The boom in the development of the Balanced Scorecard or Balanced Scorecard has led many companies to stick to the idea of the French Scorecard of the 1960s. Such emphasis has been placed on the scorecard that it leaves out concepts such as the cause-effect relationship, one of the main contributions of doctors Kaplan and Norton.
The Scorecard, or Scorecard, is the final result of the business strategy approach, in a cause-effect relationship between the different perspectives. It should be done in a "balanced and comprehensive" way, which in the end is represented in a table or board, which clearly reflects both the vertical relationship between perspectives and the cause and effect between indicators. This warning had already been given in «Beware of the Balanced Scorecard», published in the weekly newspaper El Financiero de Costa Rica, on October 13, 2003.
Most of them develop their strategic map or diagram correctly, as it has been observed in companies that have requested help to validate the work carried out, but when reviewing the scorecard, it can be seen that the focus is maintained traditional of the 1960s, where the different perspectives (Financial, Clients, Internal Processes, Learning and Growth) are shown separately, thus losing the cause-effect relationship between what Kaplan and Norton propose to identify the real cause of the problems.
Much has been written about the new source of value creation for companies and the importance of intangible assets, such as human capital, information capital and organizational capital, but it has also been insisted that their administration loses meaning if It is not possible to convert the results of the intangible assets into tangible values, measured by the financial perspective. It should not be forgotten that financial objectives serve as a focus for objectives and indicators in all other perspectives.
A company cannot have a strategic map presented in a way and a scorecard that shows different relationships. In one of the companies evaluated, its map is quite clear, since it shows the cause-effect relationships between perspectives, but its scorecard presents each perspective separately and the cause-effect relationships occur between the same perspective, thus losing the integral concept. It is not possible to look for the answer to the problems in the financial perspective within the same perspective, they obey the performance of the rest of the perspectives.
A map that is presented in such a way strengthens the "trench policy" where each area defends its terrain, attacking the remaining areas, and does not create a culture where strategy is the responsibility of the entire management group and not of the functional areas in which the company is organized, in what has been called the “feudogram”.
This situation is reflected in the very conception of the strategic plan. When the financial issues are proposed, in the initial hypothesis statement that will be reflected in the strategic map, the finance director takes the singing voice and the other areas, with notable exceptions, tend to abstract themselves from the discussion, “this is not with me". It is not understood that the success of any area should have an impact on better financial results, otherwise your effort will be wasted. Sometimes they insist on maintaining a parallel agenda, working on their own initiatives or projects, despite verifying that these do not contribute at all to the new strategy that is being proposed, sometimes it is a matter of pride.
In a query made through www.grupokaizen.com a master's student from a university in South America, I needed examples of objectives and indicators for the client's perspective. The different perspectives for completing the final work of a Balanced Scorecard had been distributed among the different students. Developing the BSC in this way loses the whole purpose of the new approach, by not considering the BSC in a comprehensive and balanced way in a cause and effect relationship. If not, it can hardly be said that the organization is being managed based on strategy.
There are excellent computer applications that consider some of the aforementioned aspects, where by delving into an indicator that did not achieve the expected results, the true root of the problem is reached, which is generally in the performance of processes or skills or in the organizational climate of the company represented in the different perspectives. The effect is vertically observed as its causes.
A final point to consider in the scorecards is the differentiation between what are indicators and what are inductors. The first level scorecard considers the outcome indicators for each of the perspectives and the second level scorecards present the inducers (also known as management, performance, and process indicators), which allows a scorecard command is presented in a simple way and with few indicators. We have seen some examples that consider a marketing plan as the inducer, which is not correct.
There is discussion about whether the dashboards of the following levels should include all perspectives or only the process perspective and the learning-growth perspective, where the results to be achieved in the client and financial perspectives are generated.
It has become customary for the maps of the following levels to consider all perspectives so that each area contributes to the achievement of the overall results of the organization, this implies that an Operations area would have objectives and indicators in the financial perspective and thus for all other areas. For this it is important to be clear about some aspects that are crucial when defining the themes in each perspective, and do not miss the initial focus that supports the strategy.
For example, a human resources area must be clear about the strategic issues of its internal clients, which are established in the perspective of Learning and Growth of the Scorecard of the first level, hence the processes related to the needs of internal clients, as well as the necessary skills in the area of human resources to be able to execute the processes with the required expertise.
In other models the main processes are identified and the objectives are established on them leaving out the financial and customer aspects. If one adjusts to the creators of the updated version of the Kaplan and Norton dashboards, it is recommended that all areas develop a complete BSC that includes all perspectives, this shows that the strategy is everyone's responsibility, however each company You should ask what best suits your needs and your strategy and not apply a recipe that is not suitable for your conditions.
