Aug
24
We all know how the usage of the balanced scorecard can make things so much easier in the corporate setting. This is because the balanced scorecard is specially designed to contain elements that can quantify the company’s present state against the goals and objectives that have once been set so long ago. However, it is not really enough to just have a balanced scorecard system implemented in a certain company. To make sure your system is better guided, then it would certainly be of much help to know balanced scorecard best practices at hand. Here are some practices that you just might need in building that top-level scorecard for your organization.
You have to remember that the balanced scorecard should provide a very predictable and feasible way of achieving strategic and corporate goals and objectives. Thus, the scorecard you develop should be capable of providing focus, communication, and accountability to all of these goals that your business wants to achieve.
One of the best practices in the arena is to copy all elements that you can from a strategy map; that is, if one has been developed or created. The strategy map is ideal to have because it is a simple depiction of the strategic objectives of the business, from the top-level objectives to the lowest-level ones. These objectives are then grouped into focus areas, commonly termed as perspectives. The four commonly used perspectives include Financial, Customers, Internal Processes, and Learning and Growth. While these incorporate the interests of stakeholders, these can still be modified to better accommodate additional stakeholders in the business.
Another best practice is the identification of key measures that determine if the company is indeed on the right track for the achievement of such objectives. These key measures are known as KPIs or Key Performance Indicators. For instance, your company would surely want to improve customer satisfaction so this should be one of the objectives that it wishes to achieve, right? One of the KPIs that you can use to achieve this objective could be the average CSAT or customer satisfaction score. By keeping an eye on this particular KPI, you can very well determine if your company is indeed achieving this objective. Other examples of metrics that you can use here can include the number of customer complaints received and the product return rate.
Moreover, companies should also maintain focus on the identification of initiatives that can address areas that are critical to underperformance. The initiatives should be time-specific here, with starting and end dates so that accurate measurement can be achieved.
Another key practice to remember is to keep the number of objectives and KPIs to use on the scorecard at a minimum. As for the objectives, just get the top 8 or 10 that your company is aiming to achieve. For each objective, assign a maximum of three KPIs or measures to use, to check the progress of the company against that particular objective.
These are just some of the balanced scorecard best practices that you can consider taking up on for your own organization. By keeping tabs with the best practices, the implementation of your balanced scorecard would be guided accordingly.
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Article Source: Why Knowing Balanced Scorecard Best Practices is Helpful