Think Tank: Becoming a performance driven organisation with balanced scorecards
- 03 August, 2009 12:23
- Comments 2
Figure 1 – The Balanced Scorecard Process.
A lot of effort goes into developing sound strategies for performance improvement and getting them endorsed by the board and the executives. Initially there is a flurry of new activities and initiatives. But a few months down the track, day-to-day operations seem to take over and strategy is relegated to the bottom of the pile. The bulk of the organisation continues to do what it did before. As a result, the performance of the organisation remains unchanged.
What is typically missing is the process for turning the broad thrust of a strategy into specific measurable performance goals, and assigning accountability right through the organisation. A balanced scorecard turns a strategic plan from a passive document into marching orders for the troops on a daily basis.
Executive Summary
Strategy describes where the organisation currently is and where it aspires to be. It also describes the broad initiatives that the organisation plans to take. It may describe key focus areas, process changes or capability-building initiatives or projects that are necessary for the achievement of goals. Strategy execution needs the ability to take a very broad-brush strategy and identify, prioritise and implement the key things that need to be done to put that strategy in practice. A successful execution means that the goals are set, accountabilities are assigned and the results reviewed on a regular basis.
A balanced scorecard (BSC) is a one-page document that outlines an organisation’s key performance goals and indicators (KPIs), usually covering financials, customers, execution and people. These KPIs are driven from the company’s strategic intent. A BSC is critical for a performance-driven organisation as it creates a common view of performance across a range of objectives. For the business, KPIs are the “guiding force” that link strategic goals with day-to-day execution. This allows managers to have a better understanding of how to improve the business. Across and down the organisation, business units and teams then define supporting targets and KPIs, which results in a hierarchy of KPIs cascading down from the corporate strategy.
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Comments
Neville Turbit
Good Article
Many years ago I did some consulting in an organisation where Hermant was part of the Management team. I remember being impressed with his professionalism and insight. He remains one of the people who stood out in the many organisations I have consulted to. This article reinforces my view that he is a person worth listening to.
Olly D'Souza
A revised model to meet the needs of small business (agility)
Having read the article and participated in other discussion on this very important topic of transferring strategy to action at the coalface - It appears to me this model may work best when there are independent layers of management with processes that are different. I would like to see a strategic model that does not imply that there are different levels of management - especially for small enterprises and in this modern day and age where outcomes are expected in a daily basis - and months, weeks etc may just be too long to meet some industry expectations.
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