The balanced scorecard is an organized, logical way for you to ensure that all aspects of your organization are covered. It tracks objectives, measures to monitor progress, keeps your goals in the middle and uses specific metrics to gauge activities. A good Balanced Scorecard will serve its purpose when implemented properly. But how can you tell if your company is using the right balanced scorecard formula?
The main feature of a balanced scorecard is the presence or absence of an integrated strategy. This is often where most companies lose their focus. If one part of your strategic objectives is to increase customer satisfaction and operational productivity, you need to focus on this particular area. Otherwise, the whole organization could become distracted by other problems that would affect productivity.
Another key feature is the establishment of relevant, quantitative, and qualitative strategic objectives. The balanced scorecard allows you to link financial measures to human strategies. In addition, you can link these objectives to various aspects of the organization, such as the business processes, people, technology, process improvements, quality, and other aspects. This makes it very easy to monitor how your company is performing against these objectives. You can also look at what you are spending your money on. This way, you can see if your strategy is aligned with your company’s values and objectives.
Another feature is the establishment of relevant operational and organizational maps. These maps show which departments or individual functions are based on the vision or mission of the whole organization. For example, a manufacturing unit is likely to have a separate planning and production section. This way, the whole organization is working towards a specific goal, rather than a vague strategy that no one can assess.
When you use a balanced scorecard in strategic planning, you first have to define the four key performance indicators. Then, you have to decide what these are, for what purpose, and how you will measure them. These measurements have to be linked to the strategic objectives that the company has. For example, if you want to improve the quality of customer service in the company, you should focus on this factor, as this is one of the most important factors for customer retention. Then, you have to link the other elements of strategic planning. They, too, have to work with the objectives that you have established for the entire plan to be effective.
The four perspectives on the balanced scorecard that you need to manage are customer satisfaction, internal resources, competitive positioning, and profits. Of course, in some cases, these will not be implemented in all the aspects of an organization, but they form the base, which you have to work around. Let us take a look at each of these in turn.
Customer satisfaction is considered to be the most important aspect of the strategic planning process because you have to make sure that the customers that your company will get are satisfied with the products and services that they will receive. You do this by making sure that the levels of satisfaction are high, as well as the satisfaction levels at the other levels of your organization. You do this by the promotion of quality, training, and good customer service, and by ensuring that you make it easy for the customers to find what they are looking for. Internal resources are linked to the balanced scorecard because you have to ensure that your people are efficient and effective and that you have the right mix of skills and talent. By creating a proper organizational chart, you can then monitor the progression of your employees, their performances, and their bonuses and wages.
These are just some of the many things that you will be able to measure and monitor through the balanced scorecard because it will allow you to do just that. There are many other aspects of this strategy that you will also be able to measure against, including your financial and administrative performance, your marketing performance, and even the performance and value of your suppliers. This is why many companies now use the BSC in their strategic planning.