The key for a business to bloom is proper management. Without proper management, the business will not be able to reach its full potential even if its products/services are marketable enough. For effective management, management tools such as the balanced scorecard can help a lot. The balanced scorecard is a standardized performance management tool that can be used by managers to monitor the actions performed by their staff and keep track of their overall performance. It has been a proven and tested tool for effective and results-oriented management.
Almost all big companies use the balanced scorecard for strategic management. It was originally developed by Dr. Kaplan and Dr. Norton. They developed this new approach in strategic management after recognizing the weaknesses and the shortcomings of the earlier approaches in management. The balanced scorecard guides the organization to put into consideration their vision and create strategies, then translate them to action.
The balanced scorecard’s main idea is to focus the management of organizations from four perspectives. From each of perspective an objective is defined, strategies and targets are formulated, then data is collected then analyzed. The four perspectives of the balanced scorecard are the following:
1) Learning and Growth Perspective
Knowledge is always the main resource in any organization. With the rapid advancement of technology, workers should continuously learn to keep up. Giving importance to the learning and growth perspective, both the individual and the company itself will improve. Through the balanced scorecard, the management can determine a particular area in which workers can improve if given the proper training and allocate the funds necessary for training them.
2) Business Process Perspective
This business process perspective deals with the internal processes in the business. In this perspective of the balanced scorecard, managers can keep track of how the business is performing, and whether their products and/or services conform to what the market wants. To be effective, the metrics of this perspective should be designed by people who have first-hand knowledge of the processes involved in the business.
3) Customer Perspective
Customers are the lifeline of businesses. In order for businesses to thrive, they should focus on customer satisfaction. Customer satisfaction should be monitored. Having a good percentage of unsatisfied customers could mean a decrease in future sales even though the current sales situation seems fine.
4) Financial Perspective
This perspective will always be a focus of all management approaches. Managers should be able to find a balance between budgeting the business’ finances without sacrificing the three other perspectives of the balanced scorecard. Financial risk assessment and cost-benefit data should be incorporated in this perspective.
CMOE has been helping companies with Leadership Development and team building since 1978. Through Balanced scorecard and other innovative business techniques CMOE has established themselves a leader in the business world. Visit www.cmoe.com for more information.