Managers and business owners have a number of tools available to measure and manage their company's performance. One of the most effective and widely used tools is the balanced scorecard.
Scorecards are customizable structured reports that compare actual performance figures (financial and non-financial) to desired performance figures, which are pre-determined by management. Ideally, scorecards reveal the gap between where your company is today and where your company wants to be tomorrow.
In some ways, a balanced scorecard is just like a baseball card. In order to judge the effectiveness of a player, baseball analysts use a variety of key performance indicators (KPIs), which are simply the most relevant metrics within an industry or organization.
If you want to gauge a player's performance, just turn the card over and you can take a look at their KPIs. The same applies for businesses and organizations. If you want to know how a business is performing, take a look at the balanced scorecard.
If a scorecard only gave managers a snapshot of their company's performance at a specific time period, it wouldn't be very useful. A scorecard enables managers to benchmark performance by comparing KPIs to a specified goal, aptly referred to as a "target." Industry experts have suggested that the most important factor in setting up a balanced scorecard is choosing the "right" KPIs to monitor and benchmark performance.
This point is made clear in the popular book Moneyball: The Art of Winning an Unfair Game by Michael Lewis. The book talks about how the managers of the Oakland A's were faced with the difficult challenge of recruiting talented players on a limited budget. Historically, baseball teams have paid top dollar to recruit players who rank high on industry accepted KPIs.
In light of their sparse resources, the managers of the Oakland A's chose different KPIs to gauge the effectiveness of a potential recruit. The result was that the new KPIs served as a much more realistic measure for identifying and recruiting good players based on an a limited budget.
Financial Scorecard Example - In the example to the right, the Salesperson Scorecard displays sales figures and sales goals
Customer Scorecard Example - A scorecard can compare customer retention and satisfaction rates with desired rates Internal Scorecard Example - In this example a balanced scorecard will show the speed of processes across and within different functional departments Growth Scorecard Example - Compare employee turnover and job satisfaction rates to managerial benchmarks
InetSoft's dashboard and scorecard tools require minimum specialized IT expertise to deploy, require no expensive BI experts or consultants, and offer an intuitive point-and-click, highly visual, easy-to-use interface. InetSoft's scorecard tools empower business users with maximum self-service ability.
InetSoft has earned its reputation of excellence as a leading global operational business intelligence solution provider by delivering innovative, award-winning software and professional services for over a decade. InetSoft serves over a million users worldwide, including 25% of Fortune 500 companies.
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