Also known as Balanced Scorecard (CMI) or balanced scorecard.
Most large companies use it for strategic planning, having updated and accessible information to control the fulfillment of their objectives and goals based on measurement criteria and translated into indicators for the different areas of the company.
The control board or Balance Scorecard (BSC) is a management methodology that serves as a tool for strategic planning and administration of companies.
It is an application of self-control and continuous improvement systems.
We can define it as a control structure for the administration and general operation of the company, whose strength lies in its philosophy of continuous improvement and teamwork based on a unified strategic vision.
When implementing the dashboard, measurement criteria and indicators are used to control the efficiency and effectiveness in meeting the vision, mission and objectives of the company.
It facilitates decision-making for the partners and executives of a company since the information is immediately available from the different areas and allows immediately detecting deviations from plans, programs and strategies and deciding on corrective measures.
The dashboard measures the performance of the company in financial results, customer service, relationship and satisfaction, internal processes, development and knowledge.
It facilitates the control of financial results, simultaneously measuring the progress in the development of capacities and the acquisition of intangible assets, relationships with clients, skills and motivation of collaborators, introduction of innovative products, etc., required to compete successfully.
It emphasizes financial and non-financial indicators and includes them in the information system for all hierarchical levels of the company.
It allows monitoring and adjusting the implementation of strategies and making timely fundamental changes to them.
The objectives on the dashboard are derived from a vertical process driven by the overall objective and strategy of the company.
The main objectives of the dashboard are:
- Measure the progress and fulfillment of the vision, mission, values, objectives and strategies of the company Align the indicators and management goals with the value chain of the company and the indicators and goals of the areas. Integrate the strategic plan of the company with the operational plans of the areas Horizontally align goals and performance indicators and process indicators with the strategic plan Create dashboards for each area and align them with the management control board. Develop the individual control panel of each position aligned with the control panel of the immediate superior hierarchical level Identify the different types of indicators existing in a process (indicators of entry, exit, efficiency, effectiveness, quality, productivity, impact and culture).Synchronize the objectives and goals of the general management with the other areas Alignment and realignment of the company to technological and market changes Orient efforts towards meeting the needs of customers, employees, suppliers, community and shareholders.
When the dashboard changes from a "system of indicators" to a "management system", it is when it brings its maximum benefits.
The most complicated part is generating useful indicators for each area and process that allow the achievement of objectives and goals to be objectively measured.
The primary purpose of using standards and indicators is to be able to evaluate in qualitative and quantitative terms the administration and operation of the company.
The “norm” is the best practice in the industry: the desired level of performance and the “indicator” is the actual level of performance achieved.
The difference between what is desired and what is real is what originates a cause, which are the factors that cause the variation with respect to the performance standard that can be favorable or unfavorable and an effect that is the impact of the variation of the expected results.
What is sought is to explore different alternatives to derive the causes and effects of the findings and translate them into preventive or corrective recommendations, as the case may be.
Knowing the findings in time can be important to make timely decisions.
The evaluation group must define the indicators to be used during the execution stage.
Comparison between actual indicators and established performance standards is the basis for detecting findings. We must measure the vital and not the trivial.
Characteristics that an indicator must have
- Objectivity in qualitative indicators Precision in quantitative indicators Compatibility with other indicators That is relevant for decision-making Logical, feasible, easy to measure and interpret Timely, reliable and verifiable Accepted by managers, managers and / or or company officials Comparable with companies of the same line of business.
Formulation of indicators
- It is necessary to define the objective to be achieved. They should preferably focus on the measurement of results. Be agreed through a participatory process. Formulation through the deductive method. Implementation by the inductive method. Validation through the establishment of behavioral norms of what is being measured.
The measurements that can be obtained with the implementation of a control panel are the following:
- External measures related to customers, suppliers, investors and financial entities Internal performance measures related to the company's areas, business processes and resources Internal control measures Measures that reflect historical results and indicators related to the future short, medium and long term.
The questions asked when taking a measurement are:
- What is to be measured? Who will perform the measurement? What measurement mechanism will be used? What deviation tolerances can be determined? Who has an interest in the measurement results? What will be done with the results?
Indicators should make it possible to measure:
- The fulfillment of the general objectives The fulfillment of the specific objectives in activities, programs, projects and areas The deviations that prevent the fulfillment of the strategic objectives The contribution to the achievement of the strategic objectives by area The efficiency, effectiveness and economy in the use and management of company resources Productivity and the level of performance of the staff Compliance with service standards Effectiveness in the development of processes The scope of actions and the identification of deviations. The degree to which products and services meet the needs and expectations of customers The degree of satisfaction, quality, values and effects perceived by the customer of the company Positioning and influence in the market Key and support processes. achievement of strategies.The profitability and growth of the company.
Indicators should be designed that reflect the scope and development of the proposed strategies.
Each indicator must have defined goals and actions to achieve them.
Only those indicators that provide relevant information for decision-making and facilitate the monitoring process should be used.
Strategic alignment is a continuous process of linking the different factors and elements that intervene in a company towards the organizational strategy and aimed at generating a common vision and mission for all the members.
It is divided into four stages: functional, synchronization or horizontal alignment, cascading, deployment or vertical alignment and integration, which have to be linked in a logical order to integrate the organizational strategy.
The definition of key performance indicators (KPI's) and the integration of plans, programs and goals are fundamental pieces in the vertical and horizontal alignment.
Horizontal alignment has to do with the synchronization of efforts throughout key processes; It means synchronizing the processes of the value chain (internal processes) and the external ones (supply chain) towards the achievement of the strategy and the satisfaction of all the actors, clients, employees, suppliers, managers and shareholders.
In short, it is synchronizing the operation of all the key and support processes that work together to create value.
Vertical alignment is the connection between the value creation strategy and the daily activity of all the members of the company.
All members must be involved towards the achievement of goals of common value.
Vertical alignment happens after internal processes are in sync across the objectives and goals of the processes and areas.
After the horizontal alignment of the areas and processes is implemented, it is possible to develop control panels at all levels of the organization.
The dashboard is intended to be an instrument that helps companies in the process of aligning deviations that arise from the focus and course planned by the company.
Through the measurements, an information system is created that allows to immediately detect deviations from the goals or the proposed strategy.
Procedure to implement a dashboard
- Prepare a comprehensive strategic diagnosis Develop the strategic plan establishing measurement criteria and indicators Train the entire company about the strategy, objective, operation and benefits of the dashboard Align horizontally and vertically the objectives of the different areas within the company Focus managers and their collaborators towards strategic objectives through performance evaluation systems Align compensation, recognition and incentive systems with performance in carrying out the strategy Align planning, execution and budgeting processes, with the dashboard. Use critical contribution matrices to align and prioritize process Kpi's. Synchronize goals throughout the supply chain.Synchronize goals throughout the value chain Perform a multilevel alignment cascade.
Benefits
- Determines the alignment that exists between the company, its situation in the environment and the vision and mission of the company Provides a methodology for vertically and horizontally aligning the objectives and strategies of the entire company Plans and establishes objectives, goals and indicators Unites vertically and horizontally, the strategic objectives and indicators in the different areas and hierarchical levels of the company It serves as a framework for the design and implementation of personnel evaluation systems and performance-based compensation Links the results of the execution with the systems performance evaluation.It integrates the processes of strategic planning and execution.It guides the processes of allocation of resources and capital.It provides information for strategic and operational control.It improves managerial effectiveness,Decision-making and generates an organizational and quality culture Promotes change in the company Facilitates consensus and commitment in the management team Continuous improvement of the performance of areas, processes and people.
In summary, the dashboard serves to align and realign horizontally and vertically the execution of the strategy and guide the company towards the projected results.
It is the best tool for partners and senior executives to improve company results.
It is also useful and functional in all dependencies and entities of the public administration.
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Jack Fleitman:
www.ciemsa.mx professional consultants
@jackkmex
Source: Comprehensive evaluation book to implement quality models 2010 by Jack Fleitman.
