Do you know how to set goals in the Balanced Scorecard? As we approach the new year, we must reflect on our personal and professional paths and set concrete goals to drive success in 2024.
However, achieving these goals requires the creation of specific objectives, and to enhance your business performance next year, we highlight the relevance of the Balanced Scorecard,a powerful tool for strategic management.
Continue reading to discover how to set goals in the BSC to strategically and effectively drive your business growth.
What you will find on this blog:
But first, what is the Balanced Scorecard?
The Balanced Scorecard (BSC) is a strategic management model that facilitates the evaluation of companies’ progress towards their long-term goals.
Additionally, the BSC is responsible for translating strategy into objectives, indicators, goals, and strategic initiatives.
However, its differentiator lies in allowing managers to clearly understand the objectives of their strategy, enabling the planning of the initiatives that need to be implemented.
What are the four perspectives of the BSC?
Before discussing how to set goals in the Balanced Scorecard, it’s essential to understand the concept of the BSC’s four perspectives to apply the methodology effectively later.
1- Financial perspective
The financial perspective of the Balanced Scorecard (BSC) represents the strategic foundation, starting with long-term financial goals.
These goals are correlated with actions in the other perspectives, ensuring the achievement of the desired long-term performance.
Therefore, specific financial indicators for each business unit are crucial, as well as monitoring the bank’s actions to achieve the outlined results in the global strategy.
2- Customer perspective
The customer perspective translates the market strategy into specific objectives. Additionally, it reflects how the office will relate to customers and niches.
Thus, indicators related to retention, profitability per customer, satisfaction, and business acquisition are essential to evaluate performance and achieve market objectives.
3- Internal processes perspective
In internal processes, the focus is on identifying crucial activities to satisfy customer needs.Indicators concentrate on internal processes that impact customer satisfaction and financial objectives.
In this case, identifying processes and competencies that confer competitive advantages, ranging from planning to post-sales, is essential to differentiate the office from the competition.
4- Learning and growth perspective
Finally, the learning and growth perspective focuses on the capacity of employees, information systems, motivation, empowerment, and alignment.
Additionally, investing in employee recycling, requalification, improvement of information systems, and alignment of bank procedures and routines are essential for the organization’s continuous development.
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When setting goals in the BSC, adopting the S.M.A.R.T. approach is fundamental. That means your goals should be Specific, Measurable, Achievable, Relevant, and Time-bound.
This methodology provides clarity and focus, which are crucial for achieving objectives. Now, check below how to do it.
1- Establish clear and measurable objectives
The first step for effective management in the Balanced Scorecard is to define clear and measurable goals.
By establishing specific, tangible, and measurable objectives for each BSC perspective, companies create a solid foundation for future success.
2- Align goals with the company’s vision and mission
Goals set in the Balanced Scorecard should align with the company’s vision and mission.
This connection ensures that all initiatives contribute to the organization’s overall objectives, promoting a cohesive approach.
3- Involve all stakeholders
Goal setting should not be an isolated task. Involving all stakeholders, from leadership to frontline employees, ensures a comprehensive understanding of goals and promotes a results-oriented organizational culture.
4- Use Key Performance Indicators (KPIs)
KPIs are valuable tools in the Balanced Scorecard. Therefore, choose relevant indicators for each perspective, allowing for an accurate assessment of progress.
Additionally, monitoring and adjusting based on these indicators drive agility and operational efficiency.
5- Promote transparent communication
Finally, transparent communication is essential for achieving goals in the Balanced Scorecard.
Ensure that information related to goals is available to all organization members, promoting a shared and aligned understanding.
Examples of company goals for 2024
When developing plans and setting goals for 2024, companies should analyze the external environment, identifying threats and opportunities.
Below, check examples of goals that can be implemented using the Balanced Scorecard methodology.
1- Human Resources (HR) and People Management
- Achieve a 15% reduction in turnover rate;
- Develop and implement 2 training programs for employees;
- Increase employee satisfaction by 12%;
- Recruit 40 professionals for strategic areas;
- Launch an enhanced performance evaluation system.
2- Technology and Information Security
- Migrate to a more efficient cloud infrastructure;
- Reduce system downtime by 20%;
- Conduct 3 comprehensive information security audits;
- Modernize or replace 2 legacy systems;
- Implement secure remote work practices.
3- Sustainability and Environment
- Achieve a 15% reduction in corporate carbon footprint;
- Execute an additional renewable energy project;
- Reach 40% recycled or reused waste;
- Decrease water consumption by 12%;
- Establish collaborations with 2 environmental non-governmental organizations.
4- Operations and Production
- Improve operational efficiency by 12%;
- Reduce production cycle time by 8%;
- Adopt 1 new software for production line optimization;
- Minimize material waste by 15%;
- Increase production capacity by 20%.
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While the BSC is a powerful approach, it’s important to remember that its implementation requires the entire organization’s commitment, planning, and involvement to achieve significant results.
However, it’s not just that; using the right technology for your management processes is crucial to being effective. Get to know Tune by Actio, software to manage the BSC in your company; with it, you ensure total control of all information, goals, and actions.
It is worth mentioning that Actio is part of the Falconi Group, a reference in business excellence.
Frequently Asked Questions
1- What does Balanced Scorecard mean?
The Balanced Scorecard (BSC) is a strategic management system that seeks to go beyond traditional financial and accounting indicators.
Using more comprehensive and intelligent metrics to assess business success.
2- What is the purpose of the Balanced Scorecard?
The objective of the Balanced Scorecard (BSC) is to evaluate a company's performance and progress through a strategic management model.
Furthermore, it is a widely used tool to monitor long-term goals.
3- When should you use the Balanced Scorecard?
The Balanced Scorecard (BSC) should be used when it is necessary to align different areas, departments, or business units around shared strategic objectives.
Conclusion
Learning to set goals in the Balanced Scorecard is crucial for business growth and sustainability.
Additionally, organizations can optimize their performance and stand out in a competitive environment by establishing measurable objectives, aligning goals with the company’s vision, and involving all stakeholders.
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