The secret for every business’ success is good management. That, of course, is easier said than done. It requires a lot of leadership skills, as well as the technical knowhow of what the business is all about. Using business management tools such as the balanced scorecard will also help the businessman a lot in managing the business and monitoring the overall direction of his/her company.
What is the balanced scorecard? The balance scorecard is a standardized business management tool developed to keep track of how the company is doing and how to go about their day to day operations. It is basically a management tool that can also be used to measure or evaluate the performance of an individual or the entire company as a whole.
According to the balanced scorecard, there are four core perspectives in a company. The following are:
1) Financial Perspective
The bottom line of all business moves is profit. Financial analysis and risk assessment based on financial data are being done with the aim of cutting costs or maximizing profit without sacrificing quality.
2) Internal Business Process Perspective
This perspective is all about the daily operation of the company. Through a balanced scorecard, the management can assess performance of a department and know the strong and weak point of the current process. This will also allow them to monitor individual employee performance. Areas were coaching is needed can also be addressed. The leader’s effectiveness can also be assessed through the metrics set in this perspective.
3) Learning and Growth Perspective:
Learning and growth should always be part of the company program if they are looking for long term success. Constant learning and development of knowledge is one of the key ingredients to make a company grow. Big companies have an extensive employee coaching and training program aimed at being able to produce top caliber workforce for the company. Continuous learning and growth program should always be part of the company program because the development of technology is constant. They should be able to adapt to technological advances if they want their company to be competitive. Using a balanced scorecard, the company can take a look at what specific areas they need to focus their development on.
4) Customer Perspective
The balanced scorecard gives equal importance to customer satisfaction as much as it gives importance to the three other aspects of a company. This is just right since customers are the lifeline of any business. With this aspect incorporated in the balanced scorecard, the company is able to keep track of customer satisfaction rating. This is important because customer satisfaction rating could be an indication of future sales performance of the company.