Balance your score card

I am one of those people that believe that the Balanced Score Card is one of the most effective tools for strategy development, planning, implementation and performance management. In fact, I believe that it is one of those tools that has the ability to just open-up and transform any organization or society that commits to implementing it the right way. With all of this confidence in the balanced score card, I am often shocked and disappointed when I hear people say “this balanced score card thing doesn’t work”.

Over time, I have come to find that most people who think that the balanced score card doesn’t work do not know what they are talking about. For example, recently, I asked a group of participants at a workshop why they felt this way, and their answer got me laughing: – “the software for capturing people’s appraisals is always down” or “this whole going on a platform online doesn’t’ work for me”. I am laughing because unfortunately people have ‘reduced” the Balanced Score Card (BSC) to a computer application or software used to track employee’s performance or record performance evaluations – how unfortunate!

Another common comment I have received is that “the BSC will not work in my department – there are no KPIs for the kind of operations (back-office) work that we do. In fact, many times people have dared me to develop KPIs for jobs in Information Technology, Customer Service, Finance, and even teaching. The biggest nay-sayers in this area come from government institutions and non-governmental organizations who say that the BSC was set up to serve “for profit” and not “not for profits” like them.

I always like the challenge and I am thrilled to see the look on their faces when I am able to create KPIs in a matter of minutes that match their jobs, industries or sectors. So, the question is – why is the BSC so widely accepted to be very useful, yet subject to so much “bashing” by the people who claim to be using it. My guess – because most people who use the balanced score card and condemn it thereafter haven’t really built the capacity to understand what it really is, and how best it should be deployed; or they have defined its scope too narrowly as either a technology solution or a management control tool which scares people away.

I am a lover of the BSC and I thought it will be useful to clear the air about it a bit: by sharing a few thoughts on the why, what and how, I am hoping I can get more people sold on this amazing tool, especially those nay-sayers who may have adopted it and consigned it to a backstage position or those who use it merely to tick boxes and fulfil all righteousness or completely avoid it altogether because it seems complicated. For countries like Nigeria and our various sub-national governments, it may be useful to note that some of the most developed countries in the world – including those closer to home like Botswana, United Arab Emirates and Indonesia use the BSC as the official tool for strategic planning and implementation. BSC is the language of organizational strategy like English is the “global language” of organizational communication.

Institutions that do not use the BSC have what we call an un-balanced score card – they build their strategy and measure performance focused on one thing – financial performance. This is very common in commercial organizations in the blind and obstinate pursuit of financial performance – profit before tax, turnover, return on equity, price-earnings ratios, share prices and earnings per share, etc. The result – a mercenary culture where everyone does anything and everything to achieve financial performance a la Enron, sub-prime mortgage loans and the various corporate scandals that have affected Nigerian companies and banks. The achievement of short term financial goals that cannot be sustained over the long-term that leads to the collapse of many businesses (large and small) or the gross ineffectiveness that debilitates public sector institutions in societies like ours that have not accepted the discipline, rigour and transparency that comes with the BSC.

The solution – balance your score card: build your strategy and manage performance across four critical pillars – finance, customer (stakeholders), process (risk management) and people (learning and innovation). After all, it is customers that help you generate finances, and it is proper risk management that ensures that you can retain the economic value that you get from your customers and it is people that do the work, driving learning and innovation that ensures performance in finance, process and customer areas in the first place. It’s like my report card in Kings College those days that measured not just performance in academic subjects, but in psychomotor skills, leadership and character – ensuring a well rounded performance.

Using the Balanced Score Card is really about three things: 1) Building a strategy using the tools for strategic analysis (SWOT, PESTEL, etc.) and creative thinking to develop initiatives and projects to drive the strategy; 2) Execution using disciplined processes and tools that align the organizations/society and translate the strategy into actual results; and 3) Leading CHANGE using tools and frameworks to ensure that the various projects and initiatives succeed by carrying the people along in a transparent and engaging manner.

BSC is the most powerful tool for transformation of any organization or society. Forget the nay-sayers: get out of the world of NO SCORECARD or the UNBALANCED SCORECARD – go ahead and Balance your Score Card!

 

Omagbitse Barrow 

Omagbitse Barrow is a prize winning Chartered Accountant, and Abuja based Strategy Advisor/Consultant with Learning Impact NG