BSC Development Tools

A good balanced scorecard translates strategic objectives and plans into actions that are expected to result to more efficient management of resources and increased profits. It identifies key performance areas essential to achieving long-term goals and establishes accountabilities for tasks by instituting effective communication. BSC development is a continuous process that requires constant monitoring of implementation of plans and synthesis organizational experiences.

For existing companies, the initial step in BSC building will be to conduct a serious assessment of the different key performance areas that are important to attainment of strategic goals and objectives. Key performance areas usually are the same for every organization. All organizations definitely give prime importance to finance, which deals with maximization of resource use. There is the external community consisting of customers, suppliers, and other business linkages; and there is organizational development. The latter can be broken down into a few sub-groups consisting of human resource, management processes efficiency, and learning and growth.

Another tool for gathering information about the current status of organizations useful for BSC building is the SWOT (Strength, Weaknesses, and Threat) analysis. As an assessment tool, the SWOT is able to ferret out, as long as participants maintain an objective stance, most of the problems in each of the key performance areas. Once the weaknesses and threats are identified, corrective actions – a new policy or policy, a new human resource development program, procedure, or more stringent monitoring system – can simply be incorporated in the plans. Another advantage of SWOT is that it takes into consideration organizational strengths and available opportunities. It can also be used to analyze external conditions. The simultaneous analysis of the internal and external environment ensures that the plan addresses all organizational and management issues that hinder progress and growth.

There are many assessment tools helpful in building a high quality balanced scorecard. The best are internally generated are still the internally generated ones. However vague the current goals, objectives, and plans are as to defy judgment on whether operating results are a success or not, assessment using the company’s own measures will reveal a very important thing: the company needs to be more specific than that. The SWOT analysis will not only be beneficial in the preparation of plan clearly focused on the key performance areas but also in providing specifics of what it should contain.

The most important thing in a balanced scorecard after the corrective measures have been identified and integrated in the objectives and plans associated to key performance areas is the quantitative and qualitative description of what the companies would like to accomplish in a given period of time. Naturally, the objectives should be specific enough as to provide an accurate measure of the validity of related plan. It will not do to have an objective that simply states “raise the productivity of employees”. So-called management experts are united in declaring that objectives should always be SMART – Specific, Measurable, Achievable, and Relevant.  And plans are expected to follow the same pattern also.

The final step in building a balanced scorecard is installing an efficient monitoring system to track plan implementation progress. The monitoring system should be supplemented by formal and regular assessments to identify problems and devise remedial measures. BSC development is never finished long as problems arise and the business environment remains inconstant.