home Converter A comprehensive system of organizational performance indicators. The system of indicators used in the analysis, as an element of the analysis methodology. The use of a system of indicators that are integrally determining

A comprehensive system of organizational performance indicators. The system of indicators used in the analysis, as an element of the analysis methodology. The use of a system of indicators that are integrally determining

System-wide characteristics of economic objects. Quantification methods

Integrity of socio-economic systems

Balanced Scorecard (BSC) as a qualitative and quantitative reflection of the integrity of the economic system

A balanced scorecard is a weighted set of integral indicators of the performance of a particular economic entity. The peculiarity and undoubted advantage of BSC over other systems for diagnosing activities and assessing the competitive position of, for example, an enterprise, is the fact that it combines and harmonizes both monetary and non-monetary operational measures such as:

- consumer(evaluation of the company from the point of view of clients);

- economic(internal state of the company: technology, costs, etc.);

- financial(attitude of shareholders towards the company based on the results of its financial activities);

- innovative(innovation, investment and human resources development potential of the company).

The structure of the balanced scorecard in the form proposed by the authors of the BSC idea, S. Kaplan and D. Norton, is shown in Fig. 2.15.

In the most general case, the concept The balance sheet characterizes the optimal structure of the interacting elements of the system (in this case, the client, development, finance, management), the integrity of which is determined by the overall strategy of the enterprise. Optimality in this case is determined by the criteria of costs, risks and the goals to which they will be directed.

The balance within the framework of the BSC concept is multifaceted, covering connections between monetary and non-monetary quantities, strategic and operational levels of management, past and future results, internal and external aspects of the activity of an economic entity.

Rice. 2.15. Fundamental structure of the balanced scorecard

In its classical aspect, BSC is the most effective tool for modern strategic planning and enterprise management. Many domestic and foreign authors see in BSC a broad framework structure of the entire operational management process, which includes a number of subprocesses:

Translation of long-term plans and strategies into the form of specific operational management plans by unfolding the hierarchy of the system of strategic goals in space and time;

Communication and translation of strategy to lower company-wide hierarchy levels using developed management indicators;

Transformation of strategy into plans, including budget plans.

Thus, BSC is a tool that allows you to fully link enterprise strategy with operational business; In addition, BSC makes it possible to make completely objective decisions in the field of resource allocation.

It should be noted that the orientation of the balanced scorecard system only to the microsystem (enterprise, firm) does not quite justifiably narrow its capabilities. Obviously, the very idea of BSC and the methods of developing and implementing a strategy with its help can be successfully applied at the level of mesosystems - regional and local economic systems, for which the concepts of “consumer”, “economic”, “financial” and “innovation” can be transformed into regionally relevant indicators:

- social (administration from the point of view of the electorate);

- economic (main indicators of the regional economy);

- fiscal (financial results of regional policy);

- innovative (development potential of the region).

A significant drawback of the BSC, recognized by the author R. Kaplan himself, is the absence in it of a critically important element - criteria and means of quantitative assessment of balance conditions, while maintaining the balance of selected indicators in the process of implementing the strategy is tantamount to maintaining the integrity of the economic system itself.

Moreover, it is the deviations of the BSC from the balance state, and not changes in the absolute values of the indicators of a balanced system, that are signals and the basis for decision-making in both the strategic and operational aspects of management.

It is possible to eliminate this drawback and, thereby, expand the capabilities of BSC and increase the visibility of its methods by using a graphical display of the balanced scorecard in the coordinates of a mirror two-dimensional space (Space method) and converting BSC indicators into quantitatively comparable values by normalizing them by the conditional maximum values and ranking according to the degree of their influence on the final result of the company’s activities.

A balanced system of four most important indicators (Wi) of the activity of a certain company (by the way, there are no restrictions on their number in this method), displayed in the coordinate system and in comparable values, is shown in Fig. 2.16.

Rice. 2.16. Space histogram of balanced scorecard

Figure (1) in the figure reflects the system balanced integral indicators of the enterprise's performance, while figures (2) and (3) reflect the imbalance caused by changes in certain indicators.

Let us assume that the set Wi reflects some current state St = F(Wi) of the economic system in the two-dimensional state space X,Y (Fig. 2.17). In Fig. 2.16 these states are represented by curves (2) and (3).

The strategy chosen by the company within the BSC is determined by the values of the integral indicators Wi max, i.e. state of the system at the end point of strategy implementation:

Sstr. = F (W i max), (2.1)

and the curve in Fig. 2.16 has the shape of (1) a square (circle) and reflects the balance of the main performance indicators of the company in their maximum values, the achievement of which is the goal of the chosen strategy.

Rice. 2.17. The position of the company at the beginning and end of strategy implementation

Obviously, the value of the indicator Wi depends both on the volumetric value of Q i and on a certain weighting coefficient Hi, reflecting its “contribution” (effectiveness) to achieving the chosen strategic goal:

W i = Q i ´ H i . (2.2)

In turn, Q i is a function of factors q ij that determine this indicator and their weight, in expert assessment, coefficients H ij:

Q i = f (q ij, Н ij), j = 1.2….m. (2.3)

For example:

Q 1 – indicator of the company’s image from the perspective of clients;

q 12 – the share of regular customers in the total mass of consumers of the company’s products;

q 13 – market share for the company’s main types of products.

Q i and q ij can be presented in absolute values, shares, % or expert assessment points, depending on the convenience of subsequent transformations and presentation of the final results.

In the simplest case, Q i can be represented by the function

. (2.4)

In A.A. Denisov proposed an original and, in our case, very clear definition of the concept of economic efficiency “H” as a function of the “degree of goal achievement” “p” so that

H i = – log (1- p i),

where p = I and / I S characterizes the degree of use of available management tools (I and) - read “resources, potential...”

In relation to our case, expression (2.2), according to A. Denisov, can be interpreted as follows:

“The value of the indicator Wi in achieving the chosen strategic goal depends both on the volume Q i of resources invested in a given area of activity (customer, finance, economic development) of the company, and on its effectiveness H i:

W i = Q i · H i = Q i (– log(1– p i)). (2.2¢)

If the degree of achievement of the goal due to the i-th indicator is very high, i.e. p = 1, which is impossible in practice, this means that the strategic goal can only be achieved through the efforts of a given (i-th) indicator, for example, intra-economic activity, and Hi = Hi max.

If p = 0, this means that the effectiveness of the i-th performance indicator is very low H i = 0, which gives reason to think about replacing this indicator in the BSC system with another, more effective one.”

Thus, the maximum values of the balanced system indicators (BSC), which determine the state of the economic system when it achieves the strategic goal (Fig. 2.17), can be defined as

W i max = Q i max · H i max ,

where Q i max are the volumetric values of indicators Wi of the state of the system at the point of achieving the strategic goal.

Graphic display of a balanced system of indicators using a Space histogram is possible by moving from absolute to W i max values of integral indicators BSC (Fig. 2.18)

W i N = W i / W i max О (0 – 1).

The spatial histogram shown in Fig. 2.18, can display the balance of both the current state of the normalized BSC indicators (W 1N = W 2N = W 3N = W 4N), and the state defined as strategic goal some economic system (W iN = 1). An imbalance of BSC indicators is a signal to adjust the position, and the nature of the imbalance and the value of deviations of individual indicators provide the manager with the direction and meaning of adjusting the state of the system.

The state of balance of the system, by definition, is an indicator of the integrity of the economic entity.

Fig.2.18. Space histogram of normalized BSC indicators

Maintaining the integrity of the system is the most important task in the process of managing the strategic development of an economic entity.

The balance of indicators here implies an optimal, from the point of view of the tasks of the internal and external environment, ratio of activities and the enterprise resources that support them.

For example, in the agricultural sector of almost any developed country with a market economy, the balance of farm resources is: 1 worker per 50 hectares of cultivated land, ½ tractor, 1 truck, ½ seeder and cultivator, ¼ harvester (combine).

D. Norton and R. Kaplan offer mathematical models for calculating balanced indicators for various types of activities.

In Fig. 2.19 shows as an example a map of balanced indicators of the strategic and current state of activity of the Taganrog State Radio Engineering University.

Rice. 2.19. Space-histogram of normalized indicators of BSC TRTU according to prospects

If we take into account the definition of integrity given above, we can see that the balance of the most important performance indicators is a clear and quantitative reflection of the integrity of the economic system and its maintenance serves the task of maintaining integrity in the process of strategic development or reengineering.

In management, sustainability also refers to the state of a system “when its essential variables remain within the boundaries specified by it (objective conditions of existence - variables of the external and internal environment).” The stability of an organizational system is closely related to the concepts of balance and equilibrium. There are static equilibrium - the structure of the system does not change over time, and dynamic equilibrium - the system adapts to environmental conditions by changing its structure. Further development involves the introduction of the concepts of structural and parametric stability and controllability.

Related information.

Any company is the object of close attention of a wide range of stakeholders: shareholders, managers, employees, creditors, suppliers, consumers, partners. Based on their specific interests, each party has its own approach to the issue of assessing the company’s activities, identifying factors and aspects of activity that are important for it, which it will evaluate. The object of assessment is the company's activities aimed at maintaining relationships with key stakeholders. This approach determines the internal structure of the balanced scorecard...

The Balanced Scorecard (BSS) is considered primarily as a system for assessing the performance of companies (organizations, enterprises). Let's try to identify the prerequisites that led to its appearance.

First of all, this is a change in the structure of companies' assets and the nature of their activities. The main resources that were fought over at the dawn of civilization were land and natural resources. With the development of industry, the emphasis in competition shifts to the area of fixed assets and capital. Intangible assets in the form of licenses and patents, knowledge and skills of personnel, trademarks and brands are beginning to play an increasingly important role. However, unlike land and oil, buildings, structures and equipment, intangible assets are difficult to “touch” and equally difficult to value in monetary terms. As a consequence, the importance of non-financial instruments in assessing the performance of companies increases.

In addition, a prerequisite for the emergence of BSC can be considered the need for a systematic approach to relations with stakeholders and the activities of the company as a whole. This is due to the increasing speed of changes in the external environment: in the competitive environment, in politics and economics.

Let’s begin our consideration of the balanced scorecard with several questions related to performance assessment, namely:

why evaluate?
what to evaluate?
how to evaluate?

The answer to the first question would seem obvious - to make a management decision. However, not all so simple.

Any company is the object of close attention of a wide range of stakeholders ( stakeholders). Here is a partial list of them: shareholders, managers, employees, creditors, suppliers, consumers, partners. Moreover, each party pursues its own specific interests ( rice. 1).

Rice. 1. Stakeholders and their interests

Based on their interests, each party approaches the issue of assessing the company’s activities in its own way, identifying factors and aspects of activity that are important to it, which they will evaluate. This raises the next question: “What to evaluate?”

The balanced scorecard is not intended to evaluate the company as a whole, although it may include financial indicators that also characterize the value of the company (its net asset value, revenue, profit, etc.).

The object of assessment is the company's activities aimed at maintaining relationships with key stakeholders. This approach determines the internal structure of the BSC. In this connection, we move on to the next question: “How to evaluate?”

American "business gurus" Robert Kaplan ( Robert Kaplan) and David Norton ( David Northon), the authors of the system propose to consider four main aspects of assessing the company’s activities:

finance - success is assessed from the point of view of satisfying the interests of shareholders;
consumer relations - assesses how successful the company is in its relationships with consumers;
internal business processes - assesses how wisely managers manage internal processes in the company, how optimally these processes are organized;
innovation and personnel - assesses how much the company cares about its own development and, in particular, about the development of its resource such as personnel.

The composition of assessment aspects is determined by the specifics of the activities of each specific organization, and when designing a system, special attention should be paid to the selection of the most appropriate aspects. At the same time, it should be noted that all aspects of assessment are considered to be interconnected by a harmonious logic of cause-and-effect relationships. This logic may change depending on the company’s relationship with various stakeholder groups.

Description of the Balanced Scorecard

Construction logic

Let's look at the internal logic behind the balanced scorecard. As mentioned above, each aspect of evaluation is associated with activities that affect the interests of one of the parties (shareholders, consumers, managers, employees). The choice of specific aspects of assessment is determined by the specifics of the organization’s activities and depends on the strategies and priorities it implements. For example, the “innovation and personnel” aspect may also cover the areas of development and training. IN table 1 examples of possible assessment areas for different types of commercial and non-profit organizations are given.

Table 1. Aspects of evaluating the company’s activities

Organization	Parties concerned	Aspects of assessment
Oil company	Shareholders Consumers Managers Environmental organizations Workers	Finance Consumers Business processes Ecology Staff
Political Party	Sponsors Voters Party members Staff members	Finance Consumers Ideology Staff
Commercial research organization	Shareholders Customers Managers Scientists	Finance Consumers Innovation Staff
Hospital	Insurance companies Ministry of Health Patients Managers Doctors and medical staff	Finance Policy Consumers Business processes Staff

Selecting assessment indicators

In each aspect of the assessment, the company uses a set of indicators that best characterize its progress towards achieving its long-term goals. At the same time, it is the company’s long-term goals and strategies that determine the choice of the most appropriate indicators for assessing the company’s performance.

Here I would like to draw attention to the fact that an indicator is understood as a sign that in some way characterizes an activity, a kind of “symptom” by which one can judge the reasons for what is happening. In this case, each indicator is assigned a standard value that the company would like to achieve (sales volume more than 2 million UAH per year) or would not want to achieve (the number of industrial accidents no more than five per year). In the course of its activities, the company measures actual values and compares them with standard ones: actual sales volume is 1.8 million UAH. per year, and the number of accidents is one. As a result of such a comparison, the company decides to change (or not change) its activities, determine new standard values of indicators, or change the composition of indicators. IN table 2 examples of indicators for each aspect of assessment are presented. The list of indicators is open. The choice of specific indicators and the establishment of standard values is determined by the company’s field of activity and depends on its strategic goals, as well as on the selected assessment aspects.

Table 2. Indicators for assessing the company’s activities

Aspect	Indicators
Finance	Return on invested capital, % Return on assets, % Sales revenue Profit Cost amount Other indicators
Consumers	Number of consumers Market share, % Number of visits to consumers Customer satisfaction index, % Other indicators
Business processes	Share of administrative expenses, % Production cycle time Equipment performance Labor productivity growth, % Other indicators
Staff	Personnel development expenses Number of teaching hours per year Employee satisfaction index, % Other indicators

Internal relationships between aspects of assessment

A significant innovation introduced by the BSC and distinguishing this system from other approaches to assessing the activities of an organization is the construction of clear cause-and-effect relationships that are established both between individual indicators and between aspects of assessment as a whole. For example, the Halifax company* (Halifax) developed the so-called Z-model, which allows us to link four aspects of the evaluation of this company ( rice. 2).

Rice. 2. Z-model of the Halifax company

According to the Z-model, there is a cause-and-effect relationship between the evaluation aspects, which can be expressed in the following phrase: “If we have selected competent personnel and run our business correctly, then our consumers will be satisfied, and we will expand our business.” This means that Halifax views its people as the foundation for building efficient business processes that, in turn, focus on customer satisfaction, resulting in superior financial results.

Similar to the connections established between various aspects of assessment, cause-and-effect relationships are established between individual indicators of the system. Moreover, connections between indicators are established both within each assessment area and between indicators located in different areas. As a result, the so-called balance of the system is achieved. However, balance is not limited to the coordination of indicators.

The relationship between goals, indicators, tasks and actions

An important factor in the balance of the system is the connection between the goals, indicators, objectives and actions of the company. To build such a system, it is very important to understand the specifics and purpose of each of these components.

Goals in the context of the BSC should be perceived as a description of the future state of the company, preferably over a fairly long period of time, for example, 3-5 years. Indicators are those signs by which in the future it will be possible to determine whether the goal has been achieved. Objectives determine ways to achieve goals and set directions for action. Well, the actual actions: what exactly should be done to solve problems, to achieve standard values of indicators, and, ultimately, to achieve goals.

All of these components form a coherent system of cause-and-effect relationships and cover both all functional areas of the company’s activities and all levels of the management hierarchy. It is the vertical and horizontal consistency of goals, indicators, tasks and actions that makes the implementation of the company's strategy a manageable process. In this regard, it is necessary to pay attention to the fact that it is the strategies implemented by the company that set the requirements for the structure and content of the BSC.

Linking the Balanced Scorecard to Strategy

Formulating a mission and setting long-term goals

Building a balanced scorecard is impossible without a clear understanding of the company’s mission, requirements and restrictions on activities that determine possible and impossible directions for its development, long-term goals and strategies acceptable for it.

The mission can be thought of as a combination of four components:

purpose - why the company exists;
strategy - competitive position and distinctive competence of the company;
values - what the company believes in;
standards of conduct - policies and behavioral patterns that underlie distinctive competencies and value systems.

These components determine the nature of the long-term goals that a company can set for itself. Graphically, the mission can be presented as a range within which both the company’s goals and strategies for achieving them fit ( rice. 3).

Rice. 3. Restrictions imposed by the mission on the company's strategies

Long-term goals could be formulated as “doubling the company's value by the end of the third year of operation” or “ensuring a 20% share of the European home appliance market in 5 years.” At the same time, the deadline for achieving the goal and the value of the indicator, which will indicate the achievement or failure to achieve the goal (double growth of the company or 20 percent market share), are clearly indicated.

Formation of strategy

To achieve its long-term goals, the company implements strategies regardless of whether they were clearly defined and communicated to managers and employees or arose spontaneously due to changing circumstances in the external environment. It is important that the company implements only those strategies that fit within the framework of the mission, without violating the integrity of its image in the eyes of stakeholders with whom it currently maintains relations and plans to maintain in the future.

Strategies here refer to the course of action that an organization follows in achieving its long-term goals. The actions themselves are selected based on the tasks that determine what, in fact, should be done.

Thus, a balanced system appears in a more expanded form, when each aspect of the assessment covers both goals and indicators, as well as tasks and actions that need to be taken to implement the company's strategy.

Here you can give an example of building cause-and-effect relationships from goals to indicators, tasks and actions. Let’s say the customer relationship goal is “increasing customer loyalty” and the metric is “38% repeat sales.” In this case, the task may be “improving the quality of customer service,” then the action is “introducing consumer service standards” or “conducting staff training to develop communication skills.” If you look closely at the actions, then “introducing standards” can be attributed to the “business processes” aspect, and “conducting training” to the “personnel” aspect. It is the construction of a chain of cause-and-effect relationships between goals, indicators and actions within and between various aspects of assessment that makes the system balanced. An important role here is played by the so-called strategic cards - graphical interpretation of the identified cause-and-effect relationships, both between indicators and between the actions taken by the company.

Implementation of a balanced scorecard

How is the BSC implementation process organized? First of all, this is a separate activity of the company, in which top-level managers, directors, and managers of key divisions and departments should be directly involved. There are several main stages of BSC implementation:
Context analysis. At this stage, an analysis of the company's competitive environment and the formation or revision of the company's mission are carried out.
Strategic analysis. The key aspects of the assessment are identified, the mission for these aspects is detailed, and strategic goals are set.
Corporate strategic maps. The sources of the company's competitive advantages are determined, a system of indicators is developed, cause-and-effect relationships are identified, long-term and short-term goals are agreed upon, and strategic maps are drawn up.
Division strategic maps. The stage is devoted to detailing strategic maps to the unit level. In fact, this is a repetition of stage 3 at the lower management level, identifying responsible executors, setting specific operational goals and activity objectives.
System implementation. Planning activities for the implementation of the system, building a monitoring system for the implementation and operation of the BSC and direct implementation.

However, there are many obstacles and pitfalls on the way to implementing the BSC that complicate, slow down, and often make it impossible to implement a balanced scorecard in organizations.

Traps and obstacles

Unpreparedness of the organization for implementation

Readiness to implement a BSC consists of several components. First of all, it is necessary that the organization really needs it. In a small company, where senior management is personally familiar with each employee and can control his actions, where all processes are visible at a glance, there may not be such a need.

The second factor determining a company’s readiness for implementation is its “maturity.” A company that has already established regular management, at least a formalized organizational structure, and has a staffing table and job descriptions can be considered ripe for implementation. Another point that positively characterizes maturity is the presence of procedures for planning and budgeting activities. The absence of these elements significantly complicates, and often makes it impossible, the successful implementation of the system.

Resistance of the political system to the organization

Like any organizational change, the implementation of the BSC affects the vital interests of managers and personnel of the organization. Strengthening control over activities through the use of BSC can be perceived as a negative factor of motivation, which often leads to increased tension in the team, the emergence or aggravation of conflicts.

BSC, as a method of activity management, is often closely related to the system of reward and motivation. This makes the implementation of the system a political process in any company, since it leads not only to the redistribution of resources allocated to the activities of various divisions of the company, but also affects the personal well-being of managers and ordinary employees. Therefore, implementation procedures must be planned taking into account the time and effort that will have to be spent on overcoming resistance to change.

Mentality of managers and staff

Another obstacle to the implementation of the system is the way of thinking adopted in companies. First of all, we are talking about senior managers, strategic decision makers, including those in whose interests the system is often implemented.

Like any tool of Western management, the BSC is often perceived as an unnecessary clutter in a harmonious domestic management structure. Doubts arise about the usefulness of communicating the strategic vision of senior leaders to lower-level managers and executives. The closed nature and elitism of top management does not allow for the very vertical integration from strategic goals to operational actions that the balanced scorecard is aimed at creating.

In conclusion, I would like to note that the BSC is now perceived not so much as a system for assessing the performance of companies, but as a tool for implementing strategies. In this regard, the question arises about the need to formalize many processes in organizations, which in itself cannot but have a positive impact on the current activities and long-term competitiveness of domestic companies.

Currently, a very promising tool for strategic management is a balanced scorecard based on cause-and-effect relationships between strategic goals, their parameters and factors for obtaining planned results.

Over the past ten years, a promising direction has emerged in the strategic management system - the Balanced Scorecard (BSS), which has become one of the most advanced methodologies aimed at assessing the performance of an enterprise and achieving consistently high and sustainable results.

Balanced Scorecard (BSC, Balanced Scorecard) is a system of strategic management of a company based on measuring and assessing its effectiveness using a set of optimally selected indicators that reflect all aspects of the organization’s activities: financial, production, marketing, innovation, investment, management, etc.

The BSC is a strategic management tool that allows you to link a company’s operational activities with its strategy. BSC reflects the balance that is maintained between short-term and long-term goals, financial and non-financial indicators, main and auxiliary parameters, as well as external and internal factors of activity.

The global goal of this system includes a number of subgoals:

creation of a management system for a company or organization that allows for the systematic implementation of strategic plans, translating them into the language of operational management and monitoring the implementation of the strategy through key performance indicators;
creating performance indicators for managers at a higher level, including in an integrated form the tasks and indicators of managers at a lower level of the organizational and functional structure;
ensuring the implementation of the strategy by regular activities of all departments, managed through planning, accounting, control and analysis of balanced indicators, as well as motivating staff to achieve them;
eliminating the gap between the company’s goals and their operational implementation, as well as promptly responding to changes;

assessing the success of any costly project;

linking the company to the activities of its personnel.

The origins of the history of the creation of BSC go back to 1990, when the Nolan Norton Institute in the USA(Nolan Norton Institute) proposed research into the development of performance indicatorsorganizations of the future, since existing approaches to assessing the activities of an organization inevitablyoutdated. The project was led by David Norton, director of the Nolan Norton Institute, and scientific advisorbecame Robert Kaplan. During the first year of work on the project, project participants and representativescompanies in various industries (financial, manufacturing, service, heavy industry and hightechnologies) jointly discussed the content of a new model for assessing the activities of an enterprise.While working on the project, the researchers studied, supplemented, and improved variouspromising systems for assessing the activities of enterprises. Along with improving traditionalindicators, for example, indicators of business activity, completely new indicators were created - indicatorstimely delivery of goods or services to the client, product quality and time cyclesproduction processes, performance indicators for new product development, indicatorsimprovement, teamwork, leadership effectiveness, etc. During the research process,various ideas and proposals regarding the content of system indicators. For example, it was consideredthe ability to include indicators of shareholder value creation, productivity and quality, however, during testing, the researchers came to the conclusion that the most optimal isa multifunctional system for assessing the performance of an organization, which eventually received the name"Balanced Scorecard" and included four main components: financial,client, internal and training and development components (Figure 1).

They called their development"Balanced Scorecard" (BSC) to emphasize the "Balanced" nature of the system, which shouldbe measurable using a system of indicators (“Scorecard”).

The authors of the system note: “The BSC retains traditional financial parameters that reflect the historical aspect of events that have already happened. This is certainly important for industrial-era businesses for which investing in long-term capabilities and customer relationships was not critical to success. However, such financial criteria are not suitable for managing and evaluating the activities of companies in the information age, which are aimed at creating value through investments in customers, suppliers, employees, production, technology and innovation projects. The BSC complements the system of financial parameters of the already accomplished past with a system of assessments of prospects.”

Focused attention only on financial indicators does not provide a complete picture of the state of the enterprise and does not allow building an accurate forecast of its development. And therefore, it is necessary to use non-financial indicators, which should not only complement financial indicators, but also be presented in a logical connection with them. BSC allows for comprehensive accounting of all indicators. BSC complements the system of financial parameters of the already accomplished past, as well as:

indicates where income growth comes from;
indicates which clients provide it and why;
identifies those key business processes that the company should focus on improving in order to convey its unique offer to the consumer as best as possible;
helps to direct investments and orient in this direction the work with personnel, the development of the company’s internal systems, corporate culture and climate.

Thus, any strategy development model can claim to be complete only if it contains answers to questions relating to different areas of the company’s activities (Figure 1). As can be seen from Figure 1, the balanced scorecard considers the goals and strategy of the company in the context of a large-scale system for assessing its activities, providing a certain methodology for creating a system of strategic criteria and management system. The main emphasis in the BSC is on assessing the achievement of financial results, which is supplemented by financial indicators of the activities of direct performers. The BSC evaluates the company's performance based on four balanced parameters: finances, customer relationships, internal business processes, training and staff development.

The work to develop a balanced scorecard begins with top managers discussing the problem of defining specific strategic goals based on the existing vision and strategy. In order to determine financial goals, you need to choose what to focus on: either increasing profitability and conquering the market, or generating cash flow. But most importantly from a customer perspective, management must clearly define the market segment in which it intends to compete for customers.

Once financial and customer goals are established, the company develops goals for internal business processes. Traditional performance measurement systems focus on cost reduction, quality improvement, and cycle time reduction for all existing processes. The BSC identifies those that are most significant for achieving outstanding results from the point of view of consumers and shareholders. Often, completely new internal business processes are discovered that management must perfect in order for the proposed strategy to lead to success.

As for the last component of the BSC - training and development, there is no doubt that serious investments in retraining, information technology and systems, as well as in improving organizational procedures are vital. These investments in people, systems and procedures will generate greater innovation and modernization of internal business processes to the benefit of customers and, ultimately, shareholders.

BSC is not just a system for monitoring, assessing the execution and improvement of processes, assessing the performance of personnel - it is a serious analytical tool, the implementation of which on the scale of a large company is a long-term and very difficult task, but which will allow management and senior managers to obtain the desired results in a fiercely competitive environment , in which all companies operate today.

With the help of the BSC, you can not only analyze financial results, but also simultaneously participate in the creation of new opportunities and regulate the acquisition of intangible assets for further growth. Moreover, recently, the asset structure of modern business has been increasing in favor of intangible assets, their employees and the knowledge that these people possess.

Today, enterprises in various sectors of the economy and production are at the epicenter of revolutionary changes. The era of industrial competition is being replaced by an era of information competition, in which the main emphasis is not on extracting maximum profits while economically using the scale and volume of production, but on the introduction of new information and innovative technologies, the optimal and effective mobilization of their intangible assets, the integration of business processes, management development, etc.

Thus, the balanced scorecard allows managers to link the company's strategy with a set of indicators, individually developed for different levels of management and interconnected. The main purpose of the system is to strengthen business strategy, formalize it, implement it and communicate it to every employee of the company, provide monitoring and feedback in order to track and generate organizational initiatives within structural divisions.

Sincerely, Young Analyst

Irina Loshchilina

Consultant of the Group of Companies "Modern Management Technologies"

The article discusses the methodology for constructing and implementing a balanced scorecard (BSC). The article is intended for business analysts, BSC implementation consultants and IT specialists.

Assessing the need to build a company strategy

Currently, to achieve success in a dynamic environment, companies need to be able to quickly adapt to changing market conditions and surpass their competitors in quality, speed of service delivery, breadth of product range and price of products.

Only prompt receipt of information about the company’s activities will help management make timely decisions. At the same time, the company's operational actions must be coordinated and aimed at achieving certain long-term goals, otherwise there is a risk of remaining stagnant. To do this, the company must be able to correctly identify its strategy and mobilize all resources to achieve its strategic goals.

A lot in the development of a company can depend on a correctly and clearly formulated strategy. It is important to understand that a well-developed strategy is only half the battle. It still needs to be successfully implemented.

What does the strategy look like? Formal ideas about strategy vary from company to company. Presentation options range from a single slide with five keywords to a massive document full of various tables entitled “Long Range Planning.”

Many believe that the content of the strategy plays the key role, and the form of presentation is secondary. Gradually, managers abandon this point of view, as they understand that strategies can only be successfully implemented if they are understood by the company's employees. By describing the strategy in a more or less orderly form, we increase the likelihood of its successful implementation.

One of the tools for presenting the strategy implementation process in an understandable form is the Balanced ScoreCard (BSC).

A balanced scorecard is a system of strategic management of a company based on measuring and assessing its effectiveness using a set of optimally selected indicators that reflect all aspects of the organization’s activities, both financial and non-financial. The name of the system reflects the balance that is maintained between short-term and long-term goals, financial and non-financial indicators, main and auxiliary parameters, as well as external and internal factors of activity.

Currently, there are not many examples of successful application of the balanced scorecard in practice, since when implementing the Balanced ScoreCard one has to face various problems. The most serious problems most often relate to incorrect interpretation of methodology or organizational issues. The complexity of developing a balanced scorecard and the lack of inexpensive and effective software products are also problems faced in the practical implementation of BSC.

The effectiveness of the balanced scorecard depends on the quality of its implementation. The implementation of the balanced scorecard is carried out in four stages:

Preparing to build a BSC;
Construction of BSC;
BSC cascading;
Control of strategy implementation.

The implementation of strategy implementation methodology today is continuously associated with automation. Implementation of Balanced ScoreCard, for example, using Microsoft Excel, or without any information support at all, is possible only at the initial stages of BSC implementation or in small organizations. If a company aims to implement a balanced scorecard system for several structural divisions and periodically clarify and adjust them, then it cannot do without using the advantages of information technology.

Currently, BSC developers have the following software products at their disposal: ARIS 7.0, Microsoft Office Business ScoreCard Manager 2005, Business Studio 2.0.

Let's take a closer look at the methodology for developing and implementing a balanced scorecard. To illustrate the main stages of building a Balanced ScoreCard, we will use the software product Business Studio 2.0.

Preparing to build a balanced scorecard

In preparation for building a BSC, it is necessary to develop a strategy, define perspectives and decide for which organizational units and levels a balanced scorecard needs to be developed.

It is important to always remember that BSC is a concept of implementing existing strategies rather than developing entirely new strategies. It is necessary to first complete the development of the strategy, and then begin to create a balanced scorecard.

When determining the divisions for which the Balanced ScoreCard will be developed, the following must be considered: the more divisions of the enterprise are managed strategically using one BSC, the better it is possible to cascade (decompose, transfer) important goals from the top level to the lower ones.

One of the important activities in preparing to develop a balanced scorecard is the selection of perspectives.

Any strategy development model can claim to be complete only if it contains answers to questions relating to different areas of the company’s activities.

Setting only financial goals when implementing a balanced scorecard is not enough if it is not clear how these goals will be achieved. In the same way, it would not be entirely correct to set goals that are isolated from each other. In this case, the relationships between individual goals and their influence on each other remain unaffected. This implies the need to take into account all important aspects of the enterprise’s activities.

Consideration of different perspectives when forming and implementing strategy is a characteristic feature of the balanced scorecard concept and its key element. The formulation of strategic goals, the selection of indicators and the development of strategic activities from several perspectives are designed to provide a comprehensive review of the company's activities.

Rice. 1. BSC Outlook

Companies that formulate their strategy too one-sidedly do not necessarily deviate only towards finance. There are companies that are too customer-oriented and forget about their financial goals. Some companies may be overly process-oriented and do not pay attention to market aspects. The introduction of a balanced scorecard, in turn, ensures that multiple perspectives are considered equally and helps to avoid such bias.

Based on empirical research, Robert Kaplan and David Norton have proven that successful companies take into account at least four perspectives in their BSC (Fig. 1):

Finance;
Clients;
Internal business processes;
Education and development.

These four perspectives should answer different questions, namely:

Finance Perspective: What kind of self-image should we create among our shareholders in order to achieve financial success?;
Customer Perspective: What kind of self-image do we need our customers to have in order to realize their vision for the future?;
Internal Business Processes Perspective: In which business processes do we need to excel in order to satisfy our shareholders and customers?;
Learning and Development Perspective: How should we support the ability to change and improve to realize our vision for the future?

The simplicity and presence of clear logical relationships between the BSC perspectives make it possible to achieve an understanding of the processes occurring in the company at the level of all performers.

Building a balanced scorecard

At the first stage of building a Balanced ScoreCard, a balanced scorecard is developed for one organizational unit. This could be the company as a whole, a division or department.

In this case, the construction of the BSC is carried out by performing the following steps:

Specification of strategic goals;
Linking strategic goals with cause-and-effect chains—building a strategic map;
Selection of indicators and determination of their target values;
Development of strategic activities.

Specifying the strategic goals of the balanced scorecard

Rice. 2. BSC strategic goals

In general terms, a goal is a description of the desired state of something in the future. This state can be expressed in the words: “to deliver our products to customers within a short period of time.” You can specify the formulation using indicators and their target values: “delivery time less than 36 hours.”

To build a strategic management system, it is necessary to decompose (break down, structure) the company's strategy into specific strategic goals that detail various strategic aspects. By integrating individual goals, cause-and-effect relationships can be established between them so that the full set of goals reflects the company's strategy.

Each strategic goal is associated with one of the organization’s development prospects (Fig. 2).

Avoid defining too many strategic goals at the top level of the organization. A maximum of 25 targets will be enough. Too many goals in the scorecard indicates an organization's inability to focus on what is important, and also means that the goals formulated are not strategic for the organizational level at which the scorecard is being developed. The development of tactical and operational goals should be given attention in the indicator systems of units at lower levels of the organizational structure.

Building a Balanced Scorecard Strategic Map

Defining and documenting the cause-and-effect relationships between individual strategic objectives is one of the core elements of BSC.

The established cause-and-effect relationships reflect the existence of dependencies between individual goals. Strategic goals are not independent and isolated from each other; on the contrary, they are closely related to each other and influence each other. Achieving one goal serves to achieve another, and so on, until the main goal of the organization. The connections between different goals are clearly visible through the cause-and-effect chain (Figure 3). Those that do not contribute to the realization of the main goal are excluded from consideration.

The cause-and-effect chain is a useful tool for communicating BSC to lower organizational levels.

A strategic map is used to graphically display the relationship between strategic goals and prospects.

Rice. 3. Cause-and-effect relationships of strategic goals

Selection of indicators of the degree of achievement of strategic goals

The BSC metrics (boxes in Figure 3) are goal measures. Indicators (Fig. 4) are a means of assessing progress towards the implementation of a strategic goal.

The use of indicators is intended to concretize the system of goals developed during strategic planning and make the developed goals measurable. Indicators can only be identified when there is clarity about the objectives. Selecting appropriate metrics is a secondary issue, since even the best metrics will not help a company achieve success if the goals are not formulated correctly. It is recommended to use no more than two or three indicators for each of the strategic goals.

Without target values, indicators designed to measure strategic goals are meaningless. Determining target values for management indicators causes difficulties not only when developing a BSC. The fundamental difficulty in determining the target value of a particular indicator is to find a realistically achievable level.

As a rule, a balanced scorecard is developed for a period corresponding to the long-term strategic planning period (3-5 years). At the same time, target values for the long-term period are determined from deferred indicators (indicators that indicate the final goals of the corporate strategy). Since the strategy is being implemented in the current year, target values are also set for the medium-term (1 year) period - for leading indicators (indicators whose changes over time occur over a short period of time). In this way, a balanced system of indicators is achieved for long-term and short-term goals.

In the Business Studio 2.0 system, the content of short-term plans is detailed by periods (quarters, months, weeks, days) and is expressed in the form of planned indicator values. Indicators and their target values (values that are planned to be achieved) provide management with timely signals based on deviations of the actual state of affairs from the planned one, i.e., the actual quantitative results obtained are compared with the planned ones.

So, an indicator is a meter that shows the degree to which a goal has been achieved. However, it is also a means for assessing the effectiveness and efficiency of a business process. Indicators serve both to assess the effectiveness of processes and to assess the degree of achievement of the goal at the same time.

Rice. 4 BSC indicators

Strategic activities to achieve strategic goals

Achieving strategic goals involves the implementation of relevant strategic activities. “Strategic activities” is a general term for all activities, projects, programs and initiatives that are implemented to achieve strategic goals.

Organizing a company's projects according to the goals of a balanced system creates clarity in understanding how a particular project contributes to achieving strategic goals. If projects do not make a significant contribution to achieving the strategic objectives, they should be reviewed to see how they contribute to the achievement of the underlying objectives. If a particular strategic measure does not make a significant contribution to achieving basic goals, then the need for its implementation is extremely doubtful.

Cascading Balanced Scorecard

Cascading leads to improved quality of strategic management in organizational units involved in building a balanced scorecard, since goals and strategic activities from higher-level units can be consistently transferred to the BSC of lower organizational units - this is vertical integration of goals.

When cascading, the strategy specified in the corporate Balanced ScoreCard applies to all levels of management. Strategic goals, metrics, targets, and improvement actions are then fleshed out and adapted across departments and teams. That is, the corporate balanced scorecard should be linked to the BSC of divisions, departments and individual employee work plans. Based on the BSC of its department, each department develops its own BSC, which must be consistent with the corporate BSC. Then, with the participation of the department head, each employee develops his own individual work plan. This plan is more focused on achieving tangible results in the workplace rather than focusing on assignments or improvement activities.

Thus, when cascading, a bridge is established between successive levels of the hierarchy, along which corporate strategy sequentially descends.

Strategy execution control

To improve the balanced scorecard, senior management and those responsible must continually analyze and evaluate the organization's performance.

Strategic objectives are characterized by a high degree of relevance to the company, and this relevance should be assessed at least annually. In this case, it is necessary to evaluate:

Are the selected indicators suitable for assessing the degree of achievement of the developed goals?;
How easy is it to calculate indicator values?;
Has the structural unit achieved the target values of the developed indicators?;
Have the target values of indicators of higher divisions been achieved?;
What contribution does the structural unit in question make to achieving the goals of the upper levels?

Evaluating indicators is primarily about understanding the possibility of calculating the actual value of an indicator based on the data of the reporting period. In addition, it is necessary to carry out plan-actual comparisons based on the values of the developed indicators with clarification of the reasons for deviations. Such an analysis is accompanied by either an adjustment to the target value of the indicator, or the development of corrective measures aimed at achieving the previously established target value.

The lower level BSC should always be assessed for its contribution to the higher level objectives.

In addition, it is advisable to predict target values of indicators for a long period of time.

What does an enterprise gain as a result of implementing a balanced scorecard?

Let us summarize some intermediate results. What does an enterprise get as a result of describing the strategy and its consistent implementation using the Balanced ScoreCard methodology? The first and most important thing is to concentrate efforts on areas that are strategically important for the company. The main goal of the company was determined, the means to achieve it (strategic goals) were outlined, and the goals were cascaded across departments. The second result, accordingly, is the presence of strategic goals for each division - that is, everyone understands what needs to be done. The third result is the ability to clearly understand the effectiveness of actions. The presence of indicators for each goal of its achievement allows each participant in the process to understand their role in the implementation of the company's strategy. And finally, the fourth result is control and manageability of the top-down strategy implementation process. A company, in the hands of its leaders, becomes an effective tool for achieving its goal.

Advantages of a computer over pencil and paper

Everything stated above is quite achievable without the use of any automation. Moreover, a number of successful businesses used similar methods in the late 19th century, when computer technology was not as advanced as it is today. Another question is whether it is convenient to work with pencil and paper, and whether automation at some stage will increase the efficiency of implementing the strategy? Of course, pencil and paper are just a symbol. Collecting and some processing of indicators is quite feasible using at least the same Microsoft Excel. However, goals may change, the significance of some indicators after the test of time will turn out to be overestimated, some elements that we considered unimportant will begin to play a strong role... The leader must be able to respond to changes and make changes to his plan, as quickly as possible - after all, every step, done in the wrong direction takes us away from the goal.

As a rule, the main problem faced by enterprises that decide to implement this strategy implementation methodology is not how to automate the creation of a tree of goals and indicators or the construction of a strategic map, but how to automatically constantly provide the BSC with fresh data and keep it in working order. Without this, operational control over the implementation of the strategy is impossible. For example, you can use the mechanism for collecting indicator values using mailings, implemented in the Business Studio 2.0 software product (Fig. 5). The means for collecting indicator values not contained in the information system are Microsoft Excel files, which are automatically sent to performers and then imported into the system.

For each individual who is responsible for entering indicator values into the system, a dynamic letter is generated with instructions for filling out the reporting table. The Business Studio 2.0 system finds all indicators for a given individual and generates a Microsoft Excel file containing a table with indicators for which this individual is responsible for entering values. This file is attached to the letter, and then these letters with files are sent to the electronic address (E-mail) of the individual stored in the system directory.

Rice. 5. Mechanism for collecting indicator values using mailings

Next, individuals fill out the files with the actual values of the indicators and place them in a specific folder on the file server or send them to the system administrator. The system automatically reads files from the folder and uploads them to its database.

This completes the stage of collecting indicator values.

The balanced scorecard, like any other management tool, must be adjusted as the company develops and the external environment changes. The environment in which an enterprise operates is usually very dynamic, which leads to adjustments in strategic goals. And this, in turn, requires constant updating of indicators for achieving these goals. However, in most cases this does not happen, which makes the balanced scorecard unworkable at best, if not downright harmful.

The collected indicator values should be made available to stakeholders for analysis. To do this, the system contains a set of pre-configured reports, which, if necessary, can be changed or supplemented with new ones. Planned and actual values of individual indicators are presented in BSC reports over time for several periods. The user can select the analysis period in the system settings of Business Studio 2.0.

The fierce competition in which modern enterprises live and operate dictates the need to improve the efficiency of every aspect of the enterprise's activities. Management activities are no exception. A manager needs tools for his job just like any other employee. The technique we described is not as complicated as it is effective, and the availability of software tools for its implementation allows you to perform this work in real time.

There are a huge number of indicators in the company. The more indicators are used, the more contradictions arise. Behind the contradictions in indicators are real contradictions between departments, project teams, and personnel. Let's consider this example. The Ceramics company produces and produces tiles. The range includes more than 1000 standard sizes of tiles with different coatings, patterns, etc. The marketing and sales departments, which are interested in sales volume, insist on increasing the range and producing to individual orders. However, these divisions do not take into account the consequences - increased production costs, decreased production rhythm. Since the work of production units is traditionally assessed by output volume and cost level, there is a danger of internal conflict situations arising. To avoid these situations, it is necessary to use a system of indicators that allows you to focus the management of all marketing activities on the final results of the company's business.

Scorecard - this is a set of indicators built according to certain principles that are interconnected and form a certain integrity, unity. The system of indicators can be built according to hierarchical principle (Fig. 2.3). In a hierarchical system, the indicator at a higher level depends on the indicators at a lower level, and the indicator at the top depends on all the others. A classic example of a hierarchical system of indicators is the Dupont formula, discussed in Chapter 1.

Rice. 2.3.

In reality, it is almost impossible to build a clear hierarchy of indicators, especially for marketing in general or such intensive areas as product competitiveness, distribution system, etc. Indicators can complement each other and have many intersecting connections. In this case they are built based on the principle of complexity (Fig. 2.4).

Rice. 2.4.

Examples of such a system of indicators are the balanced scorecard, the system of product quality indicators. These systems represent a complex of naturally interconnected indicators that have a certain order and logic of construction. Requirements for the indicator system. The construction of a system of indicators, on the basis of which it is possible to diagnose, plan, ensure implementation and evaluate results, must comply with certain principles.

Relevance to goals presupposes the presence of precise and specific measures and criteria for assessing the achievement of goals. Whatever goals the company sets for itself: the first step to assess the effectiveness of marketing or any other processes is to select accurate indicators of their achievement. Indicators should also be interconnected with the company's mission, values and key success factors. Marketing goals must be defined in specific numbers and indicators. Table 2.2 provides examples of setting goals and indicators for measuring them.

Table 2.2.

The principle of fit for purpose is also expressed in the fact that marketing indicators should satisfy the specific needs of a specific user. In many management systems, indicators are assigned to specific people responsible for their implementation or “production”. For example, the head of the marketing communications department may be assigned responsibility for the implementation of the following indicators: awareness of the company, recognition and correct identification of advertising. Indicators can be set for the head of the service department: the share of active clients, the level of client retention, etc.

The principle of using best practice when setting indicators. Following this principle ensures a shift of attention from one’s own expectations and subjective assessments to comparison with the external environment. Comparisons can be made in relation to standard companies and to companies that are similar in some respects (strategy applied, market share, etc.). The implementation of this principle is associated with the use of benchmarking. Benchmarking (English bench mark - starting point) - a method of using other people's experience, advanced achievements of the best companies, divisions of one's own company, individual specialists to improve business performance. The main point of benchmarking is to learn from the best so that you can be the first.

Staff engagement. A prerequisite for the success of a performance management system is leadership from top management. Without his active support, the implementation of any system is impossible. However, this is a necessary but not sufficient condition. The scorecard will only work if all staff participate in its development to one degree or another. It is also important that the indicators are not perceived by employees as a threat to their position, income, etc. The indicators must be accepted by everyone.

In addition, the indicators must meet the requirements that apply to any business information. They must be reliable, timely, sufficient in volume, accessible, and not violate commercial secrets. Implementation of the principle reliability assumes the relevance of indicators (updateability), the use of reliable sources and calculation methods.

The principle of timeliness provides for prompt collection, prompt transmission and regular updating of indicators.

Principle required volume is connected, on the one hand, with ensuring the necessary completeness of information, and on the other hand, with the absence of its redundancy. Necessary completeness means that the number of indicators must be sufficient to make a management decision. Sometimes the data collected is generalized to such an extent that it loses all meaning. For example, based on the total indicator of acquisition costs, it is very difficult to assess how rationally the promotion budget is used. For such a conclusion, it is necessary to have a number of additional data on the structure of such a budget, the degree of impact on consumers of each of the promotion tools, and the level of costs for each attracted client for each tool. However, a more common problem is an excess of disparate, unnecessary data that is difficult to work with. As a rule, no employee should process more than 15-20 indicators. This is a reasonable number of variables to control.

Accessibility principle presupposes the availability of initial data for calculation, ease of receipt and use, and clarity. For ease of use and understanding, indicators can be visualized. They can be presented in the form of graphs, diagrams, drawings. A convenient method for visualizing indicators is to use a “dashboard” of indicators (Fig. 2.5), which looks like a speedometer or tachometer in a car. Thus, to control the car, the driver does not need to know the exact values of speed, amount of gasoline and temperature.

Rice. 2.5.

fuel tank dimensions. A quick glance is enough to see that they are within acceptable values. Also, one glance at the “marketing dashboard” is enough to determine that the main characteristics are normal. For ease of perception, areas of “bad” values are highlighted in color. Figure 2.5 shows various options for visualizing marketing metrics.

Ensuring trade secrets. Companies try not to disclose many indicators, especially financial ones, believing that they contain commercial secrets. The Civil Code of the Russian Federation stipulates the following: “Information constitutes an official or commercial secret in the case when the information has actual or potential commercial value due to its unknownness to third parties, there is no free access to it on a legal basis, and the owner of the information takes measures to protect it confidentiality".

In general, following these principles, it is possible to form an information base for making management decisions. Its use will help companies make the necessary diagnostics, identify problems and opportunities for their business, quickly recognize emerging trends and evaluate results.