The present work contains a concrete, practical and integrating algorithmic succession of methodological steps that provide the manager with the most appropriate way to access the answer to the question that gives the title to this work and with it, create the Balanced Scorecard (CMI) best suited for your Company, thus coming into contact with a powerful and seductive tool developed at Hardvard University by the prestigious professors Robert Kaplán and David Norton in 1992 that allows, from the very beginning, to know yourself as a company by offering us a complete dimension of the organization, determine the coordinates of the current position it occupies among the other competitors and the course to take to reach the desired state. Each step works as the teacher who guides us and guides us the aspects that must be reviewed, as well as how to focus and guide them, accompanying the interested party to his position in the mind of the client and as a consequence, conquer a privileged place in the market.
Abstract
This work contains a concrete, practical and integrated algorithmic sequence of methodological steps that provide the manager, the best way to access the answer of the question that gives title to this work and thereby create the Balanced Scorecard (BSC) best suited to your company, entering into contact with a powerful and attractive tool developed at Harvard University for distinguished professors Robert Kaplan and David Norton in 1992 that allows, from the very beginning, knowing yourself as a company offer a whole dimension of the organization, determine the coordinates of the current position it occupies among the other competitors and the direction to take to achieve the desired state. Each step works as a teacher who guides us and directs the aspects that should be reviewed, and how focused and driven,accompanying the person concerned to its positioning in the mind of the customer and as a result, gain a privileged place in the market.
Introduction
It is not possible to penetrate the complex scenario of Strategic Business Planning without first acknowledging the contribution of the prestigious professors Robert Kaplán and David Norton, creators of The Balanced Scorecard; a powerful management tool whose conceptual basis was published in the Harvard Business Review magazine (Editorial Gestión, 1992) in its first issue. This instrument, as proposed by its authors, is an administration system or administrative management system(Italics are by the author), which goes beyond the financial perspective with which the managers of the time used to evaluate their performance. They also stated that its distinctive feature is that it allows measuring the financial and non-financial factors of the Company's Income Statement.
Today, the complex business scenario is facing increasingly complex and dynamic powerful forces causing substantial changes in business strategy. The International Financial Crisis and Neoliberal Globalization, to name just two current phenomena, have mutilated the integrity of large, medium and small companies causing, in representative numbers, the total closure of many of them with a not only economic repercussion, since the events go beyond that area, causing increasingly forceful blows in culture, medicine, environment, scientific research, among others.
This is why managers of the “modern” world need an instrument that equips them more and more with the highest level of updated and truthful information possible, decisive in the timely decision-making process. It is not enough to know that you have state-of-the-art technology that allows maximum exploitation of installed capacity, minimizing costs and maximizing benefits. It is vitally important to go a little beyond the knowledge of these indisputable strengths and also go into the subjective factors that represent the way of thinking and acting of people, since it is these that in the end will determine an optimal and lasting operation of that technology of tip that is available to produce at maximum capacity and with the desired indicators.
It is on this foundation that I base my criteria to say that the CMI is much more than a usable tool to measure financial and non-financial factors as an essential characteristic, as it was raised by its creators Robert Kaplán and David Norton. In the globalized conditions that the world is going through today, the WCC does not escape the changes that the dynamics of the environment impose on us, since this cannot be a rigid instrument, but a tool perfectly adaptable to the specific conditions and circumstances of each company, whether it is this producer of goods or services and also applicable independently to the historical moment, the country or the social system that contains it.
I consider it of paramount importance to broaden the traditional horizon with which the WCC was initially conceived, complementing it with the deeper and more objective measurement of subjective factors, where special attention is given to measuring satisfaction, not only of the needs and requirements of clients., but also to the personal satisfaction of the human force that is available, translated into the determination of the real state of motivation, as the variable that constitutes the lever with which the most important of all resources, The Human Resource, can move to the business world(italics mine) and thus, obtain a more comprehensive vision of the organization that allows: to correct with greater precision and in a timely manner the main deviations that have appeared during the strategic process towards the scope of the vision, reveal the coordinates of the current position that we occupy between the other competitors and the course that has to be taken to conquer a privileged place within the market, in the shortest time imagined.
With this proposal I have tried, in a practical and simple way, to synthesize in 10 methodological steps, the answer to the question that gives the work its title. Its main merit is precisely that, leading businessmen along a clear path, which is an unprecedented luminaire that is presented in the precise and integrative approach of the topics, the dynamic order in which they must be treated, as well as the way of conducting them, to obtain a product. finish with high efficiency, effectiveness and own style.
In step No. 4, when referring to the diagnosis, I highlighted what is related to staff motivation, since this variable places it in a privileged place among the most powerful strengths that decide the success of the implementation of all CMI. She is decisive in the most entrepreneurial of business strategies.
Development
Methodological steps to create your balanced scorecard
1. Determine the general and specific objectives, as well as the causes that generate the realization of the CMI.
2. In summary, write the Birth and Evolution of the Company.
3. Characterize the Culture.
4. Carry out the diagnosis of internal and external factors, build the SWOT matrix and define the Strategy.
5. Establish mission, shared values, and vision.
6. Set Prospects.
7. Design the Strategic Map.
8. Establish the Criteria and indicators of Measures.
9. Approval by the highest management.
10. Implementation.
Interpretation of each step
1. Determine the general and specific Objectives, as well as the causes that generate the realization of the CMI: The Committee of Experts appointed for this purpose by the management, will clearly amaze the General and Specific Objectives that are intended to be achieved with the CMI (Why I do), as well as the causes that give rise to its creation, which may be these, among others: New creation or reopening of the Company, Merger with one or more other companies, Change of its corporate purpose, Substantial changes in its structure, etc.
2. Write in synthesis, the birth and Evolution of the Company: In this step, your General Data, Higher Organization to which it belongs, how and when it arises, Main changes occurred in its physical and functional state, causes of these and date will be specified. as well as the level of approval and documents that support these changes. Breakdown of the Template, etc.
3. Characterize the Company Culture: Although there is no pattern for the analysis of company culture, they can be considered as basic elements:
• Carry out a Diagnosis that, in addition to that indicated in the previous steps, reflects the environmental impact caused to the environment, results of the implementation of the Total Quality System, behavior of the business plan of the last 5 years (Graph) and current situation of their investment plans, State of the resources they manage (human, financial, material, computer resources, others).
Characterize them. R&D projection, status of installed technology. Main suppliers. Its hierarchy, stability of supplies. Main products or services that they offer, as well as those that distinguish us in the market, Certifications that they possess according to ISO standards, Distribution channels, Main clients. Its ranking, Main Competitors. Its ranking. Organizational Culture, traditions, habits, customs, tastes, preferences of workers and managers. Corporate image.
• Measure the Bilateral Company - Environment Impact. Measure the economic and sociocultural impact that the actions carried out by the Company have caused in the environment, leaving everlasting traces in it, as well as the influence it has had on the Company. Some of the factors that should not be ignored are presented below as examples.
Impact factors between the company and the environment
From the company to the environment
I. Modifying projects undertaken towards the community, as well as the support provided to those who emanate from the latter;
II. Influence it exerts on the environment and on the general quality of life of the population.
III. Role played in strengthening citizens' sense of belonging.
From the environment to the company
I. Identify and evaluate the non-conformities that are issued about the Company, by agencies, organizations and the general population.
II. Identify and control the potential of the workforce that the environment offers and that make the flow of Human Resources possible.
III. Existing agreements between the parties, which guarantee the improvement of workers and managers, • Hierarchical structure or organization chart, description of the technological or service process. Quantify the number of cadres, leaders and officials available. Check that the current structure or organization chart presented by the Company responds to the flattest and most functional design possible, thus eliminating excessive command steps and with it, among other things, the probability of distortion of the messages that are emitted in both directions. of vertical communication. During the description of the technological process, it is necessary to reflect the main weaknesses that constitute restrictions for the process, as this will contribute greatly to the correct decision-making necessary for the success of the WCC.
• Main communication channels. Flow map: The map must reflect the structure and the spaces created for the transmission of messages, orienting the direction in which they flow: vertically downwards (From the maximum direction, towards the departments, from these towards the brigades and from the brigades towards the workers), vertically upwards (The same but in reverse) and horizontally (Between departments and between workers, of equal rank). It is vitally important to denounce the prevailing style, individually for each one of the spaces created for this purpose, as well as the process in general (meetings of different contents and ranges, rallies, murals or banners, magazines, newspapers, bulletins and even the own usual interpersonal communication), the transparency with which it develops,their timely nature, their immediacy, etc.
• Characterization of workers. Quantify workers according to age, sex, level of education and occupational category.
• Characterization of the Board of Directors. Quantify managers by age, sex, race, professional preparation and workforce, etc.
4. Prepare the SWOT matrix from the diagnosis of internal and external factors: In this step, a diagnosis must be carried out to determine the matrices of internal and external factors that will serve as a starting point for the preparation and interpretation of the SWOT matrix. With these results the strategy is elaborated.
During the diagnosis, the main strengths and weaknesses of the company are determined, as well as the main opportunities and threats. In this process, it is vitally important to measure with the greatest precision and objectivity possible, among others, the motivational state that workers and managers present to accept and face change, because as I said in the introduction, it is in this where the energy is concentrated supreme that will launch the great engine of the strategy, is also the lever, with which the most important of all resources, The Human Resource, can move the business world.
Here, in addition to the traditional indicators, others must be measured which, due to the decisive role they play, can promote or stop the dynamic logic in achieving the proposed goals. Among others, proactivity, enthusiasm, initiative, creativity, sense of belonging, collaboration, etc. can be considered.
5. Establish the mission, shared values and vision: Build the Mission, Vision and Shared Values, based on the ideas and consensus of all.
6. Set the Perspectives: In this step, the Company's senior management decides on the Perspectives from which the work will be focused. The most used, according to the Kaplán and Norton model, are: Learning and Growth, Internal Perspective, Customer-oriented and Financial Perspective.
The financial perspective is of utmost importance in the elaboration of the Balanced Scorecard since it is the one that converts the strategy into financial results, serving as a guide for the selection of the remaining indicators in the other perspectives of the table. The Customer Perspective sets the guidelines that generate income, contributing to the achievement of the goals reflected in the Financial Perspective. In its conception, the market segments in which you want to compete as well as those that will constitute your main clients must be made clear, with the aim of concentrating the maximum effort in this regard, since these will constitute the main source of income for the achievement of financial goals, without neglecting all secondary clients who at some point may also become primary.The internal perspective focuses on the processes that take place in the company and that are more direct to satisfying customer requirements through the goods or services we offer, allowing them to measure their performance prioritizing key processes, using indicators financial and non-financial such as specifications, quality costs, non-quality costs, energy and time, among others. The Learning and Growth Perspective focuses on learning and growth objectives to achieve maximum competitiveness in the main of all resources, the human resource whose overcoming allows an efficient and effective development of the processes that will be developed in the internal perspective,with which the traditional clients are maintained and the new ones are conquered that in turn will allow the success of the financial objectives.
Once the Perspectives are defined, the ARC, the FCE, the measurement indicators and the goals are determined, in correspondence with the outlined Strategy.
- The Key Results Areas are the Company scenarios where the most important and decisive processes are developed that guarantee the production of goods or the provision of services that satisfy the requirements of the clients, according to the activity for which the Organization is designed., as well as the Regulation and Control Areas that serve as logistical support and support for them. Examples, Production, Human Capital, Technology and Development, Accounting and Finance, among others.
- The Key Success Factors are vital signs that declare our advantages over other competitors in the market or simply guarantee that we will enter or remain in the preference of our clients. Examples. Taking advantage of the installed capacity, Professionalism in the provision or distribution of the good or service, exclusivity of the product or service we offer, attractive prices, etc. The examples presented are perfectly usable, both by Companies that Produce Material Goods, and by those that are dedicated to the provision of services, depending on their corporate purpose.
- Indicators and goals allow the objectives to be translated into concrete, measurable, challenging but achievable results, so as to facilitate a comparison between what is planned and what is actually obtained, in order to correct the deviations that will occur.
7. Design the Strategic Map: The map raises the strategic issues in a cause-effect relationship, generally ordered in ascending order from the Perspective of Learning and Growth, moving through the Internal Perspective, the Perspective of Orientation Towards the Client and finally the Financial Perspective. Each of them is mapped to its strategic objectives, keeping a cause-effect relationship.
8. Establish the Criteria and indicators of Measures: The main objective of the indicators is to convert what is planned into a result and thus be able to evaluate the performance of the area through parameters established by each perspective in relation to the goals or objectives set, as well as observe the trend over a period of time during an evaluation process. Once the deviations have been identified, a cause-effect analysis will be carried out to determine the origins of the deficiencies. With the results obtained, solutions or tools that contribute to the improvement or corrections that lead to the achievement of the goals or objectives set may be proposed.
9. Approval by the top management: Once the process of creating the WCC is completed, it will be submitted for approval by the highest management body of the Company, through the spaces designed for making the fundamental decisions of the Business.
10. Implementation: Put the CMI and feedback channels into practice. During this stage it is necessary to carry out an adequate disclosure through all the areas of the company, with the aim of making it known to all workers and managers. This step requires a special skill that also allows motivating all staff to face change. It is also vital that a training program be developed that facilitates its understanding and implementation.
Adequate feedback allows to know precisely the state of compliance with the objectives set, thus offering the opportunity to correct deviations or non-conformities that appear during the process. Here again motivation plays a fundamental role in the sense of achieving continuous improvement. That is why an effective channel must be established so that all the necessary information that contributes to decision-making flows with transparency and loyalty.
Conclusions
Every entrepreneur who applies this procedure will have the opportunity to:
- Get in contact with an effective and lasting tool that helps them to fully understand their Company.
- Discover in staff motivation a determining strength for the successful implementation of all CMI, so its accurate measurement should never be neglected.
- Access a simple and concrete design for the preparation of your CMI with the peculiarity of giving them the opportunity to exhibit their own style.
- Perceive the desired changes in the shortest time imagined.
Bibliography
Harvard Business Review: Editorial Gestión, 1992.
LUÍS MUÑIZ, ENRIC MONFORT: Practical Application of the Balanced Scorecard, Editorial Gestión, 2000.
ROBERT S. KAPLAN, DAVID P. NORTON: How to use the balanced scorecard, Editorial Gestión 2000.
The present work contains a concrete and practical and integrating algorithmic succession of methodological steps that provide the manager with the most appropriate way to access the answer to the question that gives the title to this work and with it, create the Balanced Scorecard (CMI) best suited for your Company, thus coming into contact with a powerful and seductive tool developed at Hardvard University by the prestigious professors Robert Kaplán and David Norton in 1992 that allows, from the very beginning, to know yourself as a company by offering us a complete dimension of the organization, determining the coordinates of the current position it occupies among the other competitors and the course to take to achieve the desired state.Each step works as the teacher who guides us and guides us the aspects that must be reviewed, as well as how to focus and guide them, accompanying the interested party to his position in the mind of the client and as a consequence, conquer a privileged place in the market.
Introduction
It is not possible to penetrate the complex scenario of Strategic Business Planning without first acknowledging the contribution of the prestigious professors Robert Kaplán and David Norton, creators of The Balanced Scorecard; a powerful management tool whose conceptual basis was published in the Harvard Business Review magazine (Editorial Gestión, 1992) in its first issue. This instrument, according to what was proposed by its authors, is a system of administration or administrative system (management system), which goes beyond the financial perspective with which the managers of the time, usually evaluate their performance. They also stated that its distinctive feature is that it allows measuring the financial and non-financial factors of the Company's Income Statement.
Today, the complex business scenario is facing increasingly complex and dynamic powerful forces causing substantial changes in business strategy. The International Financial Crisis and Neoliberal Globalization, to name just two current phenomena, have mutilated the integrity of large, medium and small companies causing, in representative numbers, the total closure of many of them with a not only economic repercussion, since the events go beyond that area, causing increasingly forceful blows in culture, medicine, environment, scientific research, among others.
This is why managers of the “modern” world need an instrument that equips them more and more with the highest level of updated and truthful information possible, decisive in the timely decision-making process. It is not enough to know that you have state-of-the-art technology that allows maximum exploitation of installed capacity, minimizing costs and maximizing benefits. It is vitally important to go a little beyond the knowledge of these indisputable strengths and also go into the subjective factors that represent the way of thinking and acting of people, since it is these that in the end will determine an optimal and lasting operation of that technology of tip that is available to produce at maximum capacity and with the desired indicators.
It is on this foundation that I base my criteria to say that the CMI is much more than a usable tool to measure financial and non-financial factors as an essential characteristic, as it was raised by its creators Robert Kaplán and David Norton. In the globalized conditions that the world is going through today, the WCC does not escape the changes that the dynamics of the environment impose on us, since this cannot be a rigid instrument, but a tool perfectly adaptable to the specific conditions and circumstances of each company, whether it is this producer of goods or services and also applicable independently to the historical moment, the country or the social system that contains it.
I consider it of paramount importance to broaden the traditional horizon with which the WCC was initially conceived, complementing it with the deeper and more objective measurement of subjective factors, where special attention is given to measuring satisfaction, not only of the needs and requirements of clients., but also to the personal satisfaction of the human force that is available, translated into the determination of the real state of motivation, as the variable that constitutes the lever with which the most important of all resources, The Human Resource, can move the business world (italics is mine) and thus, obtain a more comprehensive vision of the organization that allows correcting more accurately and in a timely manner,the main deviations that have appeared during the strategic process towards the scope of the vision, reveal the coordinates of the current position that we occupy among the other competitors and the course that must be taken to conquer a privileged place within the market, in the least imagined term.
With this proposal I have tried, in a practical and simple way, to synthesize in 10 methodological steps, the answer to the question that gives the work its title. Its main merit is precisely that, leading businessmen along a clear path, which is an unprecedented luminaire that is presented in the precise and integrative approach of the topics, the dynamic order in which they must be treated, as well as the way of conducting them, to obtain a product. finish with high efficiency, effectiveness and own style.
In step No. 4 when referring to the diagnosis, I have highlighted what is related to the motivation of the staff, since this variable places it in a privileged place among the most powerful strengths that decide the success of the implementation of all CMI. She is decisive in the most entrepreneurial of business strategies.
Methodological steps to create your balanced scorecard
1. Determine the general and specific objectives, as well as the causes that generate the realization of the CMI.
2. In summary, write the Birth and Evolution of the Company.
3. Characterize the Culture.
4. Carry out the diagnosis of internal and external factors, build the SWOT matrix and define the Strategy.
5. Establish mission, shared values and vision
6. Set Prospects.
7. Design the Strategic Map.
8. Establish the Criteria and indicators of Measures.
9. Approval by the highest management.
10. Implementation.
Interpretation of each step
1. Determine the general and specific objectives, as well as the causes that generate the realization of the CMI: define the general and specific objectives that are intended to be achieved with the CMI (what do I do it for). The causes may be, among others: New creation or reopening of the Company, Merger with one or more other companies, Change of its corporate purpose, Substantial changes in its structure, etc.
2. Write in synthesis, the birth and Evolution of the Company: In this step, your General Data, Higher Organization to which it belongs, how and when it arises, Main changes occurred, their causes and date will be specified. Behavior of the business plan of the last 5 years and current situation of their investment plans, Status of the resources they manage (Human, financial, material, computer resources, others). Characterize them. R&D projection, situation of installed technology, main suppliers. Its hierarchy, main products or services they offer, as well as those that distinguish it in the market, certifications that they possess according to ISO standards, distribution channels, main clients. Its hierarchy, Main Competitors. Its hierarchy.
3. Characterize the culture of the company: Although there is no pattern for the analysis of business culture, they can be considered as basic elements.
• Characterization and Diagnosis of the Organization.
• Impact of the Company on the environment.
• Hierarchical structure, description of the technological or service process.
• Main communication channels. Flow map
• Characterization of workers.
• Characterization of the Board of Directors.
• Diagnosis of Organizational Culture, traditions, habits, customs, tastes, preferences of workers and managers. Corporate image.
4. Prepare the SWOT matrix based on the diagnosis of internal and external factors:
In this step, a diagnosis must be made to determine the matrices of internal and external factors that will serve as a starting point for the preparation and interpretation of the SWOT matrix. With these results, the strategy is defined and elaborated.
Durante el diagnóstico se determinan las principales fortalezas y debilidades que presenta la empresa, así como las principales oportunidades y amenazas. En este proceso, es de vital importancia medir con la mayor precisión y objetividad posible, entre otros, el estado motivacional que presentan trabajadores y directivos para aceptar y enfrentar el cambio, pues como dije en la introducción, es en esta donde se concentra la energía suprema que echará a andar el gran motor de la estrategia, es además la palanca, con que el más importante de todos los recursos, El Recurso Humano, puede mover al mundo de los negocios.
Here, in addition to the traditional indicators, others must be measured which, due to the decisive role they play, can promote or stop the dynamic logic in achieving the proposed goals. Among others, proactivity, enthusiasm, initiative, creativity, sense of belonging, collaboration, etc. can be considered.
5. Establish the mission, shared values and vision: Build the Mission, Vision and Shared Values, based on the ideas and consensus of all.
6. Set the Perspectives: In this step, the Company's senior management decides on the Perspectives from which the work will be focused. The most used, according to the Kaplán and Norton model, are: Learning and Growth, Internal Perspective, Customer-oriented and Financial Perspective. Once the Perspectives are defined, the ARC, the FCE, the measurement indicators and the goals are determined, in correspondence with the outlined Strategy.
The Key Results Areas are the Company's scenarios where the most important and decisive processes are developed that guarantee the production of goods or the provision of services, according to the activity for which the Organization is designed, as well as the Areas of Regulation and Control that serve as support and logistical support to them. Examples, Production, Human Capital, Technology and Development, Accounting and Finance, among others.
The Key Success Factors are vital signs that declare our advantages over other competitors in the market or simply guarantee us to enter or remain in the preference of customers. Examples. Taking advantage of the installed capacity, Professionalism in the provision or distribution of the good or service, exclusivity of the product or service we offer, attractive prices, etc. The examples presented are perfectly usable, both by Companies that Produce Material Goods, and by those that are dedicated to the provision of services, depending on their corporate purpose.
The indicators and goals allow the objectives to be translated into concrete, measurable, challenging but achievable results, in such a way as to facilitate a comparison between the planned and the actual obtained in order to correct the deviations that will be presented.
7. Design the Strategic Map: The map raises the strategic issues in a cause and effect relationship, generally ordered in ascending order from the Learning and Growth Perspective, the Internal Perspective, the Client Orientation Perspective and finally the Financial Perspective. Each one of them is made to correspond in diagram form to the FCE contained in it, keeping the relation "if, then".
8. Establish the Criteria and indicators of Measures: The main objective of the indicators is to be able to evaluate the performance of the area by means of parameters established in relation to the goals or objectives, as well as to observe the trend in a period of time during an evaluation process.. With the results obtained, solutions or tools can be proposed that contribute to improvement or corrections that lead to the achievement of the goals or objectives set.
9. Approval by the highest management: Once the process of creating the WCC is completed, it will be submitted for approval by the highest management body of the Company.
10. Implementation: Put the CMI and feedback channels into practice.
Conclusions
- The motivation of the staff in any business group is a determining strength for the success of the implementation of all CMI, so its precise measurement should never be neglected.
- With this proposal, entrepreneurs will have the opportunity to access a simple and concrete design for the preparation of the most suitable WCC for their Company with the peculiarity of providing them with a more comprehensive and innovative vision.
- In the shortest period imagined, the desired changes will be shown perceptibly.
Bibliography
Luís Muñiz, Enric Monfort: Practical Application of the Balanced Scorecard, Editorial Gestión 2000.
Robert S. Kaplan, David P. Norton: How to use the balanced scorecard, Editorial Gestión 2000.
