Balanced Scorecard as a tool to communicate strategic vision and operational management
It is very important to run business in an efficient way in a highly competitive business environment. In the post crisis economy, customers are unwilling to buy. It is becoming increasingly difficult to attract new customers and satisfied high demands of the existing ones. That’s why business performance needs to be constantly measured and evaluated. Performance evaluation looks like an easy process at a first glance. One should only select a number of indicators that represent performance of the company and communicate them with the strategic goals. But in fact, the entire process is much complex as it seems.
4 perspectives of Balanced Scorecard system
Before introduction of Balanced Scorecard System performance management evaluated only financial indicators. Company strategy and operational indicators were often ignored. But how a company can achieve financial success? Of course, through improvements in performance. Thus, operational indicators are equally important for any business.
Balanced scorecard evaluates KPIs (key performance indicators) that can be split into four perspectives: financial, customer, internal processes, learning and growth. Each perspective represents certain aspects in the work of the company. In fact all these four perspectives cover all possible processes things happening to the company.
Moreover, these perspectives up interrelated. For example, improvement in customer satisfaction is possible through learning and coaching of the company personnel. Another example is gaining financial success through improvement of internal process is in the company (like saving, use of more efficient methods and techniques). Of course, there are many more examples of how these perspectives are interrelated.
Key requirement for successful implementation of BSC
It should be noted that key performance indicators differ from business to business. They also directly depend on the company strategy. It is imperative for a company to have a comprehensive strategy otherwise balanced scorecard will appear useless.
It’s also very important to have a well educated and professional staff to work with balanced scorecard. One of the main reasons why BSC implementation fails is lack of professional personnel. Sometimes managers do not the dissipating strategic planning and thus are unaware of the company strategic goals. In such a way implementation of balanced scorecard turns into a waste of money and time.
Before making the final decision on BSC implementation the company owners and top management need to agree on strategic goals. Balanced scorecard communicates strategic goals with operational management. This means that every employee in the company should be aware of his or her role in contribution to reaching of strategic goals. In other words, the company personnel needs to understand why they need balanced scorecard.
