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Time To Implement Balanced Score Card

The document discusses implementing the Balanced Scorecard methodology for monitoring and steering organizations. It describes the Balanced Scorecard as a framework that uses both financial and non-financial metrics to track performance against strategic goals from multiple perspectives. Implementing a Balanced Scorecard requires defining objectives, strategies, measures and action plans to monitor critical success factors. Studies show companies that adopt this approach improve competitiveness and profitability. The document recommends a seven step implementation process and offers a book providing practical guidance.

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Diana Aldanova
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47 views2 pages

Time To Implement Balanced Score Card

The document discusses implementing the Balanced Scorecard methodology for monitoring and steering organizations. It describes the Balanced Scorecard as a framework that uses both financial and non-financial metrics to track performance against strategic goals from multiple perspectives. Implementing a Balanced Scorecard requires defining objectives, strategies, measures and action plans to monitor critical success factors. Studies show companies that adopt this approach improve competitiveness and profitability. The document recommends a seven step implementation process and offers a book providing practical guidance.

Uploaded by

Diana Aldanova
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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E n s o l u t i o n.

Management Consulting IT

Time to implement Balanced Scorecard!


- for all companies from small to industry-leading
We mean that Balanced Scorecard gives companies and organizations the decision
support they want and need at the right point in time. Unfortunately, the majority of
companies and organizations still hold the delusion that they can monitor the organization with
budgeting and other traditional methods. It is time to acknowledge that without modern
methodologies to run and monitor their organization, these companies face the risk of falling behind
and loosing competitive advantages when compared to their competitors.

The competent personnel of today demand a different form of steering than giving orders. As the
development goes towards knowledge based organizations and organizational forms based on
networks, it isn’t enough to state what you are planning to do. You have to show what you want to
achieve in order to create spontaneous work in that direction. Consequently, managers today look for
new ways to describe and steer their business. One methodology that has already reached a major
break through today, in Sweden as well as internationally, is the Balanced Scorecard.

What is the Balanced Scorecard?

Balanced Scorecard is a methodology developed by Mr. Kaplan and Mr. Norton (the methodology was
presented for the first time in Harvard Business Review in 1992), which aims to steer a business with
the help of measures beyond the traditional, financial measures. Rather than simple following up on
what has already happened, you want to be able to steer the business in a more forward-looking
manner. With the Balanced Scorecard you get the possibility to navigate the business from different
perspectives and time dimensions. In this way, you can create an understanding for the whole picture
within the organization. In principle, the Balanced Scorecard is about:

¾ giving a strategic direction to the business navigation


¾ getting a more relevant and structured navigation
¾ giving a clear picture to everyone about the purpose of their performance
¾ raising respect for the notion that not everything that exists is money; everything does not
generate further revenue - enabling discussions on how investments in e.g. keep-fit measures
and the environment give future dividends
¾ complementing traditional accounting with non-financial information – presenting and steering
the intellectual capital or e.g. environmental effects

What does a scorecard look like? The scorecard can be seen as a pyramid breaking down the vision in
smaller pieces.

Vision: The overall goal that the company has. It describes to where the
organization is heading. What do we want to accomplish?
Strategy: Describes how we get there and how we use the resources in the company
to achieve the vision. How do we get there?
Perspectives: Describe the areas that we should focus on to reach the defined company
strategies. Which perspectives should we focus on?
Critical Success Factors: Describe what is critical for us to perform well. What do we have to do well?
Measures: Describe what we should measure to secure the critical success factors. How
do we measure that we are doing well?
Action Plans: Describe what steps should be initiated to be able to achieve our goals.
What do we have to do?

Ensolution AB

Regeringsgatan 111 Teknocenter, Pilefeltsgatan 73 Telefon: 08 - 640 70 00 e-mail: [email protected]


111 39 Stockholm 312 50 Halmstad Fax: 08 - 24 70 01
Which effects can you expect after implementing the Balanced Scorecard?

The Balanced Scorecard creates an “increased relevance”. This means that organizations look at the
right things and that everyone agrees on the motives, needs and methodology used in steering the
organization. For example, putting the motto “Customer in the center” into practice provides a
remarkable increase in customer value.

Furthermore, the time consuming budget process can be abandoned, allowing more free time to be
used on other more valuable things. To make the individual development and importance of personnel
visible, will create trust, security and loyalty. This can have a great significance on the internal
attitudes within the organization.

In summary, you could say that used correctly, Balanced Scorecard not only creates concrete results,
but also creates a long-term balance in the company. This balance can be described from many
different angles. The Balanced Scorecard provides a balance between the short term and the long
term. This means that it offers a balance between what is important today and what is important
tomorrow. It also gives a balance between external and internal measures, indicating a balance
between what is important to us and to our stockowners or principals. Moreover, Balanced Scorecard
gives you a balance between financial and non-financial measures. Or, simply expressed, a balance
between hard and soft. Finally, it gives a balance between different levels in the company. This
balance is the one established between what is important to the management and what is important
to all employees.

Kaplan and Norton have shown in their latest research that the Balanced Scorecard also can produce
the promised effects. Examples of these results can be seen in companies such as Mobil Oil and
Rockwater, which have increased their competitiveness and profitability considerably with the
implementation of Balanced Scorecard.

Are you considering implementing the Balanced Scorecard?

To succeed with the implementation of the Balanced Scorecard, a number of different components
must coincide. A good methodology and plan to implement the Balanced Scorecard is one of the
cornerstones. The methodology described in our book, To implement the Balanced Scorecard – a
practical guidance, contains seven different steps. The four first steps involve the definition of the
scorecard. That is, the breaking down of the vision into strategies, critical success factors,
perspectives and measures. In the fifth step, the created scorecard is evaluated. In step number six,
actions are initiated to plan and follow up on the scorecard. Finally, a follow-up and updating routine
is created in step number seven. Carrying out this last step renders the scorecard a living tool in the
organization.

If you are interested in learning more about Balanced Scorecard, you can order the book, “Att införa
Balanced Scorecard - en praktisk vägledning” at www.studentlitteratur.se or by contacting Ensolution
at +46 (0)8 640 70 00.

Andreas Johansson Ulf Hallgårde

Ensolution AB

Regeringsgatan 111 Teknocenter, Pilefeltsgatan 73 Telefon: 08 - 640 70 00 e-mail: [email protected]


111 39 Stockholm 312 50 Halmstad Fax: 08 - 24 70 01

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