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The Key Areas of a Balanced Scorecard Framework
Developing a scorecard is not just for the sheer of it. Adequate knowledge about the balanced scorecard framework should be used, if one is to maximize its function.
The balanced scorecard—also known as BSC—is a management tool that can also be used as a performance tool. It was developed in the late 1980s to see if small-scale business processes and activities can affect global or corporate goals and objectives. It has become widespread in the 1990s and now, almost every company uses this approach to balance performance and financial goals. In essence, the balanced scorecard framework is about measuring performance through metrics. Commonly known as Key Performance Indicators or KPIs, these are performance metrics that are expected from employees, especially rank and file employees. And these are measured on regular intervals to see if an employee meets the required or ideal targets.There are basically four key areas or perspectives in developing a scorecard. During the development of the balanced scorecard concept, some people theorize that there should be six. No matter what, the essential part here is that there should be balance among the key areas, and these should compensate the goals of the company. What needs to be done is to gather as much data and then correlate it with these four key areas of the scorecard and put more weight on the part that has more impact in achieving the goals of the company.First area is the Learning and Growth Perspective. In this area, the focus is on the improvement of the employees or individuals who does the legwork for the company. Without any improvement programs, one should not expect that the employees can keep up with the changes in the processes. They cannot function well if they are not knowledgeable in the aspects of their jobs. One may also add to this the motivation factor. If there are no such things as promotions and career advancement that employees can look forward to, they will tend to lose interest and underperform. The tools are also an integral part to make the employees perform faster and better.The second area is the Business Process Perspective. This involves processes that can be translated in numbers. This is what managers need to see if their group or organization is performing or meeting the desired targets. Processes are things that need to be developed by internal employees. It is a big mistake to have an outsider or a third-party organization develop processes on your behalf, especially if they are not experts in the field or industry concerned.The third area is the Customer Perspective. As the term implies, this takes into consideration the customer satisfaction level. The main ingredient to make a business last long is to make customers happy. These customers are the bloodline of every business and they are the ones that bring money to the company.Lastly , one should not forget the Financial Perspective as part of the balanced scorecard framework. This is in relation to funding projects and putting adequate resources to make people function very well. Financial data is ideally centralized to promote the idea of check and balance among all departments concerned.
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