In the facilities management (FM) function, use of a balanced scorecard enables companies to evaluate the performance of their external providers against multiple criteria (Figure 1), help set alignment and focus, identify improvement opportunities, enhance performance reporting, and conduct constructive discussions with their FM providers.
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.
“Just as organizations want their employees to achieve the highest level of performance, they should want the same from their FM service providers.” (Blurb)
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.
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 self- performed 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 ( 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 scorecards to thoroughly evaluate each criterion, the “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.
Specific evaluation criteria
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. 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.
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 “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.
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. The organizations should establish detailed scorecards for their other outsourced service lines, such as janitorial services, call center and mailroom.