Balanced Scorecard – Reports, Examples, Guides

Balanced scorecards have been subjected to a lot of scrutiny these days. This is why steps to make balanced scorecards work have been developed by experts and analysts.

Yes, we all know how important the balanced scorecard is as a managerial tool these days. With all the hype that has been going on about this managerial tool, it is somewhat hard not to hear about how effective it has been. However, with the onset of recession and its frustrating effects on global economy, there has been a lot of talk and speculation regarding the efficacy of balanced scorecards. There are even some analysts who go as far as saying that balanced scorecards are mere tools of the past – that they do not really have that strong an effect as they used to have on the success of companies and enterprises nowadays. Still, these are just claims that are not really supported by stats and figures. But if you take time and really go back to the basics of balanced scorecard designing and development, you would see that there is still much promise to behold with these managerial tools. More importantly, there are also steps to make balanced scorecards work that your company itself can take.

The first step is to translate the mission, vision, and strategies of your company into implementation by means of four perspectives – financial, customer, business process, and learning and growth. By compartmentalizing, it would be easier for your company to monitor not only its present performance but its future performance as well.

To better compartmentalize everything, there is a need to raise a few questions. For the financial perspective, you need to ask yourself how the company should appear to its shareholders so that it would success financially. For the customer perspective, the company should then focus on its appearance to its customers. For business processes, the company should ask which business processes it needs to be good at so that both customers and shareholders are adequately satisfied. And for learning and growth, the company has to determine how it can sustain its ability to adapt to changes and make necessary improvements in order to achieve its vision.

The next step is to monitor and score or evaluate four areas for each perspective discussed above. These four areas include objectives, measures, targets, and initiatives. Objectives pertain to the major objectives that the company wishes to achieve; for instance, profit and growth. Measures are the observable parameters used in measuring the company’s progress towards achieving those objectives. Targets are more specific values in nature that are used in the process of measuring progress. Initiatives, meanwhile, are the programs or the projects that are implemented to meet set objectives.

Lastly, outcome metrics need to be implemented as well. The logic behind this is quite simple – what you cannot measure, you cannot improve. Thus, outcome metrics need to be implemented with the priorities of the company’s strategic plans as bases. Moreover, these priorities give managers the criteria and key business drivers that they need to look out for in the desired metrics. Information is then collected and implemented in numerical form for analysis, thereby providing your company necessary feedback regarding its progress.

These are the necessary steps to make balanced scorecards work that companies need to keep in mind. With this as your guide, you are sure to have an effective balanced scorecard in your hands.

Scorecard Best Practices Articles balanced scorecard, Finance, Managerial Tool

Preparing BSC implementation is the first step towards successful use of the managerial tool. With sufficient preparation, the tool can be maximized and used to its full potential.

It is not enough for businesses to develop and design a balanced scorecard or BSC that they can use to monitor and evaluate corporate performance. They have to go the extra limb, especially when it comes to BSC implementation. A lot of companies neglect to undergo preparation procedures, assuming that these are no longer necessary. Nothing could be further from the truth because BSC implementation does entail much preparation. Why? This is because implementing the BSC as a managerial tool that would be used to evaluate not just the performance of the company, but that of the employees themselves would certainly bring about a lot of changes. Yes, these may be positive changes, but these are changes nevertheless. And we all know how people react to changes at first bat – most tend to resist them, no matter how positive the changes may be. Thus, preparing BSC implementation becomes a must for all companies to undergo.

Going back to the basics, the BSC generally covers four aspects, namely finance, customers, internal business processes, and learning and growth. The interplay of all these four aspects would then be indicative of the company’s performance. More importantly, this would indicate whether or not the company is performing well. This is all the more reason why the scorecard is termed as “balanced scorecard”, to connote the “balanced” nature of the tool itself. Thus, it is important to incorporate balance, cohesion, and order across these four perspectives.

The success of BSC implementation is largely dependent on whatever strategies would be employed by the management team – more specifically, the members of higher management, that is. Thus, upper management should be wary and extremely careful when it comes to choosing which strategies to use towards effective BSC implementation. Whatever strategy or combination of strategies a company employs, all of these should be sound, stable, and deemed effective by the larger population of higher management. Effective management is then the logical beginning of effective BSC implementation.

Pertinent facts and figures should support the procedure carried out by the implementing body. Do not think of foregoing this just because this is still quite early when it comes to implementing the whole procedure. In fact, much focus should be placed here because this is the foundation of success – or failure – for the BSC as a managerial tool. This is why everything should be backed by facts and figures.

Communication is also another aspect that should be given much focus. As mentioned above, employees tend to shy away from whatever changes implemented by the management, especially the ones that are implemented quite suddenly. This is why it is important to foster open communication lines, so that early on, employees would already be aware of the coming changes brought about by the tool. Moreover, the purpose of the tool as well as how it would be used should be discussed to the employees themselves. This way, it would be easier for employees to fully grasp just how beneficial the use of the tool really is.

Preparing BSC implementation is indeed necessary, from all the information discussed here. With sufficient preparation, the company itself would be ready to deal with whatever curveballs that may come its way.

Scorecard Best Practices Articles balanced scorecard, Businesses, Managerial Tool

With the controversy the balanced scorecard has been receiving, the time has come to go back to the basics. There is a need to keep an eye on balanced scorecard success factors as well.

The balanced scorecard has been subjected to a lot of scrutiny these days and if your company keeps tabs with the latest trends in the field, then you surely must have questioned the efficacy of the tool itself as well. Do not worry or subject yourself into a state of panic right this moment because it is but natural to question the effectiveness of the managerial tools that you are using. Rest assured that the balanced scorecard is still a formidable managerial tool that all companies can use. However, it remains formidable only if you are constantly looking out for ways to improve your tool, to maintain that competitive edge. To do this, not only do you need to keep tabs with prevalent trends, you also need to get in touch with the basics on balanced scorecards as managerial tools. That means that you need to go back to the basics – from performance measurement via the use of relevant KPIs or key performance indicators and right down to benchmarking. All of these comprise balanced scorecard success factors that we need to keep an eye on.

Going back to the basics, remember the adages, “You cannot manage what you cannot measure,” and “Without date, you are just another opinion.”? Yes, these may be clichйs to the many people who are not equipped with the knowledge needed to use balanced scorecards. Still, these are great adages to live by because these are indeed the statements instilled in the core of the development of scorecards in the first place.

To illustrate in laymen’s terms, let us say that you are learning to fly a biplane but you do not have a dashboard in your cockpit. This means that you do not have any gauges to base your flight plan on and you do not have idiot lights either. Sure, you just might be able to lift your biplane off the ground but without the gauges and the needed dials on your dashboard, you might as well kiss your destination goodbye because there is just no way for you to get there on your own. The balanced scorecard is actually your dashboard that contains all the gauges and dials.

For a balanced scorecard to be successful, the tool itself should make use of internal and external benchmarkers as well as make use of the cascading method of setting performance goals. This way, achievements would then be acknowledged and lauded in real time. Also, for the tool to be motivational in nature, data that is both timely and accurate should be provided. Make sure the data is presented in the simplest form possible without jeopardizing or compromising the validity of the measurements being used as well as the ability to trace problems right to their root causes.

So, what then are the keys towards balanced scorecard success factors? First, you should employ a “no status quo” mindset. This means either you win or you lose. Second, you define the key success factors of the company as thoroughly as possible. Third, you determine stretch goals that are both realistic and relevant to the key success factors of the enterprise. Fourth, you implement coaching or training programs to foster education. Education, after all, is a guaranteed pathway towards excellence – provided everything you learn would be applied accordingly though. Lastly, make sure to celebrate the achievement of each goal. Recognition and appreciation are very much needed here.

Scorecard Best Practices Articles balanced scorecard, Managerial Tool, Success Factors