Balanced Scorecard Basics

The balanced scorecard (BSC) is a strategic planning and management system that is used extensively in business and industry, government, and nonprofit organizations worldwide to align business activities to the vision and strategy of the organization, improve internal and external communications, and monitor organization performance against strategic goals.

The balanced scorecard suggests that we view the organization from four perspectives, and to develop metrics, collect data and analyze it relative to each of these perspectives:

The Learning & Growth Perspective
under this perspective we look at employee training and corporate cultural attitudes related to both individual and corporate self-improvement. Metrics can be put into place to guide managers in focusing training funds where they can help the most. In any case, learning and growth constitute the essential foundation for success of any knowledge-worker organization.

The Business Process Perspective
This perspective captures the Company's 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).

The Customer Perspective
Customer are the life line of any business. This perspective focuses on their satisfaction. If customers are not satisfied, they will eventually find other suppliers that will meet their needs. Poor performance from this perspective is thus a leading indicator of future decline, even though the current financial picture may look good.

The Financial Perspective
Timely and accurate funding data will always be a priority, and managers will do whatever necessary to provide it. Reduction in cost and increase in revenue will keep the company going.

By using the balanced Scorecard method you will be looking at the four aspect of a company's performance which gives a balanced view and full picture as to whether your company is meeting its objectives while it seem that the company is doing well financially, it may be that customer satisfaction is low, employee training is inadequate or processes are outdated.
Also the scorecard approach gives the opportunity not only to evaluate the immediate future of the organization but allows stakeholders to determine the health of short, medium and long term objectives of the company

Deployment of Balanced Scorecard:
Once you decide to deploy BSC in the organization there is bound to be a lot of changes in the ways things are done. Some people may want to resist the new changes therefore there will be need to manage these changes and take everyone along by selling the BSC idea to them.
Next treat the deployment as a project.
Top management should initiate a pilot project team starting with a part of the company from the head office and ensure that top management should be part of the initial team; the team should come up with strategic initiatives to reach the set goals. The department be used for the pilot project will have to come up with specific goals, initiatives, desired outcomes, metrics, target and annual milestone. This will include strategic plan plus performance plan in accordance with the organizational goals.

Measurement Processes of Balance Scorecard:
In balanced scorecard data collection is a necessary to drive the process. There are two sets of data flows required in the system, namely: Downwards information flow in which line managers and branch managers define goals, desired outcome s, initiatives, metrics, target which should aligned with specific top-level strategic plan and balance scorecard performance plan. Next is the: Upward information flow: here it is important to create feedback to the managers on metrics that are pertinent to their own strategic interest.

The measurement can be captured in excel format or using the BSC software.

Rewards and incentive guidelines must be defined for the origination to encourage continual patronage of the balance scorecard system.


By Gloria Oyinkari