Balanced
Scorecard at Marks and Spencer
Before
discussing Balanced Scorecard at Marks & Spencer, let’s gather
some useful information about the company. There are two main
elements to the way in which human capital is being evaluated at
Marks & Spencer. The first is the creation of a skills map
designed to show how the firm is faring in terms of the skills
across its employee base. The second is the work the firm is doing
in the area of employer brand and attempts to measure the effects of
their employment practices.
An Employee
Insight Unit has been set up to give the company an understanding of
how employees view Marks & Spencer, and seeks to measure
employee's emotional commitment to the workplace, in the same way as
an already well-established Customer Insight Unit has sought to
measure customer loyalty.
Let’s put some
more light on Balanced Scorecard at Marks & Spencer to see how
it all started? For long, Marks & Spencer was the iconic
company. The competitive advantage of the business was based on its
reputation with customers, its relationship with supplies, and the
caliber and commitment of the work force.
How did this
come about? One of Marks & Spencer’s long standing policies was
the provision of good meals to employees at nominal prices. The
meals policy began after Simon Marks paid one of the frequent store
visits which are part of the routine of all senior Marks &
Spencer executives. During it, one of the assistants fainted. When
she recovered, Marks learned that her husband was unemployed and the
family didn’t have enough food to go round. Marks’ conclusion was
not – and I want to emphasize this – that Marks & Spencer had a
social obligation to relieve poverty in the community. But he did
take the view that the kind of business he was building was not one
in which employees fainted because they hadn’t enough to eat. That
is Mode 1 behavior. A Mode 2 company
would compare the costs of providing subsidized meals with the
expected net present value of the savings from reduced staff
turnover. Only if the net balance was positive would the transaction
enhance shareholder value and appeal to the
Board.
In life, and
business, we should judge ourselves by a balanced scorecard. Among
the management fads and fashions of the last twenty years, the
balanced score card is one that survives, and deserves to survive.
The principle is that the performance of a business is judged, not
by any single metric – the bottom line – but by a wide range of
indicators related to a company’s distinctive capabilities, the
source of its competitive advantage, its relationships with its
stakeholders. For Marks & Spencer, whose competitive advantage
rested on what is called its architecture – the structure of its
relationships with suppliers and employees – and on its brand and
reputation, the components of its Balanced Scorecard at Marks &
Spencer would have placed appropriately more emphasis on people, and
on the way people outside the company perceived it.
We can see how
these kinds of assessment could have restrained, perhaps even
prevented, the calamities that befell these businesses. They relate
the metrics of performance to the competitive strengths of the
corporation.
Now, let’s take
a look on “Case study: Marks and Spencer Scorecard takes HR to the
top of the agenda”:
Retail giant
Marks & Spencer has linked its staff satisfaction survey to the
company's sales performance to measure HR's output as part of its
balanced scorecard. The store is able to relate responses to certain
questions in the twice-yearly questionnaire to improvements in sales
per square foot.
Marcus Powell,
head of HR strategy and change, told delegates a 1 per cent increase
in the 'clarity about own contribution to meet customer needs'
question equates to a 5.1 per cent increase in sales per square
foot. A 1 per cent increase in employee satisfaction on the 'praise
for performance' question translates to a 2.9 per cent jump in sales
per square foot.
Powell said the
link between employee satisfaction and sales performance is an
important part of the company's balanced scorecard. Powell told
delegates the scorecard has helped move HR to the top of the
business agenda and played a major part in the company's improved
UK performance over the
past year. HR had very short-term goals of helping the business
stabilize. The company had always been known for treating its staff
well and we want to get back to that and become the standard against
which all other [HR departments] are
measured.
The move is
part of the organization’s restructuring of HR, which is designed to
encourage and reward commitment. HR's role now is to support the
line providing leadership to their people and helps the business
deliver better results and Balanced Scorecard at Marks & Spencer
is doing the same or even more.
