Are you familiar with the balanced scorecard? Do you use it in your business?
In today’s 2 Minute Accountant find out what a balanced scorecard is and why you should include it in your performance management strategy.
What is a balanced scorecard?
It’s a strategy performance management tool that started as a philosophy back in the early ‘90’s.
The innovators were two PhD electrical engineers, Kaplan and Norton. They wanted to find an effective way to use KPI (Key Performance Indicators) to grow a business.
One of their main philosophies was that when you look at your financials, you’re already looking in the rearview mirror. It’s already happened.
You can’t go back, but you can change your business’ financial future.
How can the balanced scorecard influence your business’ financial performance?
Your business’ financial situation is the result of three key areas on the balanced scorecard.
1. Your people and the training you provide them
The secret to having a growing business is to choose your people wisely. Once you’ve identified the right people for your team, it’s time to start thinking about quality training opportunities to offer them.
Tip: Train your people well if you want them to excel at their job.
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2. Your business’ internal processes
Specifically, the efficiency you have within your business including your systems, policies and procedures.
Business management studies show that people want to do good at their job.
But one of the many reasons people fail in a company is a systematic failure. In other words, they can’t do their job properly because the system doesn’t allow them a smooth transition.
Tip: Make sure your business’ internal processes help your staff develop instead of working against them.
3. Your customers
Last but not least, your customers are the ones who can help your business develop.
If you do a great job at your customer service, you implement great internal systems and procedures, you choose the right staff for your business and you find great ways to train them well… your financials will surely follow.
Tip: Don’t forget about your customers. They can make or break your business.
You might also be interested in: What Is A Balance Sheet?
The balanced scorecard is a fantastic performance management tool we use in business. I hope you have a better idea of what a balanced scorecard is and how it can benefit your own business.
Just give it a try. It will launch your business forward like you wouldn’t believe.
Use the balanced scorecard tool for your business now!
I can assist you in making the right decisions when it comes to your business. Whether you have questions about business management, a company set up, business structure or registration, I am here to help you. Let’s get in touch now.