Simple Rules in Cascading Balanced Scorecard

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Navigation: All Balanced Scorecard Articles > Cascading in BSC

If you have been using the BSC, you might have heard that there is huge importance in cascading balanced scorecard. Find out why along with the significant rules that you have to follow in this article. Check additional information about cascading balanced scorecard.

Cascading balanced scorecard is greatly important. Aligning the metrics with the goals of the organization and the divisions in it is a scorecard best practice. The main objective here is to link the strategic directions to the operational plans. The strategic directions pertain to the overall objectives within the strategy map. There are some fundamental rules that you have to follow so that you can successfully cascade your corporate scorecard.

Rule number 1 is to cascade the firm objectives instead of the measures. Usually, the businessmen confuse the cascading balanced scorecard as the method of distributing the measures of the BSC. If you cascade the measures, you will realize that they do not naturally communicate with the boundaries of the company. On the other hand, cascading the organizational objectives will enable you to cascade the qualities that you would like to gauge and attain relevancy at that level.

The second rule is to cascade the themes of your strategy map. What this means is that you have to ensure that you have thoroughly cascaded the model which shows the cause and effect relationship between the strategies and the targets of the business. For instance, in the marketing department, you should be able to cascade the financial impact, which consists of the costs and the revenues, the customer impact, the learning and growth and the marketing processes. These make up the BSC dimensions that you will have to measure in order to influence and improve the overall health of the company.

Third is to select the pivot point for cascading balanced scorecard. This can be a little subtle and requires you to choose correctly. If the strategy map is chiefly designed around the business processes, then you can consider the map as the point of cascade. Once you have selected the point, you will have to divide up the diagram into topics for every process. Meanwhile, if you have linked your strategy map to your customers, this is where you will be cascading around your clients. Hence, every department will have to understand how to support the customer objectives and facilitate employee initiatives.

Abiding by the rules does not hurt anyone particularly if you are serious in successfully cascading balanced scorecard. It is noteworthy that you be wary of cascading the measures particularly because they can sometimes be inconsistent when applied to the whole organization. In addition to that, you should not aggregate your key performance indicators into worthless ratios and then later combine them with the composite measures. If you fail to go by this principle, this will lead to hiding away the meaning and the relationship between the company and the forces that drive performance.

It is also essential that you communicate with everyone within the organization about what you would like to achieve especially when planning to start cascading balanced scorecard. Providing information about how you will be measuring the performance of the company through various BSC dimensions will help a lot. Apart from that, you should search for ownership which is also a scorecard best practice. If your people comprehend what they should do, they will find ways to achieve it.

If you are interested in cascading balanced scorecard, check this link to find out more about Cascading balanced scorecard. Also, you can check other articles in Cascading in BSC category.


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