What Are The 7 Benefits of a Balanced Scorecard?
Successfully completing a Lean/Sigma programme is only the first step on the journey to success. To keep progress sustained, organizations must find ways to track performance over time.
Monitoring Key Performance Indicators (KPIs) is a great way of achieving this, but a key complement to KPIs are Balanced Scorecards (BSC).
What are Balanced Score Cards?
BSCs are tools of performance reporting that translate a company’s Vision and Strategic Objectives into performance indicators.
They are usually divided into 4 perspectives:
Learning & Growth: “To achieve our vision, how will we sustain our ability to change and improve?”
Internal processes: “To satisfy our shareholders and customers, what business processes must we excel at?”
Customer: “To achieve our vision, how will we sustain our ability to change and improve?”
Financial: “To succeed, how should we appear to our shareholders?”
BSCs put together seemingly disparate indicators of an organization into one document. However, these indicators are interrelated. Growth is driven by learning which refines a company’s Internal Processes. Improving internal processes in return will result in better operational efficiency which in return creates Customer satisfaction and increased financial benefits.
It also minimizes information overload by focusing on the indicators that really matter. This gives the company a balanced view of its long-term well-being.
Some examples of indicators used in Balanced Scorecards
Each perspective of the Balanced Scorecard will have goals; initiatives will be required in order to achieve these goals and metrics can be used to track their progress.
Here are some examples:
Why BSC complements KPIs
BSCs are a way to measure a company’s alignment to its strategic goals; Its measurements are long term. KPIs are a measure of a company’s performance and it focuses on the present. In a way, KPIs are an indicator of whether a company is moving in the right direction.
7 benefits of a Balanced Scorecard
1. It puts the company’s strategy & vision at the core of the company’s health monitoring system.
2. It encourages the company’s leaders to reach a consensus on what the strategic objectives truly are.
3. It is visual and simple: in one setting, it summarizes the company’s strategy map.
4. It sets a 2-way communication with stakeholders and enables a dialogue to refine processes and promote feedback.
5. It helps managers identify the areas that need improvement.
6. It shows the logic between a company’s long-term objectives (strategic) with the needed short-term goals (initiatives) and the metrics necessary to keep them on track.
7. It shows employees at all levels of the organization how their individual objectives align with the company’s.
How to implement a BSC
Do you want to implement a Balanced Scorecard to meet your organizations needs? Contact us to discover more about Lean and how it can help improve your business!
This is part of a series of Blogs on the manufacturing industry and this represents the third article in this series. Please click on the following links to view the other blogs already published on KPI’s and Managing Lean/6Sigma Projects in a GMP Environment.
About the Author
Ben Bonmati has 20 years of industry experience working at Intel and Sanofi Pasteur across 4 countries. He is Lean Black Belt and Six Sigma Green Belt and has a long experience working in high volume manufacturing environment and using visual management to implement out of the box solutions. He is PMP® certified and can facilitate the deployment of Lean and other Continuous Improvement projects in organizations.
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