Lots of big and small companies, including financial, non-profit and government organizations have applied the Balanced Scorecard approach to their management strategies. The main concept of this business management system is quite easy for comprehension, however receiving the desired outcomes is virtually impossible without performing a thorough Balanced Scorecard company research.
The Balanced Scorecard differs from the conventional management approaches. The main distinctive feature of this approach is performance evaluation based on four perspectives. An overall company's growth is impossible without these perspectives. Unlike traditional management strategies, Balanced Scorecard suggests assessing both financial and non-financial aspects of the organization. There are four perspectives we need to consider: customer, business process, learning and growth and financial perspective. It is necessary to remember that all perspectives are tightly connected and cannot function independently. Thus, to assess performance of the entire organization it is crucial to consider each perspective. The financial perspective is used for measuring financial aspects of the company such as returns on investments and general revenue. The customer perspective helps measure the level of customer satisfaction, as well as keep track of loyal and regular clients rate. The learning and growth perspective is necessary for the evaluation of employees' performance and satisfaction. Finally, the business processes perspective allows keeping track of the amount of costs invested in various business processes as well as evaluating efficiency of internal processes aimed at implementation of strategic goals.
Each of the abovementioned perspectives is measured with relevant key performance indicators. To make the evaluation process easier and more precise, it is recommended assigning from three to four measurements for each perspective. An excessive amount of metrics will make the evaluation difficult, thus it is necessary to choose only the most important KPIs. All measured elements are then integrated into the company's scorecard which helps assess its performance.
Since the times of its invention, the Balanced Scorecard framework has been used by many companies worldwide and is fairly considered the most efficient management and strategy planning tool. One of the benefits of this system is that it is used not only for the assessment of business productivity but it helps create strategy plans and set up various business development activities. However, we should not forget that successful implementation of Balanced Scorecard requires certain knowledge and experience. In other words, comprehension of its main concepts is not enough for getting the targeted outcomes. Before introducing the system to your firm, it is necessary to perform a tedious company analysis.
When integrating Balanced Scorecard concepts to the management approach of the organization, it is necessary to have a strategy map revealing the connection between the targeted goals and strategic activities. To automate the management process and therefore make it easier and more efficient it is imperative to use the Balanced Scorecard software. You can choose between desktop and web based software. Just make sure you consider the pros and cons of both types.
The Balanced Scorecard is a powerful business tool, which can put your firm at a completely new level of management. However, you will not notice any changes unless a proper analysis has been performed. Improper implementation of this system will lead to failures and disappointments, as well as huge monetary losses.
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