EPLI, WC, medical benefits, Inland Marine)

As shown, the degree by which a company applies its resources, systems, and metrics must be carefully configured on both effective design and efficient application. This quadrant must discern success, not manifest bureaucracy, paralysis, or tedium. More, is not necessarily better; better, is always better.

The holy grail of better ROI is due in large part to the capitalistic mindset contained in the Process quadrant.

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