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Balanced Score Card for Managing

Whether you are a big time CEO, departmental manager or someone just trying to get your family to organize their finances a balanced score card methodology is one way to think deeper about your finances. Oftentimes people just look at the financial number at the end and don’t necessarily focus on managing the inputs leading up to that number. If you think of someone on a diet they will often measure their weight but some of the more important metrics objectives are things like how many calories they consume or how much time they spend exercising. While intended primarily for business the balanced scorecard approach seeks to focus on managing the inputs that lead to that final number at the end.

The traditional balanced score card buckets are

  • Financial
  • Customer
  • Learning and Growth
  • Internal Processes

Financial metrics are typically things like how much cash is in the bank, how many people owe me money, how many people do I owe money and what am I doing to manage this process. With customer you can focus on metrics like how many customers are late to pay, how many new customers do I have, where are they coming from and what activities am I doing to retain them. You can even apply these concepts to your personal life. It may sound strange, but thinking about how much time I spend with my family etc. Some of the concepts related to the balanced scorecard can be difficult to understand one of the best ways to get a grasp is through the use of a bsc case study. The are many examples online that can be very useful in helping to get a better grasp on the subject.

When it comes to measuring each of these items they are referred to as KPI’s or Key Performance Indicators. These are specific measurable items you can use to define your progress. Using our diet example from above you can think of calories consumed or time spent exercising as KPI’s for a diet. There are also many metrics case study examples available to help you think through as well.

Recently, I started working on a KPI dashboard for a company where we used some of these measure to alert managers of some of the key inputs before they turned into problems. Previously the data was difficult to get to and the managers were not following their KPI’s closely. Now they can see from a quick glance if any of their KPI inputs are in danger by highlighting red. Using the right software can make the balanced scorecard much easier to implement. It allows you to measure the right behavior and act on it appropriately.

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