In many companies the dashboard is being adopted to improve their performance measurements and their administrative systems, Gartner Group estimates that at least 40% of the companies listed in the Fortune 1000 implement the dashboard as of the year 2000
There are a number of shareholders and managers who are dissatisfied with the general performance of their companies, either because they present losses, or because they do not generate enough value. This disagreement has made shareholders and executives seek new management guidelines that allow creating value and generating profits, but not by cutting costs or eliminating unproductive business units, but by improving the profitability of their business units through development strategies and innovative growth. The scorecard allows these managers to determine the critical elements in a growth strategy:
- Innovations in products, services and processes Investment required in human resources and systems to generate sustained growth Proposal of value to customers that leads to higher margins Identification of target customers that generate value
Like all new strategies, the scorecard requires the commitment of senior management, but that is not enough, each person in the organization must be involved, everyone must understand the new strategy and implement it in their day-to-day life. in a way that contributes to the success of the strategy.
The dashboard is a measurement system that helps companies better manage long-term value creation. It seeks to enhance the non-financial drivers of value creation such as: strategic relationships with suppliers, critical internal processes, human resources and information systems, among others.
What is not measured is not improved:
Measurement is the first step to control and improvement. If you can't measure something, you can't understand it. If it is not understood, it cannot be controlled. If it cannot be controlled, it cannot be improved » H. James Harrington
Building
The construction of dashboards consists of four basic phases: Orientation to design, architecture of indicators, computing and use, which are subdivided into 10 stages.
These are detailed below.
A. Design orientation
- Stage 1. Company, Business, Success Formula: First, the characteristics of the company, size, market in which it operates, who are its main customers, that is, its nature, are determined. Then its strategic elements, mission, vision, objectives, policies and strategies are defined to achieve the objectives. The strategic plan is analyzed and its key success factors are determined. Thus, management indicators can be established. Stage 2. Managers and management concepts: each level of the company has different challenges, in each of them there are people who make decisions about different problems. It must be determined what decisions are made at each level and who are the people who make these decisions and their types of management. Here the indicators vary according to the level and management styles influence their selection.
B. Architecture of indicators
- Stage 3. The dashboard for senior management: The selection of indicators for senior management depends on stages 1 and 2, these indicators mix financial and non-financial and are of a general nature for the organization. Stage 4. Objectives, goals, indicators and persons responsible by level: The indicators must be linked vertically according to the organization's processes. Everyone's responsibilities must be clear to avoid problems. Stage 5. Variable Remuneration, Business Transformation: One of the key elements in the construction of the dashboards, as already mentioned, is to involve all the elements of the organization in the new strategy. The most common way to do this is to tie offsets to results. Stage 6. Calculation formula: Once the indicators have been defined, it is necessary to specify their calculation formula, how sales will be measured, added value, company value, etc. Stage 7. Benchmarking, comparisons, graphic representation: The indicators should be compared with the goals established at the beginning in the strategic plan, it is also advisable to compare them with other companies, with market leaders or with our competition, if possible. The information must be reflected in tables and graphs that allow a quick and complete analysis.
C. Informatics
- Stage 8. Management Information Systems: There are many providers and software available. Usually the data is taken from transactional systems, the Internet and other sources. These data are arranged in a database ("Data Warehouse"), from which they are extracted with some criteria (modeling, as indicated in previous stages). The presentation to the information manager requires the use of certain tools (OLAPs are used today, in the future more expert systems / artificial intelligence will be used).
D. Use
- Stage 9. Communication and training: The preparation of the TC implies an effort of explicit and implicit communication in addition to the normal one. All stages (its design, its construction, its use) is a very valuable educational process, for all levels. Stage 10. Integration with the entire company and its processes: The dashboard must be integrated into the planning and budgeting process of the company, that is, each goal must have a plan, a program and a budget that allows it to be fulfilled and must be used in the management of the personnel and their evaluation.
