Scorecard Benchmarking for Competitive Advantage and Internal Consistency

Access your KPIs online;
Measure your success;

Navigation: All Balanced Scorecard Articles > BSC software

Scorecard benchmarking can be a very useful tool not only to compare a company against its competitors, but also within the company to ensure the coherence of its business units. Check additional information about Scorecard Benchmarking.

Business is quite a competitive field, for a variety of reasons. One, of course, is due to the number of participating companies and institutions, which naturally stimulates competition for the limited amount of resources to be had. Another set of reasons is the fact that it often is difficult to simply stay afloat as a company, even disregarding the effect of competing companies. It takes sound strategizing and excellent execution for any organization to stand a chance to swim in the waters of the business world, which can be hostile to the new and unprepared. Scorecard benchmarking is a strategic tool that can greatly increase the chances of an organization succeeding.

First off though, what is this scorecard? The term refers to a strategic management approach, the balanced scorecard approach, which aims to provide a holistic picture of organizational performance. This is done via the use of several so called perspectives, each of which illuminates a different aspect of the company. These perspectives are the Financial perspective, Customer perspective, Growth & Development perspective, and the Internal Business Processes perspective. Taken together, these four categories more or less span the range of activities, processes, and goals that most companies possess.

Benchmarking, on the other hand, refers to comparing quantities or parameters with certain standards, which may of course vary. The scorecard is one way of measuring performance, and thus can be of great use in any benchmarking procedure or strategy. Various types of benchmarking may be done: internal, competitive, functional, and generic. Internal benchmarking refers to the comparison of processes and results between the different units of a single organization or company. This is usually done to standardize and streamline results and processes within the company itself. Competitive benchmarking, as its name implies, deals instead with comparing a company's performance with other groups in competition with it. This is often done with an eye towards not only matching but exceeding these other groups' performance as shown by the benchmark comparisons. Functional and generic benchmarking refer, respectively, to comparison between similar and dissimilar industries and fields. Done properly, the perspective and information yielded by these comparative procedures can be of great use to managers directing future company policy. In fact, these procedures can be useful not only in long term strategic planning, but also in short to mid term execution.

A large project may be more easily divided into smaller sub-projects, which would then be assigned to different teams. The results and performance of each smaller part may be compared and brought together using scorecard benchmarking. This will allow the overall executives to have a confident and precise grasp on each aspect of the big project. This will improve efficiency and allow for the fast and accurate communication of the needs and contingent changes in each sub team. By allowing such a division of labor to occur and still be managed effectively, such scorecard comparison strategies greatly increase productivity. The proper use of such tools will be a great addition to any manager's strategic and tactical arsenal.

If you are interested in Scorecard Benchmarking, check this link to find out more about dashboard analysis. Also, you can check other articles in BSC software category.

Balanced Scorecard Toolkit includes step-by-step manuals, documents, presentations, check lists designed to help business professionals with successful development and implementation of Balanced Scorecard. Learn more about BSC Toolkit.