In the organizational world, there are endless tools and resources to improve production and operational performance. Many of them are digital solutions for personnel management, financial management, contracting and alliance management, as well as task and incident management. But there is also the balanced scorecard, a very useful administration system when seeking to know the real state of the pillars of the company, for example, finances and customers.
In this article, we tell you a little more about the balanced scorecard, its indicators, why it is important and what its advantages and disadvantages are.
What is a balanced scorecard?
It is a management tool commonly used to analyze, evaluate and manage the performance of a company based on key areas such as customer relationships and, of course, the financial perspective. Also known as a balanced scorecard, the balanced scorecard (BSC) was designed by Robert Kaplan and David Norton in 1992. This idea arose in the development of a proposal for an administrative system where there was a comprehensive perspective of internal processes, so that the business strategy could be aligned with strategic objectives.
So what makes the CMI particularly useful for decision making? It allows you to collect and visualize financial information, manage customer relationships, understand the internal structure and deploy learning and growth actions. These four perspectives favor deep knowledge from a perspective that goes beyond the mere analysis of the product or service. In this sense, it encourages a balance between the factors that drive success in the medium and long term.
Following the above, the balanced scorecard deals, roughly speaking, with the following aspects:
- Profitability
- Economic growth
- Customer satisfaction and retention
- Operational efficiency
- Talent development
- Innovation
Indicators in the balanced scorecard
These are the 4 indicators of the balanced scorecard.
Financial indicators
Finances are essential to understand the scope of business strategies, which, as seen, are directed towards certain strategic objectives. Part of the investments must report profitability, returns, income and benefits. The minimization of costs is sought to maximize profits.
Indicators around customers
The indices associated with customers focus not only on loyalty, but also on retention. In this sense, we work to understand the way in which products or services satisfy the expectations and needs of customers. This is important to improve the consumer experience, but also to position the company against the competition, in such a way that a positive perception of the brand is generated. At this point, the Sales Department intervenes.
Internal process indicators
Internal processes, as seen, are aligned to achieve objectives. So, it is about maximizing the efficiency of operational processes and production cycles, as well as improving the product by optimizing costs without losing quality. For this, innovative and efficient technologies are required, and consequently training employees to make active use of them. Software and machinery are included.
Learning and growth indicators
Each department or section of the company (eg marketing, sales, finance, production, human resources, among others) must implement a set of measures in order to achieve better operations according to both internal and external quality standards (ie regulations and certifications). ). Here the company launches innovation plans to adapt to both technological and market change.
Why use the dashboard?
The main reason why a company chooses to create a scorecard is the need to develop a global and comprehensive strategy to achieve the objectives set for each work period. With this as a basis, managers, department directors and employees can propose and deploy measures to achieve performance, profitability and market presence.
Following this, the balanced scorecard is essential for the following actions:
- Have a holistic vision of the company
- Expand analysis perspectives
- Make informed decisions
- Maintain balance between objectives
- Improve service for customer retention
- Identify areas of improvement
- Implement digital and innovation solutions
- Align teams according to basic indicators
- Optimize internal communication
- Contribute to the sustainability of operations
Advantages and disadvantages of using a dashboard
Let’s now look at the advantages and disadvantages of this business management tool.
Advantages
- It allows you to obtain real-time data on all the operational components of the organization.
- Organize and collect the most important information to understand the company’s problems or strategies from a more precise perspective.
- It facilitates the internal and external analysis of the company’s products and services, a necessary action to anticipate or foresee changes in the market.
- Optimizes communication between managers and employees through an optimized and goal-focused flow of information.
- Provides data to strategize and deploy rapid actions to mitigate risks.
- It contributes to the creation of a more solid business image, which results in a greater presence in the market.
Disadvantages
- Implementing a balanced scorecard can be expensive for small businesses and time-consuming, especially in large organizations.
- The CMI can be a complex tool if staff are not trained in its use. In that sense, it is not only about acquiring a software subscription, but also about hiring professional advice to make the most of this tool.
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