Optimizing Balanced Scorecard Results
Managing for the Future with a Balanced Set of Metrics
Balanced scorecard is a measurement system that enables organizations to clarify and translate their vision and strategy into action. Balanced scorecard measurements provide feedback around both internal business processes and external outcomes in order to continuously improve strategic performance and results. When fully implemented throughout an organization, the balanced scorecard transforms strategic planning into the organization's business intelligence center.
The balanced scorecard includes traditional financial measures, which tell the story of past events and performance, and adds important forward looking measurements for guiding and evaluating the journey that information age companies must make to create future value through investment in customers, suppliers, employees, processes, technology, and innovation.
The balanced scorecard views the organization from four perspectives. The balanced scorecard requires organizations to develop metrics at the enterprise and business unit levels, collect data and analyze it, and to take appropriate action based on the measurements relative to each of these perspectives:
- The Learning and Growth Perspective
- The Business Process Perspective
- The Customer Perspective
- The Financial Perspective
Optimizing balanced scorecard results requires direct feedback from employees and customers. Their perceptions and information about what it is like to work for and be a customer of the company, and about the company's products, processes and policies provide the basis for making better decisions and making changes to achieve increased growth and performance. Quantisoft's employee and customer surveys can play a key role in optimizing an organization's balanced scorecard results.
Learning and Growth Perspective
This perspective includes employee training and development, focused on increasing individual and corporate performance. In today's knowledge-worker organization, metrics are needed to guide managers in focusing training funds where they can help the most. Learning and growth are critical for the success of any knowledge-worker organization.
Business Process Perspective
This perspective refers to internal business processes. Metrics based on this perspective allow the managers to know how well their business is running, and whether its products and services conform to customer requirements (the mission). These metrics have to be carefully designed by those who know these processes most intimately. With our unique missions these are not something that can be developed by outside consultants.
In addition to the strategic management process, two kinds of business processes may be identified: a) mission-oriented processes, and b) support processes. Mission-oriented processes are the special functions of government offices, and many unique problems are encountered in these processes. The support processes are more repetitive in nature and hence easier to measure and benchmark using generic metrics.
, sales force
and other surveys
typically include questions that identify process strengths and problems, and suggestions for improving processes. The surveys can be customized to learn about issues that are important to customers, employees and company performance. Some of the business process issues our customer and employee surveys often include process and customer service timeliness, process efficiency, and process bottlenecks.
Customer focus and customer satisfaction are leading indicators for business growth and success. If customers are not satisfied, sooner or later they will buy their goods and services elsewhere. Low customer satisfaction is a leading indicator of future decline, even though the current financial picture may look good.
Customer satisfaction metrics should be analyzed in terms of customer demographics and the processes for which companies are providing a product or service to those customer groups. Customer satisfaction surveys
are a highly effective tool for identifying customer satisfaction levels, customer perceptions about products, services, customer service and many other factors that influence customer purchasing and loyalty decisions.
Financial and sales data will tell you how much of each of your organizations products and services are being sold, and about sales trends, but these measurements do not tell you why customers are or are not buying, and what need to be done to increase sales. Companies need direct feedback from customers to learn about what can be done to increase sales and to gain and keep more customers. Customer opinion surveys and customer satisfaction surveys are an excellent, cost-effective way to learn about the customer perspective.
Before the focus on implementing balanced scorecard, financial performance data was the main, or in some organizations the only type of metric that was used to measure business performance and plan for the future. Although balanced scorecard was first introduced in the early 1990's, many organizations have not yet implemented balanced scorecard, or they have not implemented it comprehensively throughout their organization. Primary emphasis on financials leads to the "unbalanced" situation with regard to other perspectives. Another problem with primarily focusing on financial data is that it largely tells you where you have been, not where you are going.
There is a need to include risk assessment data in the balanced scorecard financial perspective category. Quantisoft's business risk assessment surveys
are a great way to measure the importance and risk level of a comprehensive set of risk factors facing your organization.
Balanced Scorecard Benefits
- Achieve increased focus on strategy, execution and results
- Improve organizational performance by measuring what drives success
- Align organization strategy with people and the work they do
- Focus on the drivers of future performance
- Make better, informed decisions using customer and employee information and perceptions
- Improve communication of the organization's Vision and Strategy using data
- Prioritize projects and initiatives based on metrics
- And most important, increase the bottom-line