How Balanced is Your Score Card?

 


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More and more organizations are to measure their performance.

Kaplan and Norton have provided the concept of the Balanced Score Card. They found that traditional accounting methods concentrated too much on the current company’s financial situation, whereas strategies needed an approach that couldn't be financially managed by observing existing accounting principles.

The construction they applied was - and is - that from different views the company’s strategy could be outlined. More important even is that with the provided framework, the performance of a strategy could be measured. Solving question like, “Where do we stand in the implementation of our strategy. ”

Current accounting rules do not longer apply and the word balanced is therefor especially used to express this equilibrium in current performance versus the strategy.

The four views that are interrelated in a complex (cause and effect) way are:

  • The financial view
  • The client view
  • The process view, and the one that drives the strategy is represented by:
  • The Learning and Growth view or perspective
This last view is about competences and the learning process that you need in order to fulfil the strategy.

The Balanced Score Card approach assumes that the financial perspective is the result of a Client specific approach, where you talk about satisfaction, retention, market share, etc. In order to achieve this you need to control and “streamline” your process. This all is formed by the organization, management and employees that learn to be more productive and have the right competences, etc, etc.

It is not to this article to resume the Balanced Score Card. But those who are familiar with the concept, know that it is still a very long way setting this all up.

Here comes in the role of the consultant. You should ask your consultant where your company differs from the rest (market) and what that means for an average BSC implementation.

Consultants have this experience. Not all of them can communicate the differences and similarities they have found in the market. This knowledge gets you up to speed. Something you can benefit from.

© 2005 Hans Bool

Hans Bool is the founder of Astor White a traditional management consulting company that offers online management advice. Astor Online solves issues in hours what normally would take days. You can apply for a free demo account

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