The balanced scorecard can be used to evaluate your company's performance.In addition to the financial measures you'd normally use, a BSC also incorporates your internal processes, the viewpoint of your customers, and the things you do to innovate and improve your products or services.You can find growth strategies that build your company as a whole by looking at these perspectives.It is possible to identify and eliminate problems early and find better ways of doing business that will keep both your employees and your customers happy.
Step 1: Define your company's mission and vision.
The strategy map is one of the most important parts of a BSC.Your company's mission is at the center of the strategy map, with all strategies helping to fulfill that vision.Use no more than a sentence or two to communicate your vision or mission.If you run a bakery, your mission might be "To develop and provide healthy, sustainable sweets that create guilt-free smiles."
Step 2: There is a box for traditional financial indicators.
The first perspective of a BSC deals with the same financial indicators you would normally include in the company financial report, such as your balance sheet and income statementThe goal for this box is to increase profits.If you're making a BSC for a nonprofit or government agency, you will likely use different indicators as well as different methods for analyzing improvement.A nonprofit might have fundraising goals here.
Step 3: There is a box for internal processes.
How you get things done as a company is covered by the internal processes perspective.It could include the structure of your company as well as the number of employees that handle each part of the business.If you run a bakery, the internal processes might include the vendors you buy your ingredients from, your cashiers or customer service employees, and your management staff.
Step 4: Another box is needed for your customers to see your company.
Customer service and the relationships your customers have with your company are the focus of the customer perspective.You can figure out how loyal your customers are and how happy they are by looking at this perspective.If you run a bakery, your customer perspective might look at how often customers return and whether they recommend your bakery to friends and family.This perspective looks at how you deal with customer complaints and issues that might come up in the course of doing business, such as incorrect or delayed orders.
Step 5: Growth and innovation should be included in a fourth box.
The things that you do to grow your company are covered in the last perspective box.Everything from computer and equipment to employee education is included.The things you do to grow and improve your company should all fulfill the mission you have set.If sustainable is part of your mission, you might want to upgrade your equipment to be more eco-friendly.
Step 6: In each of the 4 perspectives, outline your company's objectives.
Objectives for your company that fall within that perspective are listed in each of the boxes.For each perspective, plan on 3-4 objectives.Each objective has a number of measures that you can use to determine if your company is on target.Common objectives for each of the 4 perspectives include: manage costs, increase profits, diversify revenue sources, increased market share, decrease wait times, improve customer satisfaction, allocate resources efficiently, streamline review process upgrade tech resources, sponsor employee continuing education, recruit highly skilled employees.
Step 7: To see the relationship between objectives, draw arrows.
The objectives in one perspective might have an impact on the other.An arrow from one objective to another shows that the second objective improves or develops as a result of work on the first.You can follow a chain to understand what changes are needed first to achieve your objectives.An arrow would be drawn from the internal process perspective to the customer perspective if you had "decrease customer wait times" and "handle support calls more efficiently" in your perspective.Customer wait times would be decreased if support calls were handled more efficiently.
Step 8: Determine the appropriate measure for each goal.
Determine which option is likely to provide you with the most useful information by Brainstorming a list of possible measures.The measures will be standard for financial goals.You may have to get a little creative for other goals.Traditional measures used for financial goals include your company's operating costs or profit margin on the products you sell.If you want to make your business more sustainable, you should take a measurement of your carbon footprint.Incremental decreases can be used as a measure of the goal.Customer satisfaction can be improved with several possible measures.The results of a national customer satisfaction survey might not be enough to capture most of your customers.You would probably want to create your own survey.
Step 9: Specific, measurable goals are what you will turn your objectives into.
Your objectives in each perspective are likely vague.Use the measure you identified to turn the initial objectives into concrete goals.If you want to improve customer satisfaction, you might decide that you'll know if a customer is satisfied if they keep coming back.It is possible to increase the percentage of returning customers by 50%.If you want your business to be more sustainable, you can set a goal of decreasing your company's carbon footprint by 25%.
Step 10: There are short-term targets for each goal.
Targets give your company something to work toward and let you know if you're on the right track.You normally evaluate your company's performance during periods such as quarterly and annual targets.If your ultimate goal is to increase customer satisfaction by 50%, you might want to set quarterly goals of improving it by 10%.
Step 11: Projects that advance the company's goals are what you should choose.
Strategic initiatives are designed to grow your company and improve it.You can use good projects to make changes that will help your company hit its targets.If one of your goals is to increase the number of customers who return to your business, you might want to conduct a survey to find out how first-time customers feel about your company and any issues that might keep them from returning.You could work to eliminate those issues.
Step 12: Project leaders should be assigned for each initiative.
A single person in charge of each initiative improves efficiency and ensures employees are accountable for the success of the company.Project leaders with authority, experience, and resources are the ones to choose.If you have an initiative to improve customer satisfaction, you want a customer service employee to lead it, not someone in human resources who isn't in contact with customers.For financial goals, assign an accountant or other financial manager who understands the metrics and how they're calculated.
Step 13: You should allocate company resources to support your initiatives.
Determine what you need to get each of your initiatives off the ground and structure your company's finances to support you.Investments in equipment or services are required for some initiatives while others only require time and effort.If you want to evaluate your company's progress towards increasing customer retention, you'll need to either design a survey or hire someone to do it.You have to figure out how you're going to get the survey to customers.
Step 14: You can divide your map into individual departments.
The objectives for the company as a whole are translated into actionable tasks for each department or type of employee.It is more specific to ensure everyone understands their responsibilities.If you're creating a strategy map for your customer service department, you might focus on the customer perspective and ways they can decrease the wait times for customers who call with a question or service request.Creating strategy maps for individual departments allows you to assign specific responsibilities to all of your employees, not just supervisors and management.The tasks and objectives become more specific as you progress down to smaller units.The maps would be more individualized to address employees in a smaller business.If Susan answers customer service calls and emails in your company, you could specify things for her to do to help achieve the company's goals.
Step 15: Individual employee performance can be tied to your BSC.
You can use the actionable tasks listed on employee performance reviews once you've cascaded yourBSC.Consider how good the employee is at fulfilling the tasks that they are responsible for.If that employee is truly an asset to your company, this tells you.An example would be if you have an employee in sales who works on follow-up calls and surveys customer satisfaction with your product.Although they won't have as many new sales as other employees in their department, they still provide tremendous value to your company.