In the beginning was darkness. We went to work, did our job (well or otherwise) and went home - day in and day out. We did not have to worry about targets, annual assessments, metric-driven incentives, etc. Aahh… life was simple back then.
Then there came light. Bosses everywhere cast envious eyes towards our transatlantic cousins whose ambition was to increase production and efficiency year-by-year. Like eager younger siblings we trailed behind them on the (sometimes) thorny path to enlightenment.
Early Metric-Driven Incentives - MDIs - were (generally) focused on the financial aspects of an organization by either claiming to increase profit margins or reduce costs. They were not always successful, for instance driving down costs could sometimes be at the expense of quality, staff (lost expertise) or even losing some of your customer base.
From these MDIs evolved the T-Rex of performance measurement for organizations and processes in the 21st century - the Balanced Scorecard.
What exactly is a Balanced Scorecard?
A definition often quoted is: 'A strategic planning and management system used to align business activities to the vision statement of an organization'. More cynically, and in some cases realistically, a Balanced Scorecard attempts to translate the sometimes vague, pious hopes of a company's vision/mission statement into the practicalities of managing the business better at every level.
A Balanced Scorecard approach is to take a holistic view of an organization and co-ordinate MDIs so that efficiencies are experienced by all departments and in a joined-up fashion.
To embark on the Balanced Scorecard path an organization first must know (and understand) the following:
Once an organization has analysed the specific and quantifiable results of the above, they should be ready to utilise the Balanced Scorecard approach to improve the areas where they are deficient.
The metrics set up also must be SMART (commonly, Specific, Measurable, Achievable, Realistic and Timely) - you cannot improve on what you can't measure! Metrics must also be aligned with the company's strategic plan.
A Balanced Scorecard approach generally has four perspectives:
Implementing the Balanced Scorecard system company-wide should be the key to the successful realisation of the strategic plan/vision.
A Balanced Scorecard should result in:
Cheers!!!
Signing off,
Shauvik.
Then there came light. Bosses everywhere cast envious eyes towards our transatlantic cousins whose ambition was to increase production and efficiency year-by-year. Like eager younger siblings we trailed behind them on the (sometimes) thorny path to enlightenment.
Early Metric-Driven Incentives - MDIs - were (generally) focused on the financial aspects of an organization by either claiming to increase profit margins or reduce costs. They were not always successful, for instance driving down costs could sometimes be at the expense of quality, staff (lost expertise) or even losing some of your customer base.
From these MDIs evolved the T-Rex of performance measurement for organizations and processes in the 21st century - the Balanced Scorecard.
What exactly is a Balanced Scorecard?
A definition often quoted is: 'A strategic planning and management system used to align business activities to the vision statement of an organization'. More cynically, and in some cases realistically, a Balanced Scorecard attempts to translate the sometimes vague, pious hopes of a company's vision/mission statement into the practicalities of managing the business better at every level.
A Balanced Scorecard approach is to take a holistic view of an organization and co-ordinate MDIs so that efficiencies are experienced by all departments and in a joined-up fashion.
To embark on the Balanced Scorecard path an organization first must know (and understand) the following:
- The company's mission statement
- The company's strategic plan/vision
- The financial status of the organization
- How the organization is currently structured and operating
- The level of expertise of their employees
- Customer satisfaction level
| Department | Areas |
| Finance | Return On Investment Cash Flow Return on Capital Employed Financial Results (Quarterly/Yearly) |
| Internal Business Processes | Number of activities per function Duplicate activities across functions Process alignment (is the right process in the right department?) Process bottlenecks Process automation |
| Learning & Growth | Is there the correct level of expertise for the job? Employee turnover Job satisfaction Training/Learning opportunities |
| Customer | Delivery performance to customer Quality performance for customer Customer satisfaction rate Customer percentage of market Customer retention rate |
Once an organization has analysed the specific and quantifiable results of the above, they should be ready to utilise the Balanced Scorecard approach to improve the areas where they are deficient.
The metrics set up also must be SMART (commonly, Specific, Measurable, Achievable, Realistic and Timely) - you cannot improve on what you can't measure! Metrics must also be aligned with the company's strategic plan.
A Balanced Scorecard approach generally has four perspectives:
- Financial
- Internal business processes
- Learning & Growth (human focus, or learning and development)
- Customer
Implementing the Balanced Scorecard system company-wide should be the key to the successful realisation of the strategic plan/vision.
A Balanced Scorecard should result in:
- Improved processes
- Motivated/educated employees
- Enhanced information systems
- Monitored progress
- Greater customer satisfaction
- Increased financial usage
Cheers!!!
Signing off,
Shauvik.
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