Managing and Measuring Strategies through Scorecards

The scorecard system is a strategic planning and management system used by organizations to ensure that operations are in line with the business vision and strategy.

The scorecard system allows:

• Managers to view performance through both financial and non-financial metrics
• Focus on limited metrics as opposed to a wide and diverse set of measurement metrics
• A study of customer perspectives
• A study of further training and development, if needed

Because it joins financial and non-financial metrics together, it is also termed as the balanced scorecard system.

Measuring and managing effectively

When using the scorecard system, a set of performance measures works as the basis on which to measure strategy and manage its implementation effectively.

Furthermore, in the balanced scorecard system, performance is measured and compared to expected values of performance. For an effective performance measurement in this case, the metrics or data need to be relevant, the expected values for performance need to be chosen effectively, and the organization must have the ability to make interventions to correct the gaps between reality and expectation.

There are four major perspectives for measuring performance, and some commonly utilized scorecard measures within these include:

• Financial Perspective: income measures, income and investment measures, revenue and costs
• Customer Perspective: customer satisfaction and time taken to meet customer needs, customer complaints, market share, etc.
• Internal Business Processes: operations processes, innovations including new products, services and time to market, and after-sales or post-sales processes including repair time as well as customer training
• Learning and Growth: employee learning and growth measures, as well as measures in terms of technical and infrastructural development

Performance measurement through scorecards has several features. Most importantly, it must demonstrate results that bring financial improvement in an organization. This improvement may be brought by showing gaps between reality and expectation and the ways to bridge them.

Other features include:

• It outlines the strategy as a series of cause-and-effect associations, also explaining how the strategy will be implemented
• Translating the business’ strategy into a set of measurable operational units that are easily understood by everyone in the business
• Identifying the most relevant and critical measures instead of populating the performance report with diverse metrics
• Identifying the challenges faced by decision makers when financial and operational considerations are not available together

Measuring strategy through the balanced scorecards has vital bearing on the financial status of an organization. At Analytix Solutions, we employ a mix of effective automation and sound business insights to ensure that our clients’ businesses are measured effectively and profitably.

To learn more about how our processes can help you measure and manage business strategy better, call us at 781.503.9002 or send us an email at sales@analytix.com.

Analytix Editorial Team