Providing reliable service at a reasonable price should be the goal of all utilities. But unless individual employees maintain their focus on the goals of the organization, inefficiencies creep in and reliability slides. How does an organization create the measures that keep all of its members focused on the same targets? And how does an organization gain the support from its team members to buy into the direction of the organization?

Kansas City Power & Light (KCP&L; Kansas City, Missouri, U.S.) decided to embrace the “balanced scorecard concept,” which, when properly implemented, enables workers to compare actual performance against company targets and take action accordingly. The scorecard concept must be supported by first-line supervision, and the communication must be relevant and timely. Above all, utilities must avoid the trap of having the scorecard perceived as just another management fad to be rolled out with fanfare, only to fade away over time.

The Scorecard

Each month, supervisors personally distribute a short and concise update to all Distribution Operations employees. Then, communications sessions are held with each workgroup to discuss results, address performance gaps and share ideas. KCP&L employees have responded positively to the balanced scorecard initiative because they better understand the business strategy and the impact each person has on meeting specific targets.

Successful Reception

Simplicity is key. A complicated scorecard would result in confusion rather than engagement at various levels within the organization. Color-coded variances provide at-a-glance indicators of whether performance is extremely favorable, extremely unfavorable or somewhere in between. Employees can identify results in a matter of seconds.

Frequency also is critical to keeping employees focused. Results are reported on a monthly as well as a year-to-date basis, along with year-end projections.

The Scorecard Commitment

Like many utilities, KCP&L recognized the importance and value of setting performance targets and measuring results against them. Traditional measures such as SAIDI, customer satisfaction and the OSHA recordable rate have been in place across the company for a long time. However, these metrics did not reflect the total business strategy that would engage employees and keep the entire company moving in unison.

In 2003, the balanced scorecard concept was launched across the company and in just one year, cohesive metrics linked to business strategies were connected to the daily activities of employees and the operational success of the company.

Not for the Faint-Hearted

Providing an easy-to-read scorecard is not easy. In fact, it is a difficult and intense exercise. Four essential business dimensions, known as “perspectives,” must be incorporated into the final product: customers, finances, internal processes, and employee learning and innovation.

Each perspective must be supported by a series of drivers, which cascade down to specific measures and for which multi-year targets are set. Unlike most exercises in metrics development, the balanced scorecard effectively captures leading as well as lagging indicators. The leading indicator enables KCP&L to maximize business success rather than simply focus on reporting past results. Identification of the appropriate leading indicators is one of the biggest challenges in preparing the scorecard.

Gaining Ground

Perhaps the most important benefit KCP&L derived from the scorecard is the ability to concisely summarize the overall business strategy to employees with regular reports of successful progress. Every employee receives the same message at the same time every month.

Also, the leading indicators included on the scorecard alert employees to negative performance trends so corrective actions can be taken. The balanced scorecard is helping to develop a winning culture that is engaging employees at deeper levels and enhancing two-way communications, which has resulted in improvement suggestions and work practice changes.

Lessons Learned

The 2004 scorecards contained too many metrics, and several proved not to be as meaningful as was hoped. The number of drivers has been reduced from 23 to 13, and the number of corresponding measures has dropped from 57 to 32 for 2005.

What's Next

The KCP&L intranet will be expanded to offer more information on metrics. Employees will be able to point and click on a particular measure that will then drill down to greater levels of underlying detail.

Whereas the 2004 scorecards flowed from the corporate level to the divisional level, scorecards for 2005 will cascade further to their logical ending point: individual departments. Departmental scorecards will provide more meaningful information to employees. A complaint frequently heard over the last year is that divisional scorecards included a great deal of information on metrics that individual employees could not directly impact. By drilling down to the departmental level, employees will review the work measures their teams can effectively influence, thus leading to further enhanced performance.

Hoang Nguyen joined Kansas City Power & Light Co. in 2002 after 20 years of service at ComEd in Chicago, Illinois, U.S. Currently, he serves as manager of Contract Operations, responsible for all contracting activities including line construction, line clearance, cable locating, street lighting and joint use. Hoang received his BSEE degree from University of Missouri at Rolla and a Purchasing Management certificate from DePaul University, Chicago. He did postgraduate work in electrical engineering at Illinois Institute of Technology. In addition, he holds a certificate in Project Management. Nguyen is a registered engineer in the state of Illinois.
Hoang.Nguyen@kcpl.com

Mark Schuler joined Kansas City Power & Light in 1984 and is currently director of Resource Management. In this position, which he has held since July 2002, he is responsible for all activities associated with work management, project management and contract management. Previously, Schuler held management positions in customer services and line clearance. He has more than 20 years of experience in utility vegetation management and holds several academic degrees, the most recent being an MBA from Baker University in 1996.
Mark.Schuler@kcpl.com

Management Commitment

When KCP&L decided to adopt the balanced scorecard, Bill Herdegen, vice president of Distribution Operations, was the driver who pushed the development of a comprehensive scorecard for his division. Herdegen insisted that key division personnel develop a thorough understanding of the balanced scorecard concept. The work of balanced scorecard pioneers Robert Kaplan and David Norton was required reading for Herdegen's management team. A smaller core team was charged with developing and implementing the balanced scorecards for the division. Details addressed included defining metrics, setting targets and selecting appropriate communications strategies. The scorecard team interacted with utilities that had already developed scorecards, assimilated existing knowledge and shortened development time. After eight months, the scorecard was rolled out in January 2003.

Partial Sample of Scorecard

November Monthly Actual	November Monthly Budget	November YTD Actual	November YTD Budget	November YTD Progress	Year-end Projection	2004 Target
671	681	671	681	YELLOW	681	681
$8.56	$8.02	$64.90	$71.21	GREEN	$92.64	$93.42
$18.62	$15.89	$175.63	$163.24	RED	$222.14	$212.93
8.78%	9.70%	7.13%	9.70%	BLUE	9.70%	9.70%
99	99-103	99	99-103	GREEN	99	99-103
Timely information, a consistent format and simple progress indicators are ingredients that keep employee interest high.

About the Targets

Distribution Operations leveraged the results of numerous independent benchmarking efforts in which KCP&L has been an active participant as targets were set. Such an integrated approach was invaluable, making it much easier to quantify performance targets and develop strategies that would accelerate the drive to first quartile performance in a variety of dimensions, such as reliability and cost. The availability of this data facilitated scorecard completion by eliminating guesswork and intuition from the target setting process. Ultimately, a total of 23 drivers and 57 measures were identified, allocated among the various perspectives, and tied to performance targets over a five-year horizon.