Strategy is very important in any kind of business. It can be considered the gasoline that runs the business’s operations. However, if you are to consider the changes that happen in the business scene, you would definitely no longer be surprised to know that strategy alone will bring your company to its optimum success – implementing balanced scorecard can.
The reason strategy alone would no longer work is because industries today are no longer inclined to tangible assets. Unlike before when most industries only work with properties and equipment, today, they already have brands, intellectual properties, and people to worry about. Needless to say, while the business scene underwent tremendous change, its management systems, sadly, have not kept up. Most management systems were designed to meet stable needs but not to cope with today’s dynamic economy. A perfect example; if you visit an organization today, they would definitely be ready to show off their balance sheets and income statement, not knowing these things could no longer keep up with intangible assets.
The balanced scorecard is the solution to this problem. It is considered a ‘strategic chart of accounts’ handling both financial and nonfinancial elements of a company’s strategy. If you have noticed, it works with strategies, thus making it more effective. Additionally, it discusses cause-and-effect relationships that bring out business results. And its feature that is the most important amongst all – it looks forward and tries to move accordingly, unlike old strategies that only look back to learn from failures and successes. And its core concept?
Measurement motivates. There is even no need to provide incentives. Most of the time, a job well done is already fulfilling enough for people to be motivated.
However, the presence of a balanced scorecard would not guarantee success. Again, it works with strategy. Here is a perfect example:
When the balanced scorecard was introduced to the business scene, management was able to determine that customer service is a major element in a customer-driven strategy. There was a complete fuss over it and campaigns started to come out. Suddenly, call centers have slogans hanging over their buildings with messages, such as ‘Customers First’ and ‘Service Matters’. But after all the fuss, customer service levels remained at its dreadful level.
Why did such a thing happen?
Call center agents’ productivity back then was measured based on the number of calls they take in each hour. This way of measurement forced them to sacrifice quality service in order to comply with the required number of calls. Thus, they ended up in a more compromising situation – a possibility to lose their client’s business.
After effectively implementing balanced scorecards, they have altered their metrics according to what appears to be needed – percentage of problems resolved in a single call. This introduced a positive change in the call center environment. Call center agents started to focus on solving problems – increasing morale, customer satisfaction, and eventually, profit. Now, this is what we call an ‘appropriate and study-based solution’. You can really never go wrong with a sound strategy and a fair system of measurement.
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