Have you tried to implement the balanced scorecard system? Do you know what the balanced scorecard system is? Is it any use in helping improve a businesses results or efficiency? Or is it just a glorified scoreboard that does nothing but tell you the score of a match but not which team is leading?
I think the answers to these questions are difficult because the answer could be yes to all of them! It really depends on how well the system is planned, what the motives are and how well it is implemented. When the balanced scorecard is developed as strategic planning and management systems it can help align an organization behind a shared vision of success and have people working together and focused on results. It really should be more than just a scorecard it is a system, which is made up of strategy, processes and people.
The balanced scorecard was originated by Drs. Robert Kaplan (Harvard Business School) and David Norton as a performance measurement framework. They describe it like this:
“The balanced scorecard retains traditional financial measures. But financial measures tell the story of past events, an adequate story for industrial age companies for which investments in long-term capabilities and customer relationships were not critical for success. These financial measures are inadequate, however, for guiding and evaluating the journey that information age companies must make to create future value through investment in customers, suppliers, employees, processes, technology, and innovation.”
They suggest that to map a company’s results purely on financial data is limiting and focused on the past. The balanced scorecard model looks at business centered on the vision and strategy with four important measures to track the trajectory towards the vision. These categories are:
1. Internal processes to create total stakeholder satisfaction
2. Learning and Growth, ability to learn, adapt, be innovative
3. Customer focused
4. Financial, a business must of course make a profit to exist.
If businesses get it right the balanced scorecard can mean that maybe for the first time, the managers take notice of what their employees are doing, maybe even ask their advice. This means cooperation, ownership and enthusiasm. It may also lead to employee’s actions being strategically linked towards achieving the vision of the business, rather than simply being busy.
The balanced scorecard is simply a tool to implement strategy and achieve the target. One key thing that business owners or managers forget is that a company wide strategy might not translate effectively into all areas or departments of the business. These departments may need a specific strategy that is tailored to exactly what they do which if achieved will contribute to the business achieving it’s brooder target. To do this properly you need to consult the experts, the people doing the job and really think about what they do, their outputs, how to measure what they do and then setting targets to give the team members something to strive towards. This process should start at the top and cascade down to all teams. Once all departments have these tailored strategic plans they need to be checked to ensure they will contribute to the overall business success.
When the balanced scorecard system is implemented like this it will not be a waste of time. In fact it will create a unified sense of direction that will set a fire under all team members and the results will blow you away. What happens will people work together towards a common goal? They move mountains. Take the balanced scorecard system slowly, plan it properly, implement it with care, get the employees input and really get the daily actions of all employees linked to the business strategy. You will not be sorry.