Metrics, Scorecard, KPIs

Have you ever thought whether not your business can do more and earn more money for you?  Well, maybe you can, but in order to learn that you have to evaluate current performance of your company.  There are many performance evaluation tools used in modern business, but perhaps balanced scorecard is one of the most popular ones.  Balanced scorecard does not only evaluate company performance but also communicates linear and operational management.  Every successful company has certain business goals.  And every company does something to achieve them.  With the help of balanced scorecard it will be possible to see “cause and effect” ties between what is done to reach goals and strategic goals themselves.  In other words, balanced scorecard puts strategy into action, as well as measures business.

The process fo BSC implementation

What are advantages of balanced scorecard?  They go as follows:

1. Balanced scorecard communicates operational and strategic management.  It often happens that company’s decisions, actions and measures have nothing to do with the strategy.  Company management thinks that they are approaching strategic goals, but in fact the company is sinking.  Balanced scorecard provides a clear strategic map with clear cause and effect ties and relations between goals and measures.  Such strategic maps are understood even for ordinary employees with little experience in strategic planning.
2. With the help of balanced scorecard it is possible to educate personnel.  Statistics show that more than 80% of managers do not participate in strategic planning or have wrong concepts and interpretations of company strategy, say apart of ordinary employees.  With the help of strategic maps company strategy will be understood at all company levels.  If every employee in the company understands his own contribution to implementation of strategic goals the company has all chances to succeed.
3. Balanced scorecard makes it possible to introduce amendments in changes to measures and goals which makes this system rather flexible and mobile.  As markets are very changeable these days, external changes should lead to changes inside the company.  Having balanced scorecard implemented in the company, it is possible to correct measures and objectives in order to implement strategic goals.

Advantages of BSC

At the same time, balanced scorecard has certain requirements and rules which need to be observed.  Various mistakes made by top managers lead to failure to successfully implement balanced scorecard.  This explains huge portion of criticism in regard to balanced scorecard.  Remember, that balanced scorecard it just a tool in hands of top managers and business owners.

As known there is a tough competition in the market nowadays. No wonder! Customers are unwilling to buy, so companies have to be very creative to attract new customers and keep existing ones. It is not easy to run business if you have so many competitors ready to take advantages of your slightest mistake. Moreover, even if you do everything right but do not developed you smarter and quicker competitors will “eat” your business. You cannot stop in business. If you choose to stop your business or company will not survive for long.

Thus, to expand and develop a company you should certainly evaluate its current performance. It is not easy, taking into account the fact that a company may have a dozen of departments and hundreds of mechanisms in its complex structure. What should you start with? Is net revenue the only thing you need to pay attention? What factors influence business performance?

Design kpi to evaluate business

With Balanced Scorecard System you will find answers to all or most of your questions. First, and foremost you need to choose the right indicators. If you are focused on the average time employee spends for lunch, instead of analyzing more important figures, think about changing your approaches to business evaluation. Key performance indicators (or KPIs for short) represent overall performance of the company. But unlike general analysis, KPIs can point where to look for the root of the problem.

Design kpi that directly show business performance

Balanced Scorecard System is a tool that was specifically developed to measure business. But you may wonder if it supports your particular kind of business. Well, do not worry! In this age of information you can find ALL KPIs related to your business activity. It does not matter what kind of business you run (a call center or a logistics company), Balanced Scorecard System will measure performance of your firm. Moreover, you will be able to find out what hampers your business down.

Measurement with Balanced Scorecard System is not like traditional evaluation. Armed with graphs and figures you will be able to solve problems even before they emerge. If you regularly perform evaluation you may compare figures and track changes. Thus, you may take measures as soon as you noticed negative trend in certain KPIs.

Business metrics is widely used at all levels, from top management to ordinary employees who want to test their performance. By the way, use of Balanced Scorecard System positively affects employees since they learn about their problems and imperfections in work. Thus they know what needs to be improved.

Business is a complex structure with hundreds and sometimes thousands of elements that are interconnected and interrelated. If something is going wrong the entire structure can collapse. It is certainly not easy to run a successful business. Any company, large or small, should always do something to improve performance. More sales, better service, improved call center features…these are just a few features that can be improved in thousands of companies all over the world.

But in order to evaluate performance you need to know what exactly should be measured. Should you pay attention to net profit only? Or should you take into account customer satisfaction? The answer is – you should pay attention to ALL factors that directly or indirectly influence business performance. Of course, some of them are primary while others are less important.

Business evaluation is also necessary to plans business activity for future. A company with great problems cannot afford investing money in development. The money will be lost and the company will turn bankrupt. What happens to a person whose illness is untimely cured? He fells pretty sick or dies. The same principle works for business. If business problems are not time solved, they turn into really big troubles for the company.

Business scorecard is used to measure organization performance

Use Business scorecard to evaluate performance of a company

With Balanced Scorecard System you can feel sure that the problem of business evaluation is solved. The program is designed in such a way so that it is possible to evaluate individual indicators that show real company performance. For instance, your net profit may directly depend on customer satisfaction or quality of logistics. With business Balanced Scorecard System you will get answers to many of your questions regarding performance of your company.

The abovementioned indicators are known as key performance indicators of KPIs. It is a fact that different businesses have different KPIs. For instance a sales company should pa a special attention to such KPI as revenue per call (if products are sold via phone), while logistics department will try to reduce freight cost per unit or transit time. Everything depends on the business and its specific character.

KPIs may concern any aspect of business. Balanced Scorecard System will present you r evaluation result in such a form so that you will be able to see all weak and strong points in the work of a company.

With Balanced Scorecard System you will be able to measure such things as organization climate and employees loyalty, which at a first glance cannot be evaluated at all.