Balanced Scorecard is a performance management system that enables senior management to measure how their organization’s business activities are helping it meet its strategic goals. The Balanced Scorecard provides an analysis from a range of perspectives and you as a Manager can leverage this method of statistically measuring your company’s performance.  Using a scale of 0-10 you get a balanced, high-level view of all areas of your enterprise.

What constitutes a Balance Scorecard

The Balanced Scorecard presents a mixture of financial and non-financial measures each compared to a 'target' value within a single concise summary report. Balanced Scorecard enables you to by look at your strategic goals from not just one, but a range of, perspectives. You would be required to  develop metrics, collect data and analyze keeping in mind these perspectives.

Finance

It encourages the identification of a few relevant high-level financial measures which can help answer the question perspective “To succeed financially, how do we appear to our shareholders?”. Your standard financial reports which show profit margin, sales volume, top lines, bottom lines constitute this.

Customer

Encourages the identification of measures that help an organization answer the question “To achieve our strategic goals, how do we appear to our customers?”. Customer satisfaction plays a very important role since if customers are not satisfied they will move on to your competitors. This one is tricky as your current results will look pretty good but bad customer service means you are sitting on a time bomb.

Innovation

Presents data from the perspective “To achieve our strategic goals, how are we sustaining our ability to change and improve?”. Can we continue to improve and create value? This perspective includes 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.

Internal

Presents data from the perspective “To satisfy our shareholders and customers, what business processes must we excel at?” 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). These metrics have to be carefully designed by those who know these processes most intimately; with our unique missions these are not something that can be developed by outside consultants.

Steps to create a Balanced Score Card

You will need to use the following steps to achieve the desired results

• Assess your Organization to determine your Organization’s Mission and Vision, challenges Also identify key Success factors that will help you achieve your vision.
• Create Strategy and define perspectives for the four constituents depending on your organizations goals identified in first step.
• Define Strategic Objectives based upon your mission and perspective. Objectives should be actionable.
• Create a Strategy Map which tells you about the effects once the objectives are carried out.
• Develop Performance measures for your organization. Determine  targets, thresholds  best case values, worst case values for your organization.
• Take Strategic initiatives to make people accountable for implementation of objectives and performance measures.
• Automate Business Processes to capture Business Data and get meaningful information out of it.
• Cascade into tiers – Pass on the Objectives to your sub departments who in turn will filter our their objectives.
• Evaluation of the completed score card to know if your strategies are working or not.