Administration emerged as a science at the beginning of the last century and since its inception is marked by a great concern of administrators for control in companies. Many have been the criteria of management theorists about what it is, its objective and its functions, but none of the theories have overlooked the importance of business control, although the different concepts they have developed have been very linked to the conceptions about companies and the role of their administrators at the time they have developed their theories.
Although the contributions of administrative currents to management control are evident, the development of this term has not gone hand in hand with the great development that administrative science has had in recent decades, and Kaplan and Johnson (1987) state that " traditional management control stopped its development in 1925, at which time all accounting procedures, still in use, already existed: budgets, standard costs, the Du Pont model, ect. ”
As efforts have been made to adapt control systems to the needs of managers and companies today, there is a greater concern for decentralization, the participation of all members of the organization and for conceiving control as a process closely linked to strategy and long-term goals.
The need for management control to evolve towards a proactive conception that combines the internal and external aspects of the company increases as companies try to operate in an environment in which the competitive conditions that are imposed on companies, they require making the most of internal and external information to achieve the development of the strategy.
With the aim of solving these questions of vital importance to the company, the Balanced Scorecard (CMI) of Kaplan and Norton emerged in the 90s, with which they conclude an investigation that they had been carrying out for years.
Although the Kaplan and Norton CMI is a model that, due to its validity, has earned its own place within the best techniques and tools of modern administration, it is important to recognize that the path of comprehensive control instruments for companies has been much longer and more arduous.
The CMI inherits the best of these instruments, which is evidenced in: the use of indicators to achieve comprehensive monitoring of the company in a more rational and simple way, the integrative and systemic nature that is essential in a current control system, the importance of an organization where all actions are coordinated and where all workers, from high command to the operational level, know what are the relevant aspects within it, for which it is important to focus.
When Kaplan and Norton first developed their CMI, they sought only to create a tool that would measure the tangible and intangible results of a company. At that time they did not suppose the great scope that this tool would have and the possibilities that it would represent as an instrument to measure strategic progress, a characteristic of the WCC that has enabled it to be considered today as the most important instrument within business management in the next 50 years. years. In this way, the CMI provides a dynamic vision of the essential aspects of the activity, allowing this to observe the trend and evolution of the essential indicators, which will allow anticipating and making strategic decisions in an optimal way.
The CMI is based on four main perspectives, although the use of them is not mandatory and the company can add the ones it deems necessary:
Financial perspective.
The financial objectives are considered as the result of the actions that have been developed in the company previously. In this way, with the scorecard, it is stated that the financial situation of the company is nothing more than the effect obtained from the measures taken in the previous perspectives. The financial objectives will serve as a focus for the rest of the objectives in the following perspectives and starting with the long-term financial objectives, a series of actions will be developed to carry out in the clients, processes and learning.
Therefore, from the financial objectives to be achieved, many of the decisions made in the remaining perspectives will start, but this will only serve as an approach and later as control of the measures taken. In this way, without eliminating the importance of financial performance, it becomes part of an integrated system, where it is one of other important elements, but it is not the only criterion for business measurement. The financial situation, in addition to valuing tangible and intangible business assets, will be an important measurement criterion of the actions carried out to achieve the strategy.
Customer perspective.
In order to achieve the financial performance that a company desires, it is essential that it have loyal and satisfied customers, with that objective in this perspective, the relationships with customers and the expectations they have about business are measured. Furthermore, this perspective takes into account the main elements that generate value for customers, in order to focus on the processes that are most important to them and that most satisfy them.
Knowledge of customers and the processes that generate the most value is very important to ensure that the financial landscape is prosperous. Without studying the peculiarities of the market to which the company is focused, there can be no sustainable development in the financial perspective, since financial success largely comes from increased sales, a situation that is the effect of customers repeating their purchases because they prefer the products that the company develops taking into account their preferences
Internal Process Perspective.
Taking into account the market to which the company focuses and the satisfaction of the expectations of the same and of the company, the key processes of the organization are identified in this perspective, in which work must be done to ensure that the products or services they adjust to the needs of the clients, identifying the processes oriented to fulfill the mission and the support processes and establishing the specific objectives that guarantee this satisfaction.
As Lorino (1993) states, "… the product is a process: it crystallizes in the knowledge detected by the company in a conception-realization chain." The customer satisfaction thus rests on the company develop a level of overall efficiency as evidenced by the quality of the processes that develops enterprise.
Learning and Growth Perspective.
This perspective, which generally appears as the fourth, is the driving force behind the previous perspectives of the scorecard and reflects the knowledge and skills that the company has both to develop its products and to change and learn. In this perspective, the learning and growth of the organization must be made to contribute to the previous perspectives.
The competences of the personnel, the use of technology as a generator of value, the availability of strategic information that ensures optimal decision-making and the creation of an own cultural climate to strengthen the transformative actions of the business are objectives that allow the achievement of results in the three previous perspectives. Satisfied and capable employees develop processes of great value for customers, who repeat their purchases and therefore generate an increase in sales, a situation that has a favorable impact on the business financial situation.
Pillars of a WCC.
For the elaboration of a coherent WCC it is important to deploy the strategy showing the causal chains that will help us achieve the objectives that we have set for ourselves. In this way, the conception of the WCC starts from the analysis of the company's strategy and the cause / effect relationships of each step of the company to obtain the desired strategic results.
The fundamental value of the strategic map is that it will serve so that the company can see its strategy in an integrated and systematic way where every action has a cause and result.
Another core element of any strategy and therefore of any CMI is the customer value proposition. For the Kaplan and Norton value proposition, they essentially take up the value chain developed by Michael Porter.
Both authors agree that the value that the client receives and for which he pays, is a set of processes that results in the perceived value. But to develop this set of processes, it must be closely related to the needs of the customers the company focuses on, knowledge of the processes that the company best dominates and that the customers value the most, among others.
Perhaps the most relevant aspect of the concept proposed by Kaplan and Norton, in terms of value proposition and that complements Porter's work, is due to the holistic nature in which they analyze the value chain, where each activity carried out is analyzed from each of the perspectives of the WCC with the objective of achieving the sequence of value-creating activities that are strategically best for the company.
As the WCC is a tool to measure the strategy, it must necessarily present the flexibility that the strategy requires. For this reason, all the changes that are necessary, caused by changes in the environment or changes in strategy, must be continuously resolved. Without a vision of the WCC as a highly flexible tool, it would not go from being a rigid instrument like other control instruments, and would not offer the company any possibility of adapting its control system to new demands that may arise.
Conclusions
Working with the Balanced Scorecard offers today's companies many possibilities, although its implementation is not as simple as it appears. The advantages derived from working with this tool are perhaps what determine that it has become one of the most popular instruments in recent years for managers and consultants.
But even this instrument has many battles to win. Perhaps the main one of these struggles, is that the possibilities that it offers are limited by the archaic conceptions that have about the management control which limits the efficient use of the CMI. As long as control is limited by erroneous beliefs about its scope, any instrument that is used will be limited in its possibilities and contributions to the work of companies.
1] Data taken from the magazine Gestión 2000.
