Scorecard In Govt. And Semigovt.Organizations
The Balanced Scorecard is a strategic planning and management system that is used extensively in organizations to align business activities to the vision and strategy of the organization, improve internal and external communications, and monitor organization performance against strategic goals. Balanced Scorecard helps management to accomplish the critical management processes:
- Clarify and translate vision into strategy
- Communicate and link objectives to measures
- Plan, set targets and align strategic initiatives
- Enhance learning at all levels
- Have a system of constant feedback
The Balanced Scorecard requires us to view the organization from four perspectives, namely Financial, Customer, Internal Business Process and Learning and Growth:
The Financial Perspective:
It measures economic consequence of the actions already taken. Financial measures indicate whether strategy, implementation and execution are contributing to bottom line.
The Customer Perspective:
It helps in measuring customer satisfaction, customer retention, customer profitability, customer acquisition, market share, etc. In developing metrics for satisfaction, customers should be analyzed in terms of kinds of customers and processes for which we are providing a product or service to those customer groups.
The Business Process Perspective:
Metrics based on this perspective allow the managers to know how well their business is running, and whether its products and services conform to customer requirements (the mission).
The Learning and Growth Perspective:
This perspective includes employee training and corporate cultural attitudes related to both individual and corporate self-improvement. In the current climate of rapid technological change, it is becoming necessary for staff to be in a continuous learning mode.
Why Balanced Scorecard?
Majority of the entities have performance metrics incorporated into their management information systems that includes financial and non financial measures. The non financial measures are used by entities for bringing improvement at shop floor level, frontline operations and customer facing operations. The aggregate financial measures are used by the senior management to summarize the results of the operations performed by their employees at mid and lower levels. Such an approach has its limitations and inefficiencies at various levels sometimes don’t get reflected in the financial measures. Balanced Scorecard tries to retain the financial measures but at the same time stresses on measuring investment and returns in the areas of customers, suppliers, processes, technology and innovation. The objectives and measures of the Balanced Scorecard are derived from Government’s vision and strategy. They view the performance from four perspectives: financial, customer, internal business process, and learning and growth. For a government entity any tool that helps them to aggregate non financial measures into a single dashboard and integrate with financial measures would be a useful option.
Developing the Scorecard
Building a scorecard system the right way is a process of discovery, and involves critical thinking and knowledge about vision, long term objectives, target customer segment and their needs and aspirations, implementation capability, communication tools, etc. A typical entity may take anywhere between 3 – 6 months to develop the Scorecard.
The first step of building a Balanced Scorecard is get consensus and support about the programme from senior management. Once the management support is available the next 12 to 16 weeks is used typically to develop the Scorecard and plan its rollout.
Step 1: Choosing an appropriate organizational unit is critical. The best unit to choose for implementation will be one that has its activities spread across entire value chain: innovation, operations, marketing, selling and service.
Step 2: Identify linkages of the chosen unit with other units and with corporate. This will help the unit to develop objectives and measures that in sync and not at conflict with other units or organization objectives.
Step 3: Conduct interviews and discussions to create the necessary documents on vision, mission and strategy. This step will also lead to development of Scorecard.
Step 4: Conduct executive workshop to further develop and refine the metrics and get buy-in from stakeholders.
Step 5: Develop implementation plan
Step 6: Conduct one more round of workshop and rollout
Potential benefits by implementing Balanced Scorecard
Balance Scorecard as a management system as opposed to measurement system can benefit the management and stakeholders in the following manner:
1.Help management to clarify their strategy to stakeholders
2.Help communicate strategy to all employees
3.Align individual and department goals to organizational strategy
4.Link strategic objectives to long term targets and budgets
5.Facilitates periodic review of strategy and quick corrective actions
6.Obtain feedback about implementation of the strategy
7.For citizens it raises visibility of government activities, facilitates feedback, supports greater accountability and brings transparency
8.Helps management to monitor performance from a single dashboard
Challenges in implementation of Balanced Scorecard
1.Requires a high level of organizational commitment and takes sustained effort to implement fully
2.May create fear amongst employees, since Balanced Scorecard raises visibility and accountability
3.Adoption rate may be slower because of challenges in training a large workforce on the methodology, lack of data and information to build the scorecard and technological hurdles.
Success of any government initiative cannot be measured only by financial metrics due to very nature of their role. However that does not justify such entities to be devoid of any measurement and monitoring programmes that helps them to implement and obtain feedback about their strategy. The management processes of the government build around the Scorecard should enable these entities to become aligned and focused in implementing the long term strategy. It is an experiment worth trying and learning from such an initiative can be of immense value.