There are about 6.1 million results when we search for the term "Balanced Scorecard", which gives us a clear idea of how much has been written on the subject and how it has come to give a new focus in the Management of companies to world level.
However, this tool has been used exclusively by large corporations worldwide and few family businesses have adopted this tool in their management. This short article aims to boldly simplify the Balanced Scorecard in order to encourage family businesses to adopt it as a management tool.
The BSC is nothing more than a set of indicators grouped in such a way that they can be prioritized and weighted to obtain an overall result for a given period. To see this in context, let's make a comparison between a company and a soccer team.
In soccer, the players have defined positions with clearly established objectives, these objectives depend on the position they occupy, goalkeeper, defense, midfielder, forward, center and forward. In this same way, companies divide their work teams into areas or departments with clearly defined objectives according to the function they carry out, be it purchasing, imports, warehousing, production, marketing, sales, distribution, accounting, credit and collection, treasury, finances, etc.
If we wanted to know the performance of a particular player, we can analyze each of the games he has played and get a conclusion from there, but since this would take a considerable amount of time, it is best to review his statistics and thus have an appreciation about meeting your goals.
In the statistics we find the main criteria or "indicators" that are measured match by match such as: starting matches, substitute matches, goals, assists, shots, shots on goal, yellow cards, red cards, fouls committed, fouls received, saved, offside, matches won, matches tied, losses, minutes played, etc. Now, if the position we are analyzing is forward, we will focus on prioritizing those key “indicators” such as goals scored or we can even go further and establish a relationship between goals scored versus the number of games played, drawing a ratio of efficiency that we can compare with other forwards and thus determine who of them best meets the proposed objective.
This same exercise can be done with players in other positions, as long as we take the indicators that are in relation to the objective that they must meet.
The same thing happens when we want to apply this in companies, we have to determine according to the job position, which are the main indicators that we have to measure according to the general and specific objectives of the organization. In this way, if we want to measure the person responsible for credit and collection, we will have to collect statistical information on portfolio turnover, average collection period, customer satisfaction, documentation control, among others. In this way, by weighing these indicators, we will be able to obtain a global result of the performance of the collaborator or team of collaborators in that particular area.
If we do this with the main functions of the company, we will have a “scorecard” or a registration board that allows us to control the scope of the objectives proposed in each functional area of the company. Now, if we weigh these variables, prioritizing those that are in In line with the Strategic Plan, we will obtain a “balanced scorecard”, which is a balanced scorecard that will allow us to follow up on the general and specific objectives of the organization and thus know whether or not we are achieving those objectives.
With this, we already have a system that allows us to measure progress in the company's strategic execution, but we are only limiting ourselves to measure.
In a soccer match, the statistics are not those that decide the outcome of the game, but the skill of the players, the alignment according to the rival, the changes and the strategy proposed by the DT. All these elements are not developed at the time of forming the team, but before and during the match.
Similarly, companies should not limit themselves to statistically recording the fulfillment of objectives according to the position, but must develop initiatives that allow them to make changes in strategy according to the business environment. These initiatives are those that allow us to carry out actions at the moment that we are not achieving the stated objectives.
It should be noted that initiatives or projects also have to be measurable.
With this in play, a tool comes in that allows us to harmonize the indicators and initiatives in a single table, and we call this tool "Strategic Maps". However, to see this in a single table, we cannot do it by functions, since initiatives can meet one or more objectives and affect different areas within the company, which is why we have to use a different perspective or perspective.
These perspectives are financial, clients, processes and learning. In this way, we will be able to group our indicators and initiatives according to the objectives they pursue and to focus them according to the perspective to which they belong.
In conclusion, we have that a BSC can be drawn up from the bottom up, based on the functions carried out by our work team, as long as they are duly contrasted with the company's Strategic Plan, in order to determine, which of these objectives should be weighted with a greater amount when measuring the indicators and strategic initiatives.
Likewise, the BSC can be elaborated from top to bottom, starting from the Strategic Plan, defining the objectives and how to measure and achieve them, being the appropriate tools the indicators and strategic initiatives.
