Balanced scorecard using the example of an organization. The company's unpreparedness for implementation

Baumgarten L.V.,
Ph.D. those. sciences,
Associate Professor RGSU

Modern organizations cannot be effectively managed based solely on financial performance. D. Norton and R. Kaplan developed a balanced scorecard that made it possible to integrate financial and non-financial performance indicators. This system of indicators should focus on core business processes, include internal indicators of the organization’s performance, allowing them to reflect changes in market share, the degree of customer satisfaction, and also reflect the organization’s development strategy and its implementation in real time.

The process of managing the organization's performance is aimed at:

identification of external relationships and internal processes influencing results;
management decisions to achieve the organization's goals;
analysis of the impacts that these decisions have on performance indicators.

To create a strategic management system, it is necessary to decompose the organization's strategy into specific strategic goals, which must be clearly formulated, communicate the strategy throughout the organization, be consistent with the goals of personnel, be linked to the annual budget, be consistent with strategic initiatives, and facilitate regular reviews through feedback. and making necessary strategy adjustments.

Drawing up a balanced scorecard is based on decomposing the strategy using a strategic map into the following four promising areas and drawing up strategic maps from them:

financial position of the organization;
consumers of the organization and sales markets;
internal business processes;
development of the organization and its personnel.

A strategic map is a diagram that describes a set of strategic goals and cause-and-effect relationships that indicate how an organization's intangible assets are converted into tangible (financial) results (Figure 1). It performs the following functions:

Represents a description of the strategy implementation process.
Explains the organization's strategy to employees and reflects the interrelationship of strategic goals.
Explains how their individual goals contribute to the overall strategy and its goals.
Shows how non-financial goals (shortening the production cycle, increasing market share, employee and customer satisfaction) help describe the process of creating added value.
Traces how intangible assets (skilled personnel, availability of information systems) are transformed into tangible results (attracting new customers, revenue growth, increased profitability).
Gives management the opportunity to understand the essence of the strategy, and also creates the basis for creating a system for managing the implementation of the strategy.

Strategic maps can be created at the level of divisions and individual performers. For a certain set of strategies, basic, template maps can be drawn up in advance.

The balanced scorecard contains four components that correspond to strategically important aspects of the organization's activities. Each component is associated with a specific key question, the answer to which is an indicator characterizing the direction of strategy implementation (Table 1). These indicators can be used as the basis for creating a balanced scorecard (BSS).

The process of developing a strategy and creating a BSC includes the following stages:

I. Based on the vision of the organization, its management determines financial goals and benchmarks.
II. The organization's consumers are identified and measures are developed to improve consumer perception of goods or services and meet their future needs.
III. Ways to achieve the goals formulated at stages 1 and 2 are identified, measures are developed to improve business processes (development of new products and services, improving the quality of service, increasing the effectiveness and efficiency of business processes) to satisfy consumers and achieve financial results.

IV. The strategy is decomposed into four perspectives: finance, customers, processes and personnel, and goals are set for these perspectives.
V. For each goal, within each perspective, the existing critical factors (key success factors of the industry or competitive advantages of the organization) are identified.
VI. The established critical factors serve as the basis for selecting indicators with which to measure the state of implementation of each critical factor. For specific conditions of the organization, these indicators will have a specific target value. The totality of such indicators constitutes the BSC.
VII. An action plan is being developed to implement the intended goals using the BSC.

All four components of the BSC should contribute to the implementation of the organization's strategy. It is important to establish a set of main strategic goals for the components of the BSC, which are used in practice when developing a strategy (Table 2).

Critical factors are determined by industry key success factors (controllable factors that improve the organization's competitive position in the industry) and competitive advantages (unique tangible and intangible resources and strategically important areas of activity) of the organization. Key success factors are determined based on industry analysis, and competitive advantages are determined based on management analysis.
Examples of possible critical factors are given in table. 3, and examples of indicators for critical factors in table. 4.

Based on the critical factors, targets are set, which represent specific values of the critical factors that the organization seeks to achieve. Thus, if the percentage of trained employees is selected as a critical factor, then the target indicator could be the percentage of trained employees during the year (for example, 40% per year). With a critical factor characterizing the frequency of assortment renewal, the target indicator could be a complete update of the assortment within two years. To implement target indicators, it is necessary to develop appropriate programs.

If the system of target indicators turns out to be extremely extensive, with the presence of duplicate indicators, then the task is to limit the indicators used. It is believed that a sufficient number of indicators in such areas as finance, clients, training and development should not exceed five, and for internal processes - no more than ten.

We will assume that the developed strategy for the tourism organization is reflected in the strategic map presented in Fig. 2. Based on the strategic map, the BSC was developed with the involvement of consultants and managers of the organization (Table 5). Similar strategic maps are drawn up for divisions (individual employees) of a tourism organization and the BSC is determined for these divisions (employees). The developed BSC should be reflected in the organization’s budgets. As strategic indicators, budgets may reflect the volume of annual profit and sales volume by type of tour. Taking into account seasonality and other specific factors for these types of travel, the annual budget is linked to monthly budgets.

Literature
1. Gershun A., Gorsky M. Balanced control technologies. - M.: Olimp-Business, 2005.
2. Introduction of a balanced scorecard / Transl. with him. - 2nd ed. - M.: Alpina Business Books, 2006. (Series “Management Models of Leading Corporations”).
3. Moiseeva N.K. Strategic management of a tourism company: Textbook. - M.: Finance and Statistics, 2000.

Also on this topic.

The Balanced Scorecard (BSC) is the most popular, world-recognized strategy implementation management concept, developed by Harvard University professors D. Norton and R. Kaplan (USA).

The Balanced Scorecard (BSS) provides targeted monitoring of the enterprise’s activities, allows you to predict and anticipate the emergence of problems, organically combines the levels of strategic and operational management, and controls the most significant financial and non-financial performance indicators (KPI) of the enterprise. The degree of achievement of strategic goals, the efficiency of business processes and the work of the entire enterprise as a whole, each of its divisions and each employee is determined by the values of the so-called key performance indicators (KPI), which are closely related to the employee motivation system. Indicators with their target and boundary values are determined in such a way as to maximally cover all critical areas affecting the implementation of the strategy.

Thus, the Balanced Scorecard (BSS) is a system for measuring the performance of the entire enterprise (strategic planning system), based on vision and strategy, which reflects the most important aspects of the business. The concept of the Balanced Scorecard (BSS) supports strategic planning, implementation and further adjustment of the strategy by combining the efforts of all departments of the enterprise.

What benefits does the implementation of a key performance indicator (KPI) management system give to an enterprise?

Traditional measurement of an enterprise's performance, focused only on financial indicators obtained from accounting systems, is quickly outdated and does not provide a complete picture of the state of the enterprise and does not allow for an accurate forecast of its development. There is a need for more advanced and effective ways to globally assess the performance of the entire enterprise. Modern approaches to strategic management call for paying attention to such non-financial components as personnel, business processes, innovation, and relationships with consumers. To this end, Robert Kaplan and David Norton identified four perspectives, which are the main groups of strategic goals, the achievement of which is assessed by key indicators:

Financial: What value do we provide to our shareholders?
Client: What value do we provide to our clients?
Internal processes: What processes must we improve to ensure the competitiveness of the enterprise?
Training and Development: Are there programs for development, motivation and growth?

A properly constructed Balanced Scorecard (BSS), supported by convenient software, allows an enterprise to:

Focus all your resources (financial, human, technological, information) on the implementation of the strategy and ensure the enterprise’s steady movement towards its goals.
Provide a link between strategic goals and the daily work of commercial, production and administrative structures (by introducing measurable indicators related to the goals).
Increase the controllability and efficiency of the enterprise, as well as reduce risks.

Completeness and accessibility of information

The main advantage of the Balanced Scorecard (BSS) is that it permeates the entire structure of the enterprise and initiates coordinated operational actions of personnel aimed at implementing the Strategy. All information related to strategic goals is available to employees at all levels. Processed and analyzed information, consistent with the tactical and strategic aspects of the activity, becomes knowledge. The presence of such corporate knowledge is the main value of the enterprise, the most important element in making informed, effective decisions.

Cause-and-effect relationships

The Balanced Scorecard (BSS) helps managers quickly obtain valuable summarized information about the activities of the enterprise to improve the quality of the decision-making process. The concept of the Balanced Scorecard helps to present the strategic goals of an enterprise on a strategic map in the form of a decomposition of goals. A strategic map is a description of strategy using cause-and-effect relationships at each level of enterprise management. This model of Strategy implementation is convenient to use both for monitoring the achievement of goals and for their modification.

Active participation of employees at all levels in the implementation of the Strategy

The Balanced Scorecard (BSS) ensures coordinated interaction between enterprise employees and provides all levels of enterprise management with ideas about how to improve the decision-making process and move closer to your goals. The success of the Strategy implementation depends on the achievements and initiative of employees, the correct allocation of resources and the building of feedback. By participating in determining key indicators and implementing the Strategy, employees have the opportunity to improve their own skills and improve the efficiency of the enterprise as a whole. By involving staff in the process of implementing strategic decisions, the enterprise turns into a flexible structure where each employee understands the goals in the same way. Such an enterprise is able to quickly respond to dangerous trends and make appropriate management decisions.

Business processes

The Balanced Scorecard (BSS) helps an enterprise optimize its own business processes and aligns these business processes with the strategy. Key management processes such as business planning, forecasting, budgeting, etc. are linked to enterprise performance indicators (KPIs) and are assigned priorities. Thanks to the Balanced Scorecard, an enterprise can more optimally manage its budgets based on strategy, rather than on the personal preferences of individual managers, which provides a link between priorities and actions.

Responsibility

Each key performance indicator (KPI) used to measure the achievement of a specific strategic goal should be assigned a person who is personally responsible for achieving the established target values for that indicator. The Balanced Scorecard allows an enterprise to identify the key areas of its business and assign responsible people for these areas.

Conditions necessary for the implementation of the Balanced Scorecard

For the successful implementation of the Balanced Scorecard (BSS), it is necessary:

Get management support
Come to an agreement on the terminology used
Find an internal project manager
Define the Mission, Vision and Strategy of the enterprise
Determine the scope (divisions of the enterprise in which the Balanced Scorecard is being implemented)
Define strategic goals
Define indicators (KPIs) to assess the achievement of goals and ways to obtain data for indicators
Define initiatives to achieve strategic goals
Implement process management
Assess the efficiency of the enterprise for certain periods

Main stages of implementation of the Balanced Scorecard:

Example of a Balanced Scorecard

The figure shows an example of a Balanced Scorecard (BSS).

Vision- a picture of what the organization wants to become in the future: “We must dominate the market”
How?- Focusing on cost optimization, high quality and investment in new technologies.
In what ways and in what perspectives should we surpass others?- Responsibilities and action plans are defined to achieve set goals.

Creating the most Balanced Scorecard is not as difficult a task as creating a manageable Balanced Scorecard!

Benefits of using the Balanced Scorecard (BSS)

The Balanced Scorecard (BSS) provides enterprise management with a complete picture of the business.
The Balanced Scorecard (BSS) allows you to prevent the occurrence of critical situations.
The Balanced Scorecard (BSS) methodology facilitates interaction at all organizational levels and ensures that all participants understand the strategy and strategic goals.
The Balanced Scorecard (BSS) provides strategic feedback and learning.
The Balanced Scorecard (BSS) helps transform the huge amount of data received from a variety of enterprise information systems into information that is understandable.

Alexander Zilberman Leading consultant at FinExpertiza Consulting
Magazine "Consultant", No. 17 for 2012

Managing a company based on a balanced scorecard is very simple. There are a lot of advantages, while there are practically no disadvantages. And implementing the system is not that difficult. But there are some nuances.

The main idea of the balanced scorecard (BSS) is to shift the focus of management's attention when assessing the company's success from purely financial indicators. According to this concept, enterprise management must track not only revenue and profit, but also other criteria related to relationships with customers, improvement of internal business processes, etc.

By assessing a company's results only by financial criteria, top management may lose sight of other components of success. For example, refusing to expand the product line will not require additional funds for technological equipment, modernization, etc. Consequently, in the short term, the company's financial performance will be better.

However, in the future, such a strategy may turn out to be a failure, since a company that does not modernize and modify products risks losing consumer loyalty, and with it, market share. This is exactly how Ford lost the competition to its eternal rival, General Motors Corporation.

The situation is similar with staff training. For example, a consulting firm may not invest in training its employees, and for some time such savings will have a positive impact on financial performance. However, over time, specialists who do not improve their qualifications will not be able to offer clients the best solutions, will not know the latest changes and trends, which will affect the quality of the services provided, reduce customer loyalty and ultimately lead to the loss of some of them.

The difficulty lies in the fact that staff training, relationships with clients and the development of internal processes cannot always be directly linked to the company’s performance. This is due to the fact that the effect of such events is complex and noticeable only in the long term. Therefore, funds for the development of these areas may be allocated irregularly, and solutions to problems may be postponed.

The main idea of the BSC is precisely that the company’s strategy, along with financial indicators, takes into account non-monetary goals. To do this, the organization’s specialists develop up to 20 main goals in four areas (finance, clients, processes, potential) and determine their own indicator for each goal.

Strategic cards

Often, company strategies contain a set of specific goals. A company can identify five or six major goals that it must achieve in the future. However, the goals may be unrelated and even contradict each other.

The balanced scorecard has clear rules for constructing goals. There are four main areas: finance, clients, internal processes, potential. For each of these areas, goals are developed that are linked to each other. A special map is being developed, which marks the main relationships between various goals. In the future, this enables management to clearly understand how the implementation of individual areas allows achieving strategic goals.

Not finance

The BSC was developed precisely for the reason that too much attention in many companies was paid to financial indicators. As a result, many processes, the development of which is important in the long term, were postponed in order to achieve acceptable financial results here and now. For example, a company may not invest in the development of new technologies, maximizing profits from cash cows, but in the long run it will lose out to competitors who have invested in R&D.

The BSC ideology recognizes that financial indicators are a priority for the company, but pushes for the determination of target values for non-financial goals. As a result, the BSC allows for balanced development, since individual areas of activity do not sag. Companies that use the balanced scorecard are better managed, have more prospects and are more transparent from the point of view of potential investors.

Responsible units are assigned for each strategic goal. For example, the logistics department will be responsible for “reducing the delivery time of equipment to the regions.” Based on this goal, this unit will develop several subgoals that will reflect both financial and non-financial indicators. Thus, each department can organize its own BSC.

This process, called cascading, allows you to strategically link the company's goals and the goals of individual departments.

Motivation and correction

The balanced scorecard does not cascade down to the individual employee level. Therefore, the dependence of the remuneration of each employee on the performance of the entire unit is introduced.

If the correct motivation system is built, the specialist makes every effort and skill to ensure that his department achieves the indicators defined for it in the BSC. As a result, a connection between motivation and the implementation of the company’s strategic goals is established, and the importance of the employee increases, since the impact of his activities on the development of the enterprise as a whole is visualized. This also helps to increase motivation and improve work results.

Thanks to the presence of clear and transparent indicators, management can monitor the functioning of the organization. If any deviations occur or a certain indicator is not achieved, then the reasons are analyzed and the target values are immediately adjusted. This allows you to keep both the operational management system and the enterprise strategy up to date, which must be flexible and take into account ongoing changes.

The balanced scorecard can be compared to a kind of “dashboard” of a business. It is developed in such a way that, with a minimum number of controlled parameters, the manager (or owner) promptly receives information about any significant deviations in the activities of the enterprise or its division.

The BSC gives the manager an additional, convenient control tool. This is appropriate to illustrate with the following example. If the “oil pressure” light comes on on the car’s dashboard, this does not allow us to draw an unambiguous conclusion about the exact cause of the malfunction. But it makes it clear in time that it is necessary to immediately check in detail the condition of the engine and its main components.

Application of the model

The BSC does not replace a strategy or planning system. It is rather a management method that allows you to systematically manage a company, based on specific interrelated indicators and their values.

After analyzing and determining the company’s position in the market, the main goals are developed that it must achieve within three to five years. For each goal, indicators are determined and specific values are developed that serve as a guide for the enterprise.

Targets are first developed for the entire planning period, and then determined for one or another criterion for separate periods, equal, as a rule, to a calendar year.

The next planning stage is to determine which strategic activities will help the organization achieve balanced performance. Here, the annual values of the criteria are adjusted in accordance with the timing of the implementation of strategic measures.

Next, responsible units are determined for each indicator. There are situations when several departments are responsible for achieving one indicator. For example, regional sales departments receive their own revenue plan, which collectively provides a target value for the organization as a whole.

At the next stages, cascading of indicators occurs, that is, based on the annual indicators for the company as a whole, each division receives its own indicators for which it must be responsible.

Thus, the BSC affects each department, linking the strategic goals of the enterprise and the specific tasks of the departments.

An important element of the system should also be a control system, when the company's management gradually evaluates the results of individual divisions and the enterprise as a whole and makes adjustments to the BSC.

Operational planning

An important aspect when implementing a BSC is related to the fact that some goals are not strategic for the company, but its daily functioning depends on them. For example, if an organization has a fairly low staff turnover, then the goal “to ensure a staff turnover rate of no more than X%” will not be put forward as a strategic goal, since management is satisfied with the existing situation.

Therefore, at the departmental level, it is important to link strategic activities aimed at bridging the strategic gap and performing current activities. As already mentioned, the target indicators that a particular department must achieve are determined on the basis of the target indicators of the enterprise as a whole (top-level indicators).

For each top-level goal, it is determined which units are responsible for its implementation and what target values it must achieve in order for the organization’s strategic goals to be realized.

Thus, cascading of indicators occurs and departments receive their own BSC.

Then the head of the department draws up its annual budget, highlighting in a separate section events that are of strategic importance for the company. When developing the budget for the next year, the head of the department takes into account both current activities, which are determined in the “basic budget” section, and the implementation of strategic activities that require separate provision of resources, described in the “project budget.” This emphasizes the particular importance of strategic activities for the development of the organization. Moreover, only the implementation of both areas of activity will allow the department to achieve its target indicators.

Then, based on the departmental budgets, a single company budget for the year is drawn up. At this stage, adjustments to strategic activities and target values are possible if the resources required to achieve the goals exceed the capabilities of the organization.

Thus, by implementing the BSC, management receives a tool that links strategy and daily activities.

Indicators and their measurability

Let's talk about the key errors encountered when implementing the system. The BSC includes four main areas along which the company’s goals are developed: finance, customers, processes, potential.

For some purposes, determining the indicator and the mechanism for measuring it is quite simple. For example, an organization receives information about financial indicators from its own financial statements.

However, for a number of purposes, the assessment of the basic and target values of indicators is not obvious. In this case, it is necessary to carry out special measures that will determine the base level and target value of the criterion.

Let's take a trading and manufacturing company as an example. Let's analyze which indicators are easy to determine and in which cases additional work is required (see table).

Table 1. Evaluation of indicators

Perspective	Target	Indicator	Unit of measurement	Actual value	Target value (three-year horizon)	Information for assessing the indicator
Finance	Reduce inventories in the regions	Share of warehouse stocks by region	%	25%	10%	Management reporting
Finance	Increase business profitability	Profit	%	12,5%	25%	Accounting statements
Finance	Increase company revenue	Revenue volume	million rubles	650 million rubles	1 billion rubles	Accounting statements
Finance	Reduce variable costs per unit of production	Variable costs per unit	Rubles by type of product	Additional calculations by product type are required		Accounting statements
Clients	Enter new regional markets	Share of sales in new markets	%	5%	25%	Marketing research, accounting reporting
Clients	Increase the company's share	Company market share	%	7,5%	10%	Marketing research
Clients	Improve the customer feedback system	Waiting time for a client to connect with a call center operator	Min.	5.5 min.	2.5 min.	Call center data processing
Clients	Improve the customer feedback system	Estimated value	Points			Customer Satisfaction Study
Clients	Increase awareness among the target audience	Estimated value	%	45%	65%	Analysis of recognition among the target audience
Processes	Reduce delivery time for equipment to the regions	Average delivery time for equipment by region	Number of days	15	5	Logistics service data
Processes	Reduce product development time	Average time to develop new products	Number of weeks	Additional preliminary calculations required		R&D department data
Processes	Expedite warranty repairs of equipment	Average warranty repair time	Number of days	20	10	Warranty repair department details
Processes	Increase quality control in production	Number of warranty calls	%	2%	0,5%	Management reporting
Potential	Improve staff qualifications in R&D	Estimated value	Points	Additional preliminary calculations required		Certification
Potential	Increase employee motivation	Turnover among key employees	%	It is necessary to identify key employees
Potential	Increase employee motivation	Satisfaction level assessment	Points	50 points	80 points	Employee survey
Potential	Increase the level of employee initiative	Number of employee initiatives	pcs.	Preliminary calculation of the indicator is required		Creating custom statistics
Potential	Increase the level of employee initiative	Implementation of a feedback system	Implementation schedule implementation			Quarterly data
Potential	Increase presence in target media	Number of articles and comments	pcs.	5 articles, 40 comments year	10 articles, 100 comments	Monitoring target media

As can be seen from the table, for a number of purposes it is easy to determine the indicator and the method of measuring it. This primarily concerns finance and, to a somewhat lesser extent, the “clients” area. In the areas of “processes” and “potential”, this is much more difficult to do, since there are often no clear criteria for assessing these goals.

For example, the goal is “to improve the customer feedback system.” Two indicators were proposed - “the time a client waits for a connection with a contact center operator” and “calculated value”. The time is determined based on a customer survey in order to find out how satisfied they are with the opportunity to express complaints and wishes to the company.

To evaluate the first indicator, we had to install special software, which made it possible to track the client’s waiting time before connecting with the operator. To assess the second, a sample survey was conducted to find out how satisfied customers were with the quality of interaction with operators, the speed of solving their problems, etc.

Since measuring indicators requires additional costs, many companies choose indicators that are easier to measure instead of more informative ones. Such errors significantly impair the effectiveness of the BSC.

Lack of strategic analysis

One of the most common mistakes in our practice when implementing a BSC is the lack of in-depth strategic analysis before developing the system. That is, companies are trying to skip the strategic analysis stage and immediately move on to determining the indicators they must achieve. This is fraught with very serious consequences.

For example, in one of the Russian banks, the goal in the “customers” direction was “to take a share of the consumer lending market.” This was done in 2003-2004, when consumer lending was developing very rapidly and many banks considered it their duty to play in this field. As a result, significant funds were allocated to solve this problem, additional branches were opened to provide potential private clients with convenient and fast loans. However, this direction soon had to be curtailed.

The bank's main clients were large government agencies. Experience in the retail market was not enough. In addition, the bank could not offer private clients the same attractive conditions as competitors specializing in this area. And even despite the efforts made and the funds spent, it was not possible to occupy the required share of the consumer lending market. Therefore, we had to curtail these programs, focusing on the main areas of activity.

Thus, the definition of any indicators is not the primary basis. Before developing a BSC, a strategic analysis, identification of strengths and weaknesses, analysis of competitors, suppliers, consumers and other elements of the external environment are required.

The company's unpreparedness for implementation

One of the key challenges to implementing a balanced scorecard is resistance to change. After the development of the BSC, the project is often put aside, and the company continues to live as before. This behavior is partly explained by the fact that the introduction of clear indicators can weed out effective managers from ineffective ones, which is not desirable for everyone.

In addition, in order for the BSC to not just gather dust on a shelf, but to serve as a management tool, it is necessary to control the progress of strategy implementation, evaluate intermediate results and make adjustments to the company’s activities. These activities take time, especially at the stage when the system is just being implemented and the procedures have not yet been worked out. For these reasons, there are often situations when the BSC implementation process ends at the stage of document approval.

One of the basic elements of overcoming such resistance may be the introduction of a BSC in any one division of the company. Successful experience will also show managers of other departments that the time they spend on development, implementation and control will be well spent. This will significantly increase their loyalty, and at the same time the likelihood of successful implementation of the BSC.

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Balanced Scorecard

Introduction

Chapter 1. What is the Balanced Scorecard

Chapter 2. Components of the BSC

Chapter 3. System for implementing customer service indicators

Chapter 4. BSC methodology

Literature

Introduction

balanced indicator staff efficiency

Management technology Balanced Scorecard or Balanced Scorecard (BSS) is of keen interest to the managers of Russian companies. However, those who begin to implement the BSC often fail due to the fact that they forget about the first and important step of BSC implementation - a detailed and thorough elaboration of the company's strategy. It is necessary to understand that the BSC does not replace the strategy, but serves as a tool for its implementation. Therefore, you first need to formulate the essence of the company’s strategy, and only then begin to formalize it with the help of the BSC and create mechanisms for executing and controlling the strategy.

The design and production of a balanced scorecard is attracting increasing attention from large Russian companies. This interest is caused, first of all, by the urgent need to effectively solve the problems of company manageability, as well as to organize control over business development on the part of the owners.

Chapter 1. What is the Balanced Scorecard

The Balanced Scorecard System (BSS) is a mechanism for consistently communicating the company's strategic goals to personnel and monitoring their achievement through the so-called key performance indicators (KPIs). In the English version, BSC is Balanced Scorecard (BSC), KPI is Key Performance Indicator (KPI).

KPIs are, in essence, measures of the achievability of goals, as well as characteristics of the effectiveness of business processes and the work of each individual employee. In this context, the BSC is a tool not only for strategic but also for operational management.

The advantage of the BSC is that an enterprise that has implemented this system receives as a result a “coordinate system” of actions in accordance with the strategy at any level of management. All resources, as well as the company’s employees, through a motivation system closely tied to KPIs, are oriented to the company’s strategy and aimed at achieving it in their daily work.

The Balanced Scorecard is a relatively new technology. The Balanced Scorecard was developed based on the findings of a 1990 study conducted by Harvard School of Economics professors David Norton and Robert Kaplan. The study was conducted with the sole purpose of identifying new ways to improve operational efficiency and achieve business goals.

The Balanced System of Indicators provides targeted monitoring of the enterprise’s activities, allows one to predict and anticipate the emergence of problems, organically combines the levels of strategic and operational management, and controls the most significant financial and non-financial performance indicators (KPI) of the enterprise. The degree of achievement of strategic goals, the efficiency of business processes and the work of the entire enterprise as a whole, each of its divisions and each employee is determined by the values of the so-called key performance indicators (KPI), which are closely related to the employee motivation system. Indicators with their target and boundary values are determined in such a way as to maximally cover all critical areas affecting the implementation of the strategy.

The basic principle of BSC, which largely became the reason for the high efficiency of this management technology, is that you can only manage what can be measured.

In other words, a goal can only be achieved if there are quantifiable indicators that tell the manager what exactly needs to be done and whether he is doing what he is doing correctly from the point of view of achieving the goal.

The BSC places an emphasis on non-financial performance indicators, making it possible to evaluate such seemingly difficult to measure aspects of activity as the degree of customer loyalty or the innovative potential of the company.

Finance (what is the perception of the company among shareholders and investors?);

Customers (what kind of company do buyers of its products see?);

Business processes (which business processes require optimization, which organizations should be focused on, which should be abandoned?);

Training and growth (what opportunities exist for the company’s growth and development?).

Technologically, the construction of a BSC for an individual company includes several necessary elements:

a map of strategic objectives logically related to strategic goals,

directly a balanced scorecard (measuring quantitatively the efficiency of business processes, the “point of achievement of the goal” and the time frame within which the required results must be achieved),

targeted projects (investments, training, etc.) ensuring the implementation of the necessary changes.

“dashboards” of managers at various levels for monitoring and evaluating activities.

There are a number of examples of successful implementation of the balanced scorecard in the business world. It is thanks to these successful examples that the methodology is constantly evolving and improving through the accumulation of various experiences. The Balanced Scorecard Collaborative (BSCol) has worked with more than 200 clients to develop and implement BSC-based management systems. Among the most famous and well-documented examples are the American corporations Mobil U.S. Marketing and Refining" and "Cigna Property and Casualty". The former moved from last to first in profitability in the industry, and Cigna P&C went from an unprofitable firm to a specialty insurance company with annual sales of more than $3 billion.

When studying the BSC and successfully implementing it, we found out that this system provides the management of the enterprise with a complete picture of the business and allows them to prevent the occurrence of critical situations.

The BSC methodology facilitates interaction at all organizational levels and gives all participants an understanding of strategy and strategic goals, provides strategic feedback and training, and helps transform the huge amount of data received from a variety of enterprise information systems into information accessible to understanding.

Thus, the Balanced Scorecard is a system for measuring the performance of the entire enterprise (strategic planning system), based on vision and strategy, which reflects the most important aspects of the business. The concept of the Balanced Scorecard supports strategic planning, implementation and further adjustment of the strategy by combining the efforts of all departments of the enterprise.

The balanced scorecard can be used to achieve such goals as:

Explanation of the adopted strategy;

Communicating the strategy to the organization's employees;

Coordination of departmental objectives and personal goals of employees with the strategy;

Linking strategic objectives with long-term goals and annual budget;

Identification and coordination of strategic initiatives;

Periodic and systematic review of the strategy;

Establishing feedback to adjust the strategy.

The application of the BSC begins, as a rule, with the announcement of the corporate strategy and the general definition of the stages of its implementation. These include:

1. development of indicators (compile a list of indicators that reflect the most important success factors);

2. identifying a causal relationship (select indicators that correspond to the chain of cause-and-effect relationships in order to outline a specific logic for creating value);

3. development of a hierarchy of scorecards (after developing a scorecard for the entire organization, prepare additional cards for each division);

4. establishing a connection with payment (linking employee rewards for success with BSC).

5. preparation of information technology infrastructure (bring data collection and reporting in accordance with BSC logic; configure and manage system components necessary to create an integrated system);

6. receiving and using feedback (conduct periodic meetings to evaluate feedback and support continuous improvement).

Chapter 2. Components of the BSC

Strategy- a multifaceted concept. It is understood as a plan of action, a business concept, and principles of behavior. The founders of the BSC, David Norton and Robert Kaplan, defined strategy as a set of hypotheses about cause and effect. This very useful instrumental definition allows you to depict strategy in the form of a map on which strategic goals at different levels are connected by cause-and-effect relationships. What could be more clear and understandable than a graphical representation? This view allows us to “bring down” strategy from academic heights and make it a working tool for “ordinary” managers. However, carrying out this transformation - turning the strategy into a map of goals that everyone can understand - is not so easy. Before you start developing such a map, you need to formulate what your strategy actually is.

Based on personal experience of such work, A. F. Kochnev (Ph.D., General Director of the consulting company "I-Team", Moscow) and

Fastov I.S. ,(General Director of the company "Nanotechnologies and Innovations" Moscow) identified four components of a formula that fully expresses all the main aspects of the strategy:

1. strategic guidelines (mission, values, vision) - why we are doing this, what we are striving for;

2. strategic positioning (market concept) - what needs to be done in the market;

3. organizational concept - what needs to be changed in the company;

4. basic strategic focus - how we will achieve our goals.

If you have clear ideas on each of these points, you can confidently say that you have defined your strategy. If you find it difficult to answer, then no multi-page plans and analytical materials can help the matter - you have no strategy.

The main question with which to start developing a strategy - “What is your strategic problem?”

A problem is something that is an obstacle to the survival and development of the company now or will become an obstacle in the future. Often business leaders say: “We have no problems!” They just haven't encountered them yet. If you don't find problems, then problems will find you. Forward-thinking leaders deal with problems before they appear in the form of collapsing sales, declining profits, and other catastrophic events. These are strategic problems. They have not arrived yet, but certain alarming signals indicate their approach. It is important to catch these signals and understand what systemic changes are necessary for the company to meet the coming changes head-on.

To achieve what is planned, you need to understand what the company should focus on and identify directions for development. Vectors of change need to be defined clearly, specifically and concisely.

The developed “formulas” should clearly indicate what to strive for in working in the market, while improving internal processes and developing the potential of employees. It is these definitions that should subsequently be specified in the form of a system of goals and indicators of the BSC.

When it becomes clear in which direction to make changes and what the company wants to achieve, you can begin to formalize the strategy in the form of a BSC.

The basic principles on which work to develop a strategy should be based can be called the following:

Teamwork. The entire management team of the company should be involved in creating the strategy. The general principle is this: everyone who will be subsequently responsible for its implementation should participate in the discussion and development of the strategy.

Enabling “collective intelligence”. Each leader of a particular area or an experienced specialist is an expert, a bearer of very important knowledge about the market, technologies, and working methods. It is important to collect and use this “scattered” knowledge during strategy development. This is much more important than expensive market research.

Harnessing the team's creative potential. In the course of work, it is necessary to create conditions for the free exchange of opinions and ideas, encourage initiative, and be attentive to any proposals.

Work should not be left to chance. This is a project with clearly defined goals, stages, and deadlines. Each participant receives specific tasks that he must complete. Creativity and discipline are two complementary aspects of this work.

Focused on achieving a shared vision. The main result is not a document outlining a strategy, but a common vision of the company’s future and ways to achieve it, which should be formed through joint brainstorming, discussions, and search for solutions. This is the main value of this work.

The management team that has collectively done this work from start to finish is fully prepared to take the next step: developing a balanced scorecard that will be instrumental in executing the intended strategy.

A formalized strategy provides the following benefits:

1. a basis is created for agreement and mutual understanding between shareholders, as well as between shareholders and top managers on issues of company development;

2. priorities for making investment decisions are determined;

3. decision-making time is reduced;

4. a basis for improving business processes is being formed;

5. conditions are created for the delegation of authority and responsibility to the middle and lower levels of company management;

6. the basis for building an effective management structure is formed;

7. an opportunity is provided to motivate employees - the company becomes more attractive to them, its competitiveness in the labor market increases;

8. the company’s attractiveness for partners increases, its competitive position in the industry strengthens;

9. the company becomes attractive to investors and competitive in the capital market.

Having a “working” strategy in a company gives a great competitive advantage - the ability to act purposefully.

In addition to strategy, the main components of the BSC remain the indicators. There are four key groups of indicators:

1. Financial performance indicators of the organization.

2. Indicators of work with clients.

3. Indicators of business processes occurring within the organization.

4. Indicators of personnel training and development.

But it is still impossible to unambiguously answer the question of which indicators, with clearly defined criteria, must be taken into account in order to achieve the planned results at a particular enterprise, taking into account Russian specifics.

Let's take a closer look at the system for introducing customer service indicators using an example.

Chapter 3. SystemsAimplementation of customer service indicators

How often have you heard from your boss: Increase the number of regular or key clients, strengthen the direction of work with clients of such and such group, be polite to clients... etc. etc. At first glance - the usual phrases about the need for a speedy onset of a bright future for the organization, phrases and slogans.

The first question is, what exactly is a regular client of an organization?.. Is the client not a regular one?.. 80% of managers are confused by this question. You can often hear: these are the customers who buy a lot. Some might also add: and regularly. But today, in the age of automated systems, this is clearly not enough. Each employee in an organization may understand these criteria differently. And it turns out that the manager was thinking about one group of clients, the head of the department understood the task in his own way, and the manager interpreted it completely differently...

Let's analyze together what we actually mean by different types of clients. First of all, it suggests segmenting customers by the number and frequency of purchases.

There are three main types of clients:

1. Potential

2. Real

3. Permanent

Potential customers are those customers who have a need for products, equipment, and services of the enterprise, but have not yet made a single purchase during the reporting period. Do you want to ask the question: why for a certain period? In fact, this is a very important question - after all, the entire volume or quantity of purchases is determined for a specific period of time. And a lot depends on the right choice of period. We recommend limiting it to a year, although each organization can optimize this period to suit its specific objectives. Schematically, the search criteria for potential clients in the database can be represented as the following condition

Potential client = purchase volume period = 0 or

Potential client = number of purchases period = 0

It is good if the organization knows about such clients, looks for information about them, and enters them into its databases, because under certain conditions these potential clients can turn into or become full-fledged real clients.

Real customers are those customers who made at least one purchase worth more than one ruble during the reporting period. Often in organizations, when they talk about clients, they mean this particular category of clients. In formulas it might look like this:

Real customer = purchase volume period > 0 or

Real customer = number of purchases period > 0

Real clients are a respected group of clients. Indeed, under certain conditions, each client from this group can become a regular customer, and therefore a regular source of income for the company.

Regular customers are those customers who make regular purchases from the organization and the amount of purchases exceeds the nominal value for the reporting period. Here are two conditions connected by a logical operator.I. (.AND.), i.e. The criterion for having a regular customer is the fulfillment of both the first condition and the second:

Constant client = purchase volume period > A.AND. quantity of purchases period > B, where

A is the conditional volume of purchases,

B is the conditional quantity of purchases.

This expression takes into account both the volume of purchases and their regularity. A simpler condition would be based only on the volume of purchases for a certain period, but here the criterion of a regular customer may include a “stray” buyer who has made one purchase for a large amount, and it would be reckless to consider him a real regular customer.

Now that the company's customer criteria have been determined, tasks can be set for managers to achieve the company's strategic goals. They could be:

Task No. 1

Filling the database with potential clients.

Subtasks:

Search for customers who have a need for the company’s goods or services

Entering them into the database (filling out customer cards on them)

Determining the conditional need for a company’s product or service, expressed in quantitative terms

The number of potential clients entered into the company database for each manager, department or financial accounting center (FAC).

Correctness of input (correct filling of all fields) of the customer card.

For many organizations, it will also be useful to find out the conditional need for a product or service of the company from a potential client. In the future, this will make it possible to sub-segment potential clients according to their needs, identify among them priority enterprises with great need and direct the main efforts of managers to them.

Task No.2

Increase in the number of regular customers of the company in the reporting period

Similar to a report on real clients, a one-time snapshot of the number of such clients is not as important as determining their number over time, over two or more periods.

Criteria for achieving and completing this task:

Determining the number of new regular customers that have appeared for each manager, department or financial center

Determining the number of “lost” regular customers for each manager, department or financial center

Since every regular customer in a company is a constant source of income, it is especially important to find out the reasons for the loss of regular customers. You can even separate such a group of clients into “lost regular clients” and display their data for a certain time to constantly monitor the state of their affairs.

It should be noted that all clients in all these reports are interconnected: first, logically, the client is potential, then real, then permanent. Unfortunately, he can only move from regular customers to the category of real customers, and from there back to potential customers (provided he does not make any purchases from the company during a conditional period of time).

In addition to reports on the inflow and outflow of various target customer groups, for companies that set goals for regularly visiting customers to evaluate implementation, you can enter an indicator of the number of visits (visits, calls) to a given target customer group.

In this case, the evaluation criterion will be the number of visits made (visits, calls) to this target group (for example, real clients) during the reporting period.

Having the ability to segment different groups of clients by quantity and regularity of purchases, it is possible to differentiate the planned number of visits (visits, calls) for each group separately.

Using the ABC matrix in relation to customer segmentation, possible indicators could be, for example,

For a group of potential clients

With a “conditionally” defined need for the company’s products or services above average - regular visits at least once a month

With a “conditionally” defined need for a company’s product or service below average - regular calls to contact persons making purchasing decisions at least once a month for a group of real customers, regular visits at least 2 times a month for a group of regular customers, regular visits at least once a week.

Thus, the setting of tasks at any level of management to achieve the strategic goals of the company becomes clear and understandable, and quantitative indicators of their implementation are determined.

Such a system covers almost all possible states of clients in relation to the company. Of course, it is possible to further complicate the criteria for determining clients in terms of volume and regularity of purchases, but it must be remembered that any complication of the system leads to an increase in the cost of company resources.

Chapter4 . BSC methodology

From a methodological point of view, there are two basic approaches to the balanced scorecard as a management tool.

First, the traditional “bottom-up” path, characteristic of developed Western companies, which systematically and purposefully searched for the optimal integration of management systems and organization of management of strategy implementation.

This evolutionary approach is typical for businesses with developed marketing and financial management systems, effective information support for operational and management processes, and a high level of personnel training. The construction of a balanced scorecard, as it were, crowns the management circuit, turning it into a logically complete, transparent and, at the same time, flexible system. In Western companies, setting up a balanced scorecard takes on average about six months. BSC contours, as a rule, are built into “heavy” information support systems and easily fit into existing management models.

The implementation of similar approaches in Russian companies often pushes the effect beyond the horizon. The overwhelming majority of Russian businesses have not yet been able to create a reliable foundation for the use of complex and precise management tools. There are a lot of blind spots in the financial accounting system and in the organization of business processes. Building functional management systems separately, gradually describing business processes, intuitive searches for solutions to problems of personnel selection and motivation - all this leads to unproductive expenditure of time and financial resources; work is carried out by trial and error.

Second, an alternative “top-down” approach is to immediately write down the internal logic of business development in the language of a balanced scorecard, and then complete the necessary management contours in the form and scale that are optimally suited for the business model set by specific strategic goals.

Outwardly, the second, frankly revolutionary approach, is much more attractive in terms of timing and more rational use of resources. However, it is very dangerous from the point of view of the possibility of rapid disappointment - too many gaps in information, inconsistency in accounting systems and organization of business processes.

In any case, setting up a balanced scorecard in a company must be considered as a serious investment project that requires significant time, financial and managerial resources. It should be noted that the use of a balanced scorecard requires a serious level of professional training of personnel.

An analysis of attempts by Russian companies to create balanced scorecards revealed a number of typical obstacles that arise during the implementation of such projects.

1. In Western practice, the construction of a map begins at the level of financial prospects, since strategic goals and the risks associated with them are expressed in the planned level of return on capital, growth in the market value of shares, and return on investment.

Questions about target markets, portfolio strategy, and areas of formation of competitive advantages are resolved, as a rule, using traditional strategic analysis tools and only require more precise tuning.

When planning a business, Russian entrepreneurs for the most part are guided by Bernstein’s famous statement “Movement is everything, the final goal is nothing.” Questions about the market, time and financial indicators of the business, when and at what price it is planned to be sold, when the business should begin to generate free cash flow and in what volumes, what from the product portfolio corresponds to strategic goals and what does not, baffle owners. The main categories of business planning for them are revenue growth, physical sales volume, cash flow, that is, at the level of operational management.

There is a very common impression that business should develop linearly, incrementally, without assessing the need for qualitative changes and leaps associated, for example, with the transition from a regional to a national market. It is also very common to underestimate the risks associated with intensive development (for example, loss of financial stability).

Quite a lot of issues exist in the area of corporate governance - the balance of interests both between the owners themselves and between the owners and top managers. Clearly not enough attention is paid to such problems as procedures for exiting a business, building relationships with stakeholders (structures interested in the results of the company’s activities - clients, suppliers, partners, government agencies, etc.), and the development and approval of strategic plans in general .

All these problems inexorably appear at the very first stage of building a BSC map; you have to “slow down” and deal with them.

2. At the level of financial prospects, at least three blocks of problems appear.

The first is associated with the existing accounting system, which, at best, makes it possible to measure indicators for product areas, but poorly reflects the real profitability of segments, costs associated with the construction and operation of distribution channels, promotion of products and services, acquisition and retention of customers. The weakness of the forecast part of financial management is explained by the low level of integration of financial and marketing planning, various formats for collecting and analyzing information.

The second block is directly related to the efficiency of using assets, both current and non-current. Here there is a need to go beyond purely financial indicators and turn to the category of labor productivity, and this is a topic that is a focal point for Western companies and has been happily forgotten for over 10 years in Russian business practice (in fact, since the beginning of the transition to market reforms).

Here you will have to not only set up financial accounting and forecasts, but also re-form the contour of performance assessment in non-financial indicators.

The third block of problems is associated with the fact that intangible assets - brand, customer loyalty, quality of personnel, efficiency of management systems - are beginning to play an increasingly important role in the generation of cash flows, and, ultimately, the value of the company. This direction is practically not reflected in existing financial management systems, and, therefore, is not planned and not taken into account. This is of particular importance for investment management, since many areas of investment related to building long-term competitive advantages are practically not considered traditional investment design tools (for example, investing in a brand, setting up management systems, personnel training).

Essentially, it is impossible to produce balanced scorecards without a full-fledged management accounting system.

3. The level of prospects for the client, it would seem, should not cause any particular difficulties - assessing segments, determining purchasing motives, forming criteria and indicators - individually everything is clear and all the above elements are present to one degree or another in developing companies. However, marketing information is not sufficiently structured and formalized, marketing accounting systems and customer databases reflect the current situation, but are clearly not sufficiently aimed at providing forecasts (the same database, as a rule, does not contain data on potential customers), and information about competitors is poorly structured. Examples can be continued, but the conclusion does not change - it is very rare where marketing is present as a system of real customer relationship management. It should be noted that marketing work is extremely poorly regulated in terms of describing work flows, regulations, etc.

4. The level of business process design in general is a stumbling block to the design of a BSC map. Identification of key business processes, description of work flows, preparation of regulations and assessment of standards is quite painstaking and technically labor-intensive work. In addition, another difficulty arises. Not all types of work can be described in the form of repeating processes. In conditions of rapidly changing markets and increasing competition, the implementation of many tasks must be described in project management formats.

5. The level of training and development in the classic version of the BSC card determines the parameters of the level of personnel training, the nature of the corporate culture, and the requirements for management systems. In Russian practice, before designing this level, it is necessary to solve a number of additional tasks - determining the “owners” of business processes and setting up the organizational structure, that is, forming a management model of the business, which is of particular importance for holding-type structures.

6. The topic of distributing areas of responsibility for strategic and operational decisions and managing the development of the BSC map as an innovation process also deserves a separate discussion.

All of the above points, to one degree or another, need to be worked out in the process of designing a map and setting it up as a management tool. Therefore, setting up a BSC requires going through a number of interrelated procedures designed to speed up and increase the efficiency of this process:

Participation of owners and top management of companies in open training on BSC technology, within the framework of which the internal logic of the business is built and priority tasks are determined;

Conducting in-house training, the purpose of which is not only to transfer design technology to company personnel, but also to identify ways to solve the above problems for a specific company;

Formation of project teams based on the results of the training to develop specific management models, prepare and process the necessary information;

Preparation of a BSC map for the company as a whole, with a detailed study of planning and control procedures;

Preparation of maps of product and functional departments, personal plans of personnel;

Preparation of plans for setting up management systems and relevant administrative documents;

Testing key procedures in pilot mode, setting up and fine-tuning the system.

Currently, it is relevant to introduce the latest management technologies into the business processes of enterprises. But behind the question: “What needs to be done?”, which first of all confronts top managers of companies and to which the answer can be found in specialized literature, courses, and at the institute, finally, the question arises: how to achieve this? What steps need to be taken to achieve the planned results?

“Know how” - this is how the catchphrase “know-how” can be translated. How to transfer an enterprise to the rails of a new line, without the risk of cars going off the track, venerable lecturers prefer to remain silent about this or limit themselves to only general phrases.

Literature

1. Belov L.B., Gasparyan A.S. Balanced scorecard system and distribution of bonus funds of the logistics service among employees // Logistics and supply chain management, No. 5, October 2006, p. 60-73.

2. Doronin A.S. The balanced scorecard is the basis for controlling the logistics of a subscription agency. // Logistics and supply chain management, No. 18, February 2007, p. 43-58.

3. Dybskaya V.V., Vasyukova V.V. Principles and practical experience of developing a balanced logistics scorecard for a trading company. // Logistics and supply chain management, No. 18, February 2007, p. 5-26.

4. Kaplan R., Norton D. Balanced Scorecard. From strategy to action. - M.: ZAO “Olymp-Business”, 2003. 304 p.

5. Controlling in business. Methodological and practical basis for constructing controlling in organizations / A.M. Karminsky, N.I. Olenev, A.G. Primak, S.G. Falco. - 2nd ed. - M.: Finance and Statistics, 2002. 256 p.

6. Novakov A.A. Application of a balanced scorecard to motivate staff at a retail distribution center. // Logistics and supply chain management, No. 18, February 2007, p. 27-42.

7. Sergeev V.I., Sergeev I.V. A system of balanced indicators for assessing the efficiency of a company's logistics operations. // Logistics and supply chain management, No. 4-5, 2004, p. 82-100.

8. Sergeev I.V. Implementation of the procedure for controlling logistics activities in supply chains using the KPI system. // Logistics and supply chain management, No. 3, June 2005, p. 33-45.

9. Balanced scorecard: design methodology and implementation features in Russian conditions. Abstracts of a speech at a conference at OAO Severstal, April 2003, Zaitsev E.V.

10. Two views on balanced scores. Shi-Jen Kati Ho, Ruth McKay, 2005

11. “Where to start developing a system of indicators”, Zh-l, “Technologies of corporate management”, 2007. Kochnev A.F., Fastov I.S.

12. “Balanced Scorecard as the basis of strategic management”, “Financial newspaper” No. 11, 2007. Igor Pashanin.

13. “Features of the practical application of non-financial indicators when working with clients,” Financial Newspaper No. 13, 2007 Kirsanov S.G.

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From the article you will learn:

Balanced Scorecard: General Information

The development of the balanced scorecard began in the early 1990s. Harvard Business School professor Robert Kaplan and the president of the consulting firm Renaissance Solutions, David Norton, worked on it. They created an imperfect model, so it was subsequently refined by other experts.

Download documents on the topic:

What is BSC

The Balanced Scorecard (BSS) is a concept of decomposition and transfer of strategic goals for planning the activities of an organization. With the help of the BSC, the performance of the company is measured, not of individual employees. Based on the results obtained, the strategy is adjusted.

The Balanced Scorecard system is used as a tool for strategic performance management. It allows you to standardize the reporting form in order to quickly track the execution or non-fulfillment of tasks by employees. BSC is equipped with automation and design methods, and has feedback elements. By tracking a small amount of data, the system is highly efficient.

At the level of business processes, control of the strategic activities of the organization is carried out through key performance indicators, in the English version - Key Performance Indicator. KPIs are measures of achievability set goals, characteristics of the efficiency of processes, the work of each employee. In this context, they are considered the basis of the BSC system.

How Balanced Scorecard works

The BSC methodology transfers strategy to the level of the organization's operational activities. Correct application of the methodology solves many problems. It allows you to:

Establishing the parameters of strategic goals: KPI indicators with numerical values, cause-and-effect relationships between goals and strategic indicators, deadlines for achieving tasks.
Distribution of responsibility among officials for achieving strategic goals.
Identification of effective tools for achieving results.

The development of the BSC (balanced scorecard) begins with the preparation of a strategic map. It reflects the cause-and-effect relationships between the tasks needed to achieve the result. The target result is determined in several perspectives: clients, finances, personnel development, business processes.

For each task, key indicators are determined that measure the effectiveness of the solution. They are necessary and sufficient in order to achieve timely target result. Therefore, the system of target indicators is called balanced.

The application of the balanced performance indicator system requires significant resources. Development of a BSC if there is a specialized unit in the organization takes more than two months. This requires quality control of the results. Labor intensity and complexity of development discourage management from applying the methodology.

Advantages and disadvantages of the balanced scorecard

The introduction of a balanced scorecard is not always rational. Organizations must consider not only the advantages of using a BSC, but also the disadvantages. If managers do not know how to properly implement and use the system, its effectiveness will decrease or go to zero.

Advantages

Flaws

Provides the manager with a complete picture of the business, the performance of the company, individual divisions and employees.

Allows you to prevent critical situations from arising.

Facilitates interaction between participants at all organizational levels and provides an understanding of strategic goals.

Balanced scorecard: an example of construction based on strategic goals

Kaplan and Norton’s methodology is used by both small firms, non-profit companies, and entire cities. Compose plan development will only be possible if you correctly analyze the state of the company and the processes in it today. Only after this do managers start from current values, determine goals and ways to achieve them.

The Balanced Performance Scorecard may include the following objectives:

Financial policy: aggressive growth of the company and sales profitability, increasing the value of the organization.
Consumer Policy: popular models or services, creation of a well-known brand, long-term cooperation with clients.
Domestic policy: maintaining the quality of goods or services at a high level, beneficial cooperation with suppliers.
Learning and Growth Policy: highly qualified personnel, advanced technologies, implementation of management systems.

The balanced scorecard example makes it clear that you need to define specific goals and then try to achieve them. When drawing up a BSC, you cannot set unattainable goals. For example, “become the largest company in 2 months.” The goal must be realistic, otherwise there is no point in investing effort, time and money.

BSC in the course of the company's activities

The system of balanced performance indicators includes the main factors of the organization's activity: operational, financial efficiency, management process. The concept involves collecting information of various types: about suppliers, customers, products, services provided, costs and profits, etc.

Based on the analysis, trends are determined, prospects for the company's development, carry out planning, evaluate performance results, compare the organization's performance indicators with its competitors or with industry averages. The system also affects customer service.

The obtained indicators are recorded and regularly analyzed to understand whether the company is achieving its strategic goals. To achieve the desired results, it is assumed that a personal system of indicators and personal goals is developed for employees. The manager analyzes the activities of the staff and identifies shortcomings. Individual work is carried out with employees who show the worst results, aimed at increasing the level of professionalism.

Aspects of the Balanced Scorecard

The balanced performance scorecard is viewed from four perspectives. In accordance with each of them, quantitative and qualitative indicators are developed, data are collected, and they are analyzed.

Learning and Development Perspective

Employee training contributes to the development of corporate culture. Educated people in a company are the main resource. Development and improvement of knowledge, skills and qualifications is important in the context of technological changes, when it is impossible to hire new technically trained employees.
Business Process Perspective

They refer to internal business processes. Indicators help determine the customer focus of the organization. The analysis is performed only by full-time employees who know the company from the inside. It is irrational to entrust work to outside experts.

Customers' Perspective