In the organizational world, there are countless tools and resources designed to improve production and operational performance. Most of them are digital solutions for personnel management, financial management, contract and partnership management, as well as task and incident management. But there is also the balanced scorecard, a management system that is very useful when seeking to understand the real state of a company’s key pillars, such as finances and customers.
In this article, we’ll tell you more about the balanced scorecard, its indicators, why it’s important, and what its advantages and disadvantages are.
It is a management tool commonly used to analyze, evaluate, and manage a company’s performance based on key areas such as customer relationships and, of course, the financial perspective. Also known as the balanced scorecard, the comprehensive management dashboard (CMI) was developed by Robert Kaplan and David Norton in 1992. The idea arose as part of a proposal for a management system that would provide a comprehensive perspective of internal processes, allowing business strategy to align with strategic objectives.
So, what makes the CMI particularly useful for decision-making? It allows the collection and visualization of financial information, management of customer relationships, understanding of internal structures, and deployment of learning and growth actions. These four perspectives promote in-depth knowledge from a viewpoint that goes beyond mere product or service analysis. In this sense, it encourages a balance between the factors that drive medium- and long-term success.
In general terms, the balanced scorecard deals with the following aspects:
These are the four key indicators of the balanced scorecard.
Finances are essential for understanding the scope of business strategies, which, as mentioned, are directed toward specific strategic objectives. They are based on investments, which should yield profitability, return, revenue, and benefits. The goal is to minimize costs in order to maximize profits.
Customer-related indicators focus not only on loyalty but also on retention. In this sense, efforts are made to understand how products or services meet customer expectations and needs. This is important for improving the customer experience and positioning the company against competitors, thus generating a positive brand perception. At this stage, the Sales Department plays a key role.
Internal processes, as discussed, are aligned to achieve objectives. Therefore, the goal is to maximize operational process efficiency and production cycles, as well as to improve the product by optimizing costs without losing quality. To do this, innovative and efficient technologies are required, and employees must be trained to make active use of them. This includes software and machinery.
Each department or section of the company (e.g., marketing, sales, finance, production, human resources, among others) must implement a set of measures to achieve better operations in accordance with both internal and external quality standards (i.e., regulations and certifications). Here, the company launches innovation plans to adapt to both technological and market changes.
The main reason a company chooses to create a balanced scorecard is the need to develop a global and integrated strategy to achieve the objectives set for each work period. Based on this, executives, department heads, and employees can propose and implement measures to achieve performance, profitability, and market presence.
Following this, the balanced scorecard is essential for the following actions:
Let’s now look at the advantages and disadvantages of this business management tool.
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