The Perspectives of the Balanced Scorecard

The scorecard helps to understand results, setting metrics, fixing plans, and making decisions.

The balanced scorecard offers a way for a corporation to gain a wider perspective on its strategic decisions and performance management by considering the impact on finances, customers, internal processes and employee satisfaction.

The balanced scorecard enables the management more accurately judge the coming curves and obstacles on the path of strategy management and get into actions in a creative, positive and proactive way.

The goals of applying scoreboard are to translate the vision and strategic planning into operational goals: The scorecard contains a good mix of the outcome measure of long-term strategic value along with performance drivers to track the operational progress in the short term. In many cases, the strategy fails not because the fundamental strategy is flawed, but because of poor execution due to either miscommunication or misalignment.

Without well- designed scorecards, often what is tracked and worked toward is separate from the strategic goals of that organization. It’s nearly impossible to cascade appropriately to create strategic alignment. This makes "strategy" a separate and distinct executive exercise with little relevance to operators, finance, and managers. Set “SMART” goals to link the individual performance to the strategic initiatives. An effective scorecard helps to connect KPIs on the strategic level to the operational KPIs so that there is a coherent truth in the company connected to the strategy.

Scorecards help greatly with prioritization: The scorecard allows you to focus on the most important things and tailor the needs of varying business stakeholders. A balanced scorecard is necessary to practice holistic performance management in a structural way, allowing the most effective initiatives to be planned for achieving corporate goals. It is better to start with a small structure that answers your very first strategic questions and then, evolves the scorecard into a more complex, accurate and specific environment.

It is also important to provide a “balanced” view of tradeoff variables. You need to consider, among other things, the overall strategic balance, dependencies, and constraints between components and overall risk exposure. The management needs to maintain the commitment if they really want to see their scorecard work well, and make sure that the management of the scorecards does not become an industry in itself, but truly help to improve the success rate of strategy management.

An effective scorecard enables the practical use of performance management concepts and the success factors: A scoreboard is a way of consolidating and comparing metrics relating to a holistic assessment of organizational or functional performance. The success factors that could be used to measure strategy and change management score within a company could be resources invested (human and financial), employees’ motivation, the number of business initiatives launched and organizational culture, etc. Through a well-designed Executive Scoreboard, business leaders can capture both quantitative hard numbers about cost savings and qualitative perspective of management health.

The well-designed scoreboard should motivate changes and innovative actions. Develop a logical structure that helps everyone know what should be measured, what belongs to the scorecard and what does not belong. The analysis takes into account financial and non-financial measures, internal improvements, past outcomes and ongoing requirements as indications of future performance. Measurement systems must be in place as part of overall enterprise portfolio management to ensure the value proposed in any business case is actually realized.

The scorecard helps to understand results, setting metrics, fixing plans, and making decisions. An effective scoreboard is easy to measure and compare, helps to improve and evolve for sharing best practices within the team or cross the management, to ensure the seamless strategic alignment and effective strategic management.

Posted in: KPIs,Performance Master