At the helm of your organisation
In difficult times like these, with frequent changes, it is important to use good tools to keep an eye on the performance of your company. The balanced scorecard method helps you to focus on the numbers that really matter and to constantly change the plan to a new reality.
As the name suggests, this method uses a scorecard. The name “balanced scorecard” (BSC) comes from the fact that financial goals are used next to non-financial ones, to get a “more balanced” view of performance. Yet it remains a dashboard that provides only the essential information, allowing you to focus on the handful of measures that are most important.
Compare it to the helm of a boat, where the instruments immediately display the position, heading and speed, ranging, etc. allowing you to judge what correction is needed to reach your destination, considering the currents, wind and weather conditions.
Just about every business, big or small, keeps an eye on its financial performance, but companies using the balanced scorecard do so from four different angles. The added insight this brings is valuable for all types of companies.
- The first is the money-related point of view, or what the shareholders expect
- The second is the customer perspective, or how you present the company to customers
- The third viewpoint is about internal processes and what you need to improve to meet customer and shareholder expectations.
- The organisational capability perspective tests how your organisation can continue to improve and create value. The four tools that fall under organisational capability are workers, tools and technology, infrastructure, and controls.
To put the balanced scorecard into practice, you need to choose a limited number of good numbers. They need
- to visualise and communicate what you want to do
- to prioritise the actions needed to do that; and
- to measure and monitor progress towards the goals, so you can decide whether a change of course is necessary.
The information this returns is very important for the business to learn, change and improve. The needed thing is that you have quality data.
This brings us to the third word in the name “method”. Choosing the good metrics requires a few steps to match up everyone’s daily work with the company’s vision, mission, values, and goals.
It begins with analysing the big picture and to confirm the focus area in which the organisation should excel. The steps to reach the goals will first be decided on a company level and later translated to the goals and activities of individual workers. The cause-effect relationship between the goals of the individual workers and those of the company will make sure that the individual actions make the improvements of the company visible in the dashboard.
Interested in putting this tool into practice? We are ready to discuss this further!