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Every company that decided to go for BSC should get proper BSC education. KPI training is one of the most important elements in this sense. Choise of key performance indicators predetermines overall BSC success. Check additional information about kpi training.

What is the most common mistake in implementation of Balanced Scorecard? In fact there are many of them. Some are common and typical while others are unique. Perhaps the wrong choice of key performance indicators is one of the most widely spread mistakes in implementation of Balanced Scorecard. In order to analyze this issue we have to better understand the concept of Balanced Scorecard. So let's answer one question: "Why is Balanced Scorecard unique?" The answer is quite simple. Balanced Scorecard was one of the first systems of managerial control and performance evaluation that included nonfinancial indicators to the list of measures to be assessed. Well, this is the most striking difference between Balanced Scorecard and other strategic management and performance evaluation tools.

Why nonfinancial indicators? The point is that financial indicators signal about what has already happened to the company and all forecasts and predictions are made based on these indicators. Just to the contrary, nonfinancial indicators signal about something that might or will happen to the company. Such indicators are called leading, while most of financial indicators are lagging. That's why the wrong choice or balance between financial and nonfinancial indicators influences efficiency of Balanced Scorecard in the company or business unit. For this reason KPI training is extremely important, especially for companies with little or no Balanced Scorecard knowledge and practical experience. It should be mentioned that choice of key performance indicators is one of the most important stages of Balanced Scorecard. Failures and mistakes made at this stage will inevitably result in further failures of Balanced Scorecard in the company. What is a failed Balanced Scorecard? This is waste of tying and what's more important - money.

What is an effective key performance indicator? First off, it should be really measurable. This means that there are instruments that can measure KPI in absolute figures or percents. It is very important to have effective and powerful measurement instruments that do not distort information and provide top managers with accurate data. An indicator must be simple and easy to understand. If a sales manager does not understand the nature of key performance indicators that measure his job, he or she will unlikely to enter the right information that the BSC system. That's why every indicator must be discussed with ordinary personnel and those employees to whom such an indicator concerns. Also, indicators as well as categories of Balanced Scorecard (financial, customer, internal business processes, learning and growth) must be given proper weight. What does it mean? It means that some indicators are more important than the others and thus they should have more or little weight in the overall business performance evaluation. That's why it is very important to decide on most important things and key success factors for the company or department. For instance, employee lateness rate may be less important for sales company then sales offers per customer more customer satisfaction. When proper balance is set, BSC shows its real power since everyone in the company understands what needs to be done to achieve personal and company goals.

If you are interested in kpi training, check this link to find out more about kpi training. Also, you can check other articles in Success Stories 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.