The Balanced Scorecard (BSC) was devised by Norton and Kaplan * with the objective of introducing non-financial parameters in the management of organizations under the premise that financial results are known when they have already occurred It being desirable to analyze the magnitudes that are responsible for them.
Note*. This tool was presented by its authors in an article published in 1992 in the Harvard Business Review.
Basically, the Integral Scorecard is understood as a panel of performance indicators of a company. The clearest analogy would be its comparison with the dashboard of a vehicle where the company, on many occasions, focuses its control on the so-called critical factors of success
In particular, the Balanced Scorecard should include indicators that provide information necessary for the management and planning of the objectives of each company. The control values will be specific to each organization and will differ from one entity to another (in a way similar to their taxes).
In its development the organization must take into account the application of two main premises:
– What can not be measured can not be managed. This main axiom of all that we dedicate ourselves to the quality is extended in the generation of the Full Scoreboard because the intended improvement with the use of this tool must be quantified.
– Do not try to measure everything that happens in the company because the cost of such work would generally exceed the expected benefits and further analysis would be too complicated. The WCC. Should include only those variables that reflect the actual health situation of the company.
The original model of Norton and Kaplan refers four types of variables to obtain indicators that make up the Balanced Scorecard:
- Financial. It covers the combination of economic profitability (achieved through the use of the entity’s assets) and financial profitability (obtained through the investment of the company’s own funds, especially the reinvestment of profits generated over time ). They usually include liquidity ratios (ability to cope with payments), debt ratios (diagnose the amount and quality of debt), asset turnover (evaluate their performance and effectiveness), ratios in the management of collections and payments, Analysis of sales and analysis of expenses.
- From the perspective of the Client. Considered as one of the main points of the Integral Scoreboard where to be represented, basically, what customers expect from our products and / or services at the same time to control “how they see us” (especially relevant is the determination of the so-called moments of the truth). Market values are also generally considered as values. From this point, reference values are usually considered in relation to loyalty, market share, attracting new customers, valuation of customers, ratios on offers, visits, etc., profitability per customer, etc.
- Internal processes Along with the previous group may be the values most developed by consultants and quality managers. The management or approach to processes aligns the development of the activity of an organization towards the contribution of value to the customer according to its requirements and fostered the permanent improvement as well as the efficiency in the activities of the company, considering its structure and so that contibuya To the strategic positioning chosen by its Management. In this section, we can basically consider four main types of indicators: compliance (related to quality attributes), efficiency (achievement of an objective regardless of costs), efficiency (ability to achieve results with the least cost Resources) and management (which consist of measuring the achievements of the proposed objectives for a given process).
- Of growth and learning. Considered as the management of knowledge (and very closely associated with what Drucker called the “knowledge workers”) as a fundamental pillar for the development of enterprises, it should be focused on a continuous learning, whereby actions must be proposed to “store The information “as well as the” tools “for the sharing of this” intangible asset “. Reference values are usually considered in relation to the training developed (and depth and effectiveness of the training), staff turnover, work climate (internal evaluation surveys), etc.
- Observation. In subsequent studies, these four variables have evolved towards Strategy (for Client) and Marketing and Human Resources control (in the Growth and Learning parameter).
The objective of a good Balanced Scorecard is to balance the financial performance indicators of the company with the non-financial values and to also provide references of “internal” and “external” securities in a single document for the entity’s Management, Its main purpose is to support management in decision-making, seeking to optimize the use of the resources of the organization for the analysis and development of the most relevant values and competencies with a greater specific weight in line with the strategy of Management profiled by the organization.
The benefits of the Balanced Scorecard are:
– The provision of a total control of the activity of the company contemplating values beyond the financial ratios which allows to have an integral vision of its operation. Indispensable for any managerial board.
– The anticipation, by the company, of economic results through the study of cause and effect of the variables involved. Powerful “tool” for the correct development of efficient actions in the entity.
The possession of a “base” for the communication of the criteria of the Management in relation to the objectives of the organization and its mechanisms of attainment to all the personnel since they are informed of all the parameters measured as well as of the relevant magnitudes reinforcing the leadership of the Own address. If the company has a well-defined strategy and aimed at adding value to its clients this philosophy can be transferred to the staff thanks to the WCC.
– Simplifies and improves the management process by reducing it to control and taking into account the most relevant indicators and improving the strategic compatibility of decisions. These indicators and parameters can be deployed at the departmental level achieving a greater effect.
– Shows and relates the variables of the company strategy showing (and allowing to use) the chain of relationships that occurs before any decision making. Basis and foundation for the development of good business management and largely developed through the subsequent implementation of so-called strategic maps
For those who carry out consultancy work on quality, the Integral Scorecard is the logical evolution of the Quality Scoreboard of our client or organization, although from the quality we usually start from the non-financial vision (mainly of the actions and values provided by Processes), the gradual integration of financial values (despite the reluctance of many managers who prefer to keep quality separate from economic values) gives management systems a breadth and depth that makes them a very powerful management tool. the company.