Joyce Biginskor manages the Assembly Department at Valance Autoparts, a parts supplier to large auto companies. Valance has recently adopted a balanced scorecard for the entire company. As a result, the plant manager for each production facility has a set of strategic goals, measurements, and rewards designed to motivate employees to achieve the company’s overall goals.

The plant manager has implemented the balanced scorecard throughout each department. The balanced scorecard measures that specifically apply to the Assembly Department are primarily related to business process measures and learning and growth measures. In particular, the assembly line and related employees supervised by Biginskor are evaluated on efficiency measures and learning and growth measures. The learning and growth measures are employee absenteeism, retention, and satisfaction. Operating efficiencies are measured by cycle time, amount of work-in-process inventory, hours of machine downtime, number of defects, cost of rework, and productivity per employee. Biginskor obtains a monthly cash bonus if she can increase the learning and growth measures and reduce inefficiencies in the operations.

During the first year that the balanced scorecard was used at Valance, Biginskor did not earn a bonus. She has been particularly frustrated because whenever she reduces the work-in-process inventory on the shop floor, cycle time increases. When she reduces the hours of machine downtime, the defects increase and employee satisfaction decreases.

The plant manager decides to hire your consulting firm, Consultants Incorporated, to help evaluate the new balanced scorecard performance measurement and compensation scheme.

Instructions

Choose a partner to round out your consulting team and write a memo to the plant manager that explains the problems the manager is encountering in the Assembly Department. In the report identify with bullet points the problems that she is having with the balanced scorecard system and provide suggestions to the plant manager to help remedy the problems.