What Is the Balanced Scorecard?
BSC is the Balanced Score Card, which is one of the common performance assessment methods. The balanced scorecard implements the organization's strategy from four perspectives: finance, customer, internal operation, learning and growth. A new type of performance management system for measuring indicators and target values. According to the explanation, the balance meter mainly implements strategic planning through maps, cards, and tables. The development of the balanced scorecard has experienced three generations of development.
Balanced scorecard
- The purpose of designing a balanced scorecard is to establish a performance management system that "achieves strategic guidance," thereby ensuring the effective implementation of corporate strategies. Therefore, people often call the balanced scorecard the most effective strategic management tool to strengthen the execution of corporate strategy.
- Balanced scorecard creation
- The budding period of the balanced scorecard (1987-1989)
- Before Robert S Kaplan and David P Norton studied the balanced scorecard, Analog Devices (abbreviated as: "ADI") tried the balanced scorecard practice as early as 1987.
- ADI is a semiconductor company that mainly produces analog, digital, and digital-analog mixed signal processing devices. Its products are widely used in the fields of communications, computers, and industrial automation. Like most other companies, ADI adjusts its strategic plan every 5 years, and reviews the implementation of the original plan while formulating a new strategic plan. But, as managers often encounter
- In fact, the balanced scorecard approach breaks the traditional focus on financial indicators.
- The goals and evaluation indicators in the balanced scorecard are derived from organizational strategy, which translates the organization's mission and strategy into tangible goals and measurement indicators. On the client side of BSC, managers identify the client and market segments that the organization will compete with, and translate the goals into a set of indicators. Such as
- core content
- The design of the balanced scorecard includes four aspects: financial perspective, customer perspective, internal business processes, learning and growth. These several angles represent the three main
- The Balanced Scorecard reflects the balance between financial and non-financial measurement methods, the balance between long-term and short-term goals, external and internal balance, results and process balance, management performance and business performance balance. Therefore, it can reflect the comprehensive management status of the organization, so that
- 1. Barriers to communication and consensus
- According to a survey conducted by Renaissance and CFO Magazine, less than one in ten employees in an organization understands the company's strategy and how it relates to its own work. in spite of
- Case: A Guangdong company used the balanced scorecard as an assessment system for the company and began to implement it in this 2,000-person company with an annual output value of several hundred million yuan. Ms. Zhang, as the performance manager of the Human Resources Department, was directly responsible for balanced score Promotion of the card. However, nearly a year has passed, and the implementation of the balanced scorecard has not been successfully implemented. Instead, there are many complaints and doubts in the company. Some even said that "the original assessment method was like a rope, and now I want to use four ropes, or is it more tightly tied, to make excuses for less bonuses?". "In fact, some companies are experiencing similar situations now. Therefore, I don't know what the problem is, is it because the balanced scorecard is really not suitable for Chinese enterprises." Ms. Zhang said that she was helpless.
- Analysis: The "strategic tool" is only used for "employee performance evaluation". I hope that this new performance evaluation method can solve the problem of evaluation and bonus distribution. This is the most common mistake in implementing a balanced scorecard.
It is an upside-down approach to use a balanced scorecard just for employee performance evaluation. If the evaluation result of the balanced scorecard is only to establish corresponding compensation, monetary rewards, and even punishment systems such as final elimination, the behavior of employees will become the following model: what to do and what to do. Because any assessment cannot exhaust all the work, and the balanced scorecard only emphasizes the key performance indicators, some things will go unnoticed. When you have to impose some non-target work utilization power on employees, it is the end of a hard-built system. This will cause employees to distrust the new system, followed by questioning: the methods and standards are unfair, why isn't it worth doing too much? No matter what card is replaced, it will still fail. Secondly, because employees want to get good results and don't want to admit that they are not doing well, managers and employees will desperately push down the indicators when setting the indicator values. Throughout the year, those interpersonal-oriented managers have to implement balanceism. Enterprises, managers and employees are still stuck in the quagmire of assessment.
In response to this situation, the human resource manager training teacher believes:
(1) Employee performance management should be based on corporate / organizational performance (strategic goals) as the starting point and criterion, that is, which indicators and values of employee performance assessment must be based on strategy as the objective standard;
(2) Because the balanced scorecard only focuses on "key performance indicators" (KPIs), those non-key indicators must be guided by a "soft" culture, mission, and values, so that employees agree with the concept of "cannot only look at KPIs" ;
(3) Money rewards and punishments such a simple "
- The Colles Balanced Scorecard is the latest and comprehensive content theory and method in the evaluation of business performance. The content it evaluates and management performance evaluation have many similarities. Therefore, try to use the balanced scorecard for management Performance evaluation will definitely help enterprises improve their management level. So how to look at management performance through the use of balanced scorecards?
- (1) Look at the profitability of an enterprise or organization from financial indicators
- Financial data is an indispensable part of management performance evaluation. The purpose of business management is to pursue profit. How well the management performance of the business managers can get a more intuitive understanding through financial data. Generally, the financial indicators of an enterprise are closely related to the profitability of the enterprise. It includes operating income, sales growth rate or cash flow generated, return on investment, etc., and even newer indicators such as economics. Value Added (EVA). As for the weight of the financial sub-module in the entire management performance evaluation system, it generally varies with the type of enterprise and the development stage. For example, the weight of traditional industries can be higher, such as 30%. 40%; For high-tech industrial enterprises, due to the large amount of R & D expenses in the early stage, which need to be amortized for a considerable period of time in the future, the weight should be lower, such as about 20%. For another example, at the growth stage of an enterprise, due to the huge amount of investment in various aspects, the weight of financial performance indicators should be lower, such as about 20%, and at the mature stage, its weight can be appropriately increased to 30% -40 %.
- (2) Viewing the comprehensive improvement of an enterprise or organization from the perspective of internal operations
- The goal of the traditional performance evaluation system for the company's internal operating process is usually to control and improve the role of existing functional departments, and to evaluate the operating performance of these departments based on financial indicators, including evaluation of product quality, return on investment, and production cycle. Indicators, but it only emphasizes the performance of a single department, rather than focusing on improving the overall business process of the company. The balanced scorecard emphasizes the diversity of evaluation indicators, including not only financial indicators but also non-financial indicators. It can comprehensively reflect the level of management performance within the enterprise, and its indicators can include the average time taken by a company to launch a new product, the product qualification rate, the ratio of new customer revenue to total revenue, production and sales lead time, and after service lead time. Set the weight to around 20%.
- (3) Look at the competitiveness of the enterprise or organization from the customer sub-module
- Ultimately, competitive advantage comes from the value that companies create for their customers that exceeds their costs. Value is the price that customers are willing to pay, and excess value is generated by providing equal benefits at a lower price than the opponent or the unique benefits provided to make up for the surplus after the high price. Therefore, meeting the needs of customers is a necessary condition for the successful development of an enterprise. In the customer sub-module of the balanced scorecard, the enterprise manager must determine the competitive customers and market share that the enterprise will compete for, and calculate the performance within this target range. For the evaluation of corporate customer management performance, its core indicators should include customer satisfaction, customer retention, acquisition of new customers, customer profitability, that is, market share and accounting share within the target range. If the conditions reflected by these indicators are good, it means that the enterprise's customer management is very effective, and the enterprise has thus obtained an important core competitiveness. In the entire management performance evaluation system, different weights of customer management indicators can be set according to different types of enterprises. For example, the weight in industrial and agricultural enterprises can be lower, about 20%, and the weight in service enterprises should be higher. Such as 30% -40%.
- (4) Seeing the continuous follow-up of an enterprise or organization from the study of innovative design
- The important guarantee for an enterprise to achieve its goals and achieve success is customer management and internal business processes. There is often a huge gap between the company's existing production capacity and the actual production capacity required by the performance goals. In order to close these gaps and ensure the realization of the above two goals, enterprises must determine the goals and evaluation indicators of learning and innovation in the balanced scorecard, which is the source of strength for enterprises to achieve long-term goals. If an enterprise wants to innovate, its manager's role of promotion cannot be underestimated, and if managers want to promote the development of enterprise learning and innovation, they must first learn and learn. At the same time, other relevant main indicators include: providing employees with various trainings, improving information technology, improving information systems, and creating a good corporate culture. In specific evaluation, it can be measured by the quantity and quality of its measures. This sub-module is very important for the individual managers of the enterprise. It indirectly reflects the individual's awareness and ability to learn and innovate. For a company with a clear development strategy, its weight should be no less than 25. %.
- BSC runs through three stages of strategic management. Because the organization of BSC
- Senior managers have short-term behavior, or have changed performance after several general managers
- Lack of effective staff
- BSC is a powerful tool for strategic performance management. It divides the evaluation of corporate performance into four parts: financial aspects, customers, business processes, learning and growth.
- The core idea is: the idea of taking finance as the core, thus achieving the combination of performance evaluation and financial goals. The "Boss" magazine stated that the balanced scorecard is more suitable as a revised index system, and should not be used as an upper-level indicator of performance evaluation, because the balanced scorecard involves four sets of performance evaluation indicators (specific Indicators can be up to more than 20). On the one hand, if each indicator becomes the target to be evaluated, then the company has many goals to pursue and achieve at the same time, the manager will often lose the code of conduct and be at a loss; on the other hand, if some indicators are not evaluated, Then it may not play the role of restraining managers at all. BSC design indicators are complex, so it is basically a Fortune 500 company that can use BSC, and it is extremely rare for SMEs or domestic companies to use or even use it successfully!
- I. The balanced scorecard is out of touch with the organization's vision and strategy
- Lack of horizontal coordination in the balanced scorecard
- 3. Failure to include functional departments in performance management
- Four, simply break down the balanced scorecard
- Fifth, the balanced scorecard is disconnected from the management process
- 6. Some core KPIs of the balanced scorecard are not included in the management due to lack of data
- 7. The balance scorecard is disconnected from the reward (floating salary) 8. The decision-making level has not participated or paid enough attention
- Nine, corporate culture does not support organizational change
- X. Lack of necessary strategic management system and organizational structure to guarantee
- Eleven, use the balanced scorecard as part of ERP
- Twelve, the company did not meet a true balanced scorecard expert