balanced Scorecard
Dr. Alaa Jarrad
Garad@alaagarad.com
04 October 2022
Imagine that you are driving your car and you have no meters other than a counter or an indicator to measure the car's speed. There is no indicator to measure the temperature of the car engine, or an indicator to measure the amount of fuel, or any other indicator.. Problems and possibly disasters must occur.
This is exactly what happens to some companies that are only interested in one indicator, which is profit, without paying attention to indicators of customer satisfaction, indicators of employees, or community opinion polls and the rest of those concerned.
It was this idea that prompted management professors David Norton and Robert Kaplan to create one of the simplest but most effective innovations in the history of management practice: the Balanced Scorecard.
The balanced scorecard has been designed to measure the most important vital indicators that are indispensable to any organization, and the card consists of four axes: The first of these axes is financial performance, where the financial goals that the organization wants to achieve are agreed upon, such as a target for sales and the percentage of profits, and it can also be Determining savings rates or reducing expenditures in the case of non-profit organizations, such as government departments or public benefit institutions.
Of course, when the goals are set, it is followed by the identification of indicators to measure performance, such as the return on investment index or the net profit index.
The second axis in the balanced scorecard is the clients axis, where the goals that the institution aspires to reach are determined, such as formulating a goal that the percentage of customer satisfaction with services or products should not be less than 90%, and the indicator is the satisfaction rate resulting from the customer opinion measurement questionnaire .
Another target, for example, is to respond to customer complaints within three working days, and the indicator is to reach 95% of the responses within three days.
The third axis is the operations axis and relates to improving the processes and procedures followed in the institution, such as increasing the productivity of a particular production line or reducing the time to provide the service, such as issuing a passport within two working days, for example, and the improvement in the emergency clinic in a hospital may be to reduce the waiting time to 10 minutes.
As for the fourth axis, it is learning and growth, where institutions are expected to apply institutional learning methods at its various levels, so that learning activities result in the extraction of lessons and then lead to continuous improvement, and attention is paid to the individual, his development and raising his efficiency while linking that learning to the performance of the institution as a whole, for example For example, the goal could be that each employee attends at least eight hours of training per month, followed by another goal is the number of improvement suggestions submitted by the employee, and therefore the employee thinks about what he has learned and then presents solutions that reflect this learning for the purpose of improvement and development at the level of his department or the organization as a whole .
It is worth noting that the balanced scorecard is a tool through which goals and indicators are formulated, and it is also used to follow up the implementation and the extent to which the percentages of achievement are compatible with the goals, but it is not a magic wand to solve all the problems of the institution. in a systematic and sustainable manner.
The employee reflects on what he has learned and then comes up with solutions that reflect this learning for the purpose of improvement and development.
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Garad@alaagarad.com
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Garad@alaagarad.com