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The Balanced Scorecard

Imagine flying an aircraft. Pilots need detailed information about many aspects of the flight, such as fuel, airspeed, altitude, bearing and destination to summarise the current and predicted status. Reliance on any one measure would be fatal. Similarly, the complexity of managing a business requires managers to view performance in several areas at once.

In a research project with many companies at the leading edge of performance management, David S Kaplan and Robert P Norton developed the “Balanced Scorecard”, a new performance management system which provides a comprehensive view of the business (Ref. Harvard Business Review).

Executives know that the company’s measurement system strongly affects staff behaviour. They know that the traditional financial performance measures are not enough. The Balanced scorecard  complements the financial measures with those related to customer satisfaction, internal processes, and the organisation’s ability to learn and improve - the activities that drive future performance.

Working with the management team, we facilitate the creation of the Balanced Scorecard. This approach enables the team to develop a winning strategy, and  focus on the indicators that are most critical to manage and grow the business. 

 

 This picture is a representation of the type of information in a Balanced Scorecard. The Balanced Scorecard tracks all the important elements of a company's strategy. The Balanced Scorecard includes financial measures, and it complements those with three sets of operational measures related to customer satisfaction, internal processes and the organisations ability to learn and improve - the activities that drive future financial performance. Executives can quickly glean a complete picture of where the organisation stands, and where it is headed.

The Balanced Scorecard

Integrating Customer Satisfaction into the management system helps to articulate and promote the direction to all employees. It results in a key benefit - delighted customers.  Delighted customers will do a large part of your sales and marketing for you!