The metric models of balance scorecard

Access your KPIs online;
Measure your success;

Navigation: All Balanced Scorecard Articles > Strategic Planning

Metric models of balance scorecard include the strategic management and analysis of company. Check additional information about metrics models.

Balance scorecard is a strategic management method to measure the performance of activities inside a company in relation to the vision and long-term goals of the company. By rational, they should be in alignment. The aspect included is not only about any specific activity, but includes all: the financial, operational, marketing and the human resources and strategic. Balance scorecard give comprehensive view through all. Basically there are some reasons of company implementing balance scorecard, they are to focus more on strategy and results, align between organisational strategy to day-to-day activities in the organisation, improve organisational performance in every aspect, make priorities on certain values or projects, improve the communication of vision and strategy to all members of organisation, and to put more forces on future performance.

The underlying theory of balance scorecard is that a company can not be successful by just focusing on one aspect, for example the financial. There should a balance. That is why balance scorecard comes with four perspectives: the financial, customer, internal process, and innovation and learning. If you notice them in big picture, the fours perspectives include all areas of a company. The financial perspective will evaluate the management effectiveness between operation and cost and the execution and implementation of a company's strategy to the day-to-day improvement. The financial aspect is important because it makes sure what backs up a company to keep doing its business. The customer perspective focuses on measuring the values delivered to customers. They include delivery time, quality of product, service, and cost. The value of this perspective is that satisfied customers will likely to make more purchases and increase company's revenue. The internal process perspective is the one that concerns with the processes inside a company, which include four clusters: the operational management, innovation, customer management, and regulatory and social. The internal process is about what is important to deliver the expected values to customers. The last one, the innovation and learning, makes more focus on intangible assets of a company. They are like human, system or information, and the climate of organisation. They are the infrastructures and surroundings that enable a company to achieve its strategic and long-term goals.

The metrics model itself are built of the four perspectives and used to track performance. They are often called KPI (or Key Performance Indicator). The model or measurement can be different and customized in each organisation, but there are usually some typical measurements to include. For example, in the measurement of financial performance you will likely use the numbers derived from cash flow, return on investment, return on equity, economic value added (EVA), sales growth, and so on. To measure the internal process you might need to know the number of value added activities vs. non-value added activities, success rate, accident ratios, percentage of defect in production, machine efficiency, productivity rate, and their kinds. While for the learning growth you may need to find out and compare between internal and external recruitment, percentage of internal promotions, employee turnover, ratio of genders, rate of investment, and the others.

If you are interested in metrics models, check this link to find out more about scorecard models. Also, you can check other articles in Strategic Planning 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.