Question

As someone with more knowledge of the balanced scorecard than almost anyone else in the company, you have been asked to use that knowledge to contribute to the improvement of the performance of the company. Explain how you will use the given performance measures to measure and improve the performance of the company. .

Answer 1

Answer to the above question:

Performance measures to measure and improve the performance of the company:-

To measure business performance, you need to track relevant business metrics, also known as key performance indicators, that display a measurable value and shows the progress of the business goals.

Measuring performance is a vital part of monitoring the growth and progress of any business. It entails measuring the actual performance of a business against intended goals. Regularly checking your business performance protects your business against any financial or organizational problems. It helps businesses in lowering process cost and improving productivity and mission effectiveness.

How is performance measured:-

The constant changes in the market conditions means that it's essential to constantly track and review your business goals and performance to remain competitive.

SET GOALS

Your goals might be acquiring new customers, improving customer satisfaction and generating high volume of traffic to your website. Until you don't know what you want to measure, you can't measure what you have.

Here are examples of business goals:

• Lead generation
• Increasing sales
• Better customer service
• Increasing profit margin
• Increasing production efficiency
• Capturing bigger market share

From the goals, establish critical success factors. The CSFs refers to specific conditions the key activities that a business should focus on to be successful.

DEVELOP KEY PERFORMANCE INDICATORS

The KPIs are standard ratios that provide insight about your business performance. Examples include revenue generated per employee or financial statements. These performance indicators help you to measure performance against the goals you have identified.

Setting the KPIs will vary between businesses. It is important to choose KPIs that means something to your business, that can be measured and provide outcomes to achieve your goals.

DEFINE SUITABLE METRICS

Business metrics are quantifiable measures that track and assess the status of a specific business process. Depending on your business and your goals, you may want to focus on certain metrics. These include marketing metrics, sales metrics, accounting and financial metrics and online metrics.

These metrics keep business owner, employees, investors and customers informed and aware of how a company is performing.

TRACK AND MEASURE

Narrow down on the information that you think is crucial to track. Choose a few major business goals, develop related KPIs and focus on tracking and collecting relevant data.

The Balanced Scorecard- Measures that Drive Performance:

What you measure is what you get. Senior Executives understand that their organization's measurement system strongly affects the behaviour of management and employees. Executives also understand that traditional financial accounting measures like Return on Investment and Earning per share can give misleading signals for continuous improvement and innovation- activities today's competitive environment demands. The traditional financial performance measures worked well for the industrial era, but they are out of step with the skills and competencies companies are trying to master today.

The Balanced Scorecard Links Performance Measures:

• How do customer's see us? (Customer Perspective)
• What must we excel at? (Internal Perspective)
• Can we continue to improve and create value? (Innovation and learning perspective)
• How do we look to shareholders? (Financial perspective)

While giving senior manager information from four different perspectives, the Balanced Scorecard minimizes information overload by limiting the number of measures used. Companies rarely suffer from having too few measures. More commonly, they keep adding new measures whenever an employee or a consultant makes a worthwhile suggestion. One manager described the proliferation of new measures at his company as its "kill another tree program." The Balanced Scorecard forces managers to focus on the handful of measures that are more critical.