We call balanced scorecard to an strategic planning and management system which is used successfully in the commercial world, including both business and industry, and also by non profit organization ( like charities-oriented or non-governmental associations), government offices and institutions, and international associations around the world. This system allows to align the activities carried by the organization with its main mission, sharing its envisioned goals, proposes and strategies under the one unifying criteria.
The balance scorecard system acts improving all the stage of the communication ( inside and outside the organization), and offers the chance of establishing a monitoring control over its goals.
Created by Drs Robert Kaplan and David Norton, this system acts like a organization performance measurement framework. This system was created with the plus of giving to managers and executives the tools to measure not only the financial side of the organization but to includes all the non -financial parameters that can be used to render a new view of the organization and its performance in a more balanced way.In its beginning it was simple and direct, a tool to measure performance within a framework; then evolved to a full strategic planning instrument which includes management criteria.
What is the difference with other system? The difference is that the scorecard turns a passive document like a strategic designed plan into a powerful tool to create mandatory orders which be delivered in a daily basis to the organization. The system orients planner to fully identify and select what it should be done and measure the results of their actions.
The traditional measures related to the financial aspect of the organization and its achieved goal is kept in the balanced scorecard system. The novelty is put in the look used to create it: past events are depicted as financial results, according to the industrial era, when there was no possibility of measuring the long-term investment outcome and its relation with all the aspects involved in the customer care and satisfaction. The balance scorecard system is focusing in these, giving a new impulse to the business of the information era.
The system provides the translation of the company’s vision into operational goals, that can be fully detailed and put into a framework.
The system has the ability to communicate the vision and link it to each individual performance inside the organization. Counting with this, it is easy to start the business planning and setting the index in suitable way to measure the scores. After all that, the project starts receiving feedback, providing new learning for the company’s workforce and commands, adjusting the goals and strategies according to the development of the case.
Strategic Planning and Management and Scorecard system
Strategic planning and management in combination with the scorecard system delivers:
• Increases the levels of collaboration among the employees and commands, also creates a friendly tendency to forward thinking
• An deep insight on the possibilities of achieving certain goals within a framework
• Helps to create, organize, analyses and create the suitable infrastructure based on perspective that include long term planning, covering the emerging needs of every circumstances.
• Creation of a budget based in well-informed surveys by strategic programming along with tactic thinking and consulting
• Workforce and funders can be more interactive and proactive.
• Workforce will understand and align around the objective in a easiest way.
• Better use of the management tools to support, asses, create and sustain a reliable system that will face the emerging needs of long term planning.
All the above can translated in scorecards and delivered to the organization in a daily basis with the outlines goals to be achieved in certain frame.
The four perspectives
The non -financial topic areas included in the first generation method created by Kaplan and Norton were aimed to identify the non-financial measures to be taken adding to the financial status. Theses perspective were four.
• Financial: identify a list of few financial issues of high relevance. Choosing measure that help to find an answer for the question "How do we look to shareholders?"
• Customer :identify the following question:"How do customers see us?"
• Internal business processes: identify the following question:What must we excel at?"
• Learning and growth: identify the following question"How can we continue to improve, create value and innovate?".
These question were called prompts and illustrate how Kaplan and Norton were organizing their thought around the needs of small to medium sized commercial organizations in the their country, USA.
A balance scorecard system is intended to be easy to use and understand and not so numerous: they are about 20 measures that mix financial and nonfinancial topics; they can handle manually or use a basic office software with their images. The procedure attached to the distribution, collection and report of the cards have to be implemented wisely, connecting the relevant people for each case and setting the timeframe to start and end the project. As we see, an innovative and at the same time simple tool can make the difference of your business or organization. It is a valuable instrument to count on with and it will support your effort to take your organization a step further.