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Stages of implementing BSC at a manufacturing enterprise. Technology for the development and implementation of a balanced scorecard Linking strategic goals with cause-and-effect chains

15.03.2024

In recent years, the task of increasing the efficiency of enterprise management has become increasingly urgent for most Russian managers. The closest attention is paid to technologies for effective business management. The reason for the emergence of new approaches to assessing business performance is the gradual increase in the value of intangible assets (new technologies, intellectual capital, innovation, reputation) in the total value of companies.

One of such international systems for the effective management of a developing business, which has received recognition among Russian managers, is the Balanced Scorecard. The basic principle of this technology is “you can only manage what you can measure.”

The Balanced Scorecard developers proposed four perspectives for assessing business performance:

Finance – what is the perception of the company among shareholders and investors?
Customers – what kind of company do buyers of its products see?
Business processes – which business processes require optimization, which ones should be focused on, which ones should be abandoned?
Learning and growth – what opportunities exist for the company to grow and develop?

Historical reference
Balanced Scorecard (BSC), or Balanced Scorecard System (BSS), is a relatively new technology developed in the 1990s by Harvard School of Economics professor David Norton and CEO of the consulting company Balanced Scorecard Collarobative Robert Kaplan. Balanced Scorecard was created as a tool that allows you to coordinate the actions of the company's departments and employees to achieve strategic business development goals at the lowest cost and in the shortest possible time. Balanced Scorecard, unlike other systems of that time, made it possible to take into account not only financial indicators of business development, but also non-financial ones - such as, for example, the innovative ability of the enterprise or the degree of customer satisfaction.

The technology for building a BSC (BSC) for an individual company includes several necessary elements:

strategic map (map of strategic objectives logically related to strategic goals);
BSC and KPI map (directly a map of balanced performance indicators that quantitatively measure business efficiency);
a list of strategic initiatives and activities (projects that ensure the implementation of the necessary changes);
“dashboards” of managers (indicator panels at various levels for monitoring and evaluating activities).

Key Performance Indicators (KPI) are indicators of enterprise performance that help the organization achieve strategic and tactical goals. KPIs allow you to monitor the business activity of individual employees, functional departments and the company as a whole. Key indicators (KPIs) have become part of the Balanced Scorecard system.

The system we proposed was developed and adapted for enterprises taking into account Russian specifics, which is that in our country most managers have a weak strategic vision (maximum horizon is 2-3 years), but at the same time they are “tailored” for operational management . And therefore it was necessary to “combine” two vectors in one map - strategic and operational.

At the same time, motivational KPIs include not only indicators for strategic goals, but also critical operational indicators. This allows one system of motivation to take into account the strategic and tactical goals facing management (see Figure 1).

Picture 1

Strategic and tactical management goals

Deputy State Duma for Strategic Development Lyubov Penegina:

“At the time of the decision to develop a strategy in the BSC format, the company was already actively working on introducing process management. Business processes were defined and regulated, indicators were selected to measure activities (operational level). Based on the results of monitoring the achievement of goals for processes, corrective measures were developed and goals were clarified. But at the same time there was no feeling of the company as a single whole; the goals of the divisions were inconsistent with each other and contradictory.

The development and implementation of the BSC system in the company made it possible to combine all developments into a single system. There was an understanding of the role of each division in achieving common corporate goals.

The BSC methodology is also interesting because it allows you to translate strategic goals into specific actions and communicate the company’s strategy to every employee. A clear understanding of the set goals, informed and involved staff, and continuous improvement efforts should increase the efficiency of our company.

We express our deep gratitude to the consultants who helped us build the system.”

Why did the enterprise need to implement BSC and KPI?

The company has been operating in the automotive components market since 2000, and today it is one of the largest enterprises in Russia producing suspension and steering parts for trucks of domestic and foreign production. In recent years, the enterprise has been actively developing, mastering new technologies, new types of products, and introducing a quality system in production in accordance with the requirements of international standards. In the course of such dynamic development of the business and the organization itself, it became clear that it was necessary to improve the management system, allowing for constant monitoring of all aspects of activity. Over the past year, new specialists have joined the top management team, therefore, there is a need to form a joint vision for business development. To do this, it was necessary to update the organization’s mission, adjust strategic goals, “link” them with business processes and operational activities of departments and employees in order to respond as clearly and quickly as possible to emerging market changes and risks.

The initiator of the project to develop and implement an integrated management system based on the Balance Sheet and KPI was the head of the HR department, Lyubov Penegina. Before that, she participated in training seminars of the MBA program, completed a number of trainings, studied the experience of Russian organizations in various industries, and this helped her formulate her approach to implementing such a project and selecting consultants.

Technology for the development and implementation of a new management system based on BSC and KPI

After the management of the enterprise decided on the need to develop and implement a new management system based on the Balance Sheet and KPI, a working group was formed, which included top managers and external consultants. The collaboration technology included several main stages (see Table 1).

Table 1

Stages of main work

Results of collaboration

Strategic sessions optimally combined the theoretical basis of strategic management and practical work in teams. The current position of the company was assessed using a variety of techniques and analysis tools. Thus, gaps between the desired position of the company and the existing situation are identified. Based on the results of the sessions, a single vector of direction for the company’s development was formed, its mission and vision were revised and updated.

Figure 2

Figure 3

table 2

Goal “Reduce management costs”

Figure 4

Indicators of the motivation system - KPI

KPIs of top managers consist of 5 indicators: one general - for the top-level goal and four individual - for the prospects of the BSC (a fragment of the table of indicators of top managers, see Table 3).

Table 3

Motivation indicators for top managers: example for 5 positions

Building a bonus system

In the new bonus system, indicators are divided into quarterly and annual.

Those strategic indicators for which quarterly setting of goals and monitoring their achievement do not make sense have become annual. Quarterly indicators are more operational in nature, and it makes sense for them to both set goals for the quarter and encourage achievement of the goal based on the results for the quarter. Figure 5 shows the principle of distribution of the top manager’s annual bonus fund in monthly terms. As an example, we take an abstract position with a current remuneration level of 100,000 rubles per month.

Figure 5

Principle of distribution of the annual bonus fund
Distribution of payment amounts for the year in monthly terms
(using the example of a position with a remuneration of 100,000 rubles)

Quality Director Victoria Korovkina:

“I hope that the BSC that we have developed with the help of consultants will become a convenient tool for the work of the chief executive of our company: the system will allow him to constantly “keep his finger on the pulse” by monitoring the status of achieving the enterprise’s goals.

For me, the benefits of the BSC are obvious: it’s one thing when employees know the strategy and goals of the enterprise in the form of abstract slogans, such as “we will become the best in our market segment,” etc., and quite another thing when all this is concretized and digitized, when everyone understands what exactly he must do in order to achieve a specific, clear and understandable goal, which he influences through his activities.

When you understand what needs to be done and why it needs to be done, there is meaning in your work and, accordingly, a desire to go to work.”

Implementation of the system in the information environment

The BSC is implemented in the business modeling environment Business Studio.

The system displays the company's strategic map, indicators for strategic goals with planned and actual values. In parallel with the BSC, Business Studio displays a model of the organization’s processes with operational indicators. Indicators included in the motivation system for top managers are accumulated in Business Studio from the strategic and operational modules of the information system. In the future, the system will be integrated with the updated 1C: UPP.

At the moment, a simplified system for collecting indicators has been implemented - without integration with 1C.

Data collection is implemented through the auto-import mechanism into Business Studio from MS Excel tables.

Problems encountered during the development and implementation of the BSC

At the initial stage of the project, the consultants encountered some resistance from top managers, which was associated with their high business activity and lack of time to develop and implement innovations. Nevertheless, further joint work was quite active and constructive.

There were other problems:

The manifestation of hidden conflicts in the interaction of individual departments.
Imperfection or incorrectness of a number of already made management decisions.
The need for joint adjustment of production, marketing, accounting, financial, personnel and information policies, decisions on which were previously made separately.
Lack of trust among top managers and lack of understanding of the real benefits of introducing new management technology at the level of their subordinate departments.
Lack or inconsistency of data necessary to monitor indicators.
Forced replacement of some strategic indicators with indicators of operational results.

Expert consultants:

“The proposed system is essentially a compilation of strategic and operational management systems. The system is quite simple and not cumbersome, which is good for a certain level of company development. This level of development today corresponds to many Russian enterprises that do not yet need full-scale systems, but already need practical tools for translating strategy into action and maintaining operational efficiency at the same time.”

Conclusion

In conclusion, it is important to note that the BSC and KPI system cannot exist separately in a company; it must be an integral part of an integrated enterprise management system and logically combined with a process management system, quality systems, budgeting and information software.

The use of the BSC improves interaction between shareholders, enterprise management, top management team, divisions and employees, and makes joint activities “unidirectional”, aimed at jointly achieving strategic goals. The company's management has a complete picture of the state of the business in real time, timely information allows you to quickly respond to crisis situations or anticipate possible risks, a large amount of data is structured and reflected in key business indicators. Employees can influence their production results by increasing productivity and efficiency of their own work, and can also evaluate their personal contribution to the common cause. The majority of employees consider the KPI-based bonus system to be fair and transparent, motivating them to achieve their goals.

Bonus calculation formula:

B = OZP x 0.4 x (K1 x Weight KI + K2 x Weight K2 + K3 x Weight K3 + K4 x Weight K4 + K5 x Weight K5),

where B – bonus;

OZP - total personnel costs for a given level of position or specific position;

D – share of the bonus in total costs;

K1, K2, K3, K4, K5 – the coefficient of fulfillment of each KPI.

Sergey Klyuchnikov - General Director of NPO Rostar, Naberezhnye Chelny. Editorial staff of the magazine "Kadrovik"

Corporate culture

Today, in many industries, there is a tendency for a sharp “catch-up” implementation of management concepts on which the owners, employees and management of companies pin their hopes. This new-fangled concept also includes the balanced scorecard system, the implementation of which in Russian conditions has its own characteristics.

The practice of introducing BSC in foreign countries has shown that this methodology has become very widespread in them. Commercial and non-profit companies were able to more or less quickly adapt to the new system, primarily due to the fact that when creating it, the authors relied on traditional assessment systems used in foreign countries, primarily in the USA and European countries.

However, when implementing a BSC at an enterprise, the following difficulties may arise:

The blurring of BSC implementation. It is very difficult to evaluate the process of implementing BSC in an organization, since it takes years to obtain objective results. During this time, much has changed in the company's activities. Implementation at the first stage, that is, the development of strategic goals for top management, proceeds quite quickly and clearly, but further advancement becomes fraught with problems, as it requires a large amount of preparatory and explanatory work. Moreover, in this case, the participation of the head of the relevant department is mandatory.
Lack of quick results. Obtaining evaluated results of activities according to the BSC is possible only within several years of the actual implementation of the strategic plan. Therefore, a serious problem may be the lack of understanding by top management of the goals of implementing the BSC in a rapidly changing market situation.
It is impossible to develop a BSC without the initiative of top management. When developing a BSC for a separate division of a company, the advantages of the BSC are not used throughout the entire organization, and the result is a much smaller effect, especially since any division of the organization interacts with a number of other divisions and, undoubtedly, depends on the quality of their work.
Difficulty assessing the importance of key indicators. The selection of key indicators is a rather responsible and ambiguous process. This becomes especially obvious when non-financial indicators are determined. Financial indicators in companies are constantly monitored, but determining non-financial indicators, especially at the first stage, is quite difficult due to their ambiguity. When evaluating indicators, it makes sense to rank them in order of importance in each of the four perspectives and leave no more than five key and most important ones for each perspective.

As for the Russian implementation experience, it can be noted that there are not many examples of successful application of the BSC in practice, because When implementing this system, Russian enterprises face even greater problems. The most serious problems in the development and implementation of BSC most often relate to:

differences in standards for preparing financial statements and conducting financial analysis procedures in Russian and foreign practice;
incorrect interpretation of methodology;
organizational issues;
BSC automation.

In addition, it is necessary to note the features of the services provided by Russian consulting companies for training in the implementation of BSC: there are often cases when training takes place in the form of seminars lasting two to three days, this period includes a workshop during which participants develop BSC for specific companies. Although in two days it is possible to obtain only general concepts, subject matter, method, and scope of application of the BSC concept, but not to develop a full-fledged strategy and key indicators for achieving strategic goals.

There are also a number of restrictions that prevent the implementation of BSC in Russian companies.

1. Features of the activities of Russian companies:

lack of complete and reliable management reporting data necessary for management analysis to make decisions for each of the four perspectives. The available data from both management and financial accounting often does not correspond to reality; it does not seem appropriate to use them not only when developing strategic goals, but also in operational management.
in the balanced scorecard there is a clear hierarchy of perspectives. The main, dominant indicators according to Norton-Kaplan are indicators of the Finance perspective, which allow managing the maximization of value for shareholders. However, such indicators as the planned level of return on capital, growth in the market value of shares, the planned level of return on investment, business value growth factors, issues of compliance of segments, clients, assets with strategic goals are practically not used in Russian companies. Instead, indicators that are more typical for characterizing the company’s activities in the short and medium term are used - for example, revenue, profit.
Existing financial accounting systems often make it possible to evaluate performance in various product areas, but analyzing the profitability of individual segments and the costs associated with building and operating distribution channels, promoting products and services, acquiring and retaining customers using them is difficult. Those. There is a lack of structured and formalized marketing information.
When assessing labor efficiency, it is necessary to refer to labor productivity indicators. However, mainly in Russian enterprises today such indicators are not calculated, and employee motivation is carried out on the basis of revenue indicators. Lack of regulations describing the area of responsibility of employees; often, if there are regulations, the described functions do not correspond to the actual responsibilities of employees, regulations describing the motivation system.
lack of descriptions of key business processes, weak regulation of work performed, lack of standard indicators. Lack of coordination of departments' activities, presence of duplicating and mutually exclusive functions.
A feature of the implementation of BSC in Western companies is the implementation of the “bottom-up” type. This is facilitated by a transparent, comprehensive management system with effective information support for operational and management processes, and a high level of personnel training. An alternative option is to develop a top-down strategy, which is fraught with inconsistency in accounting systems and organization of business processes. However, in Russia, consultants often propose the implementation of the BSC through a “top-down” approach.
in the classic BSC model proposed by Norton-Kaplan, the first stage is an assessment of the company’s external environment, its strengths and weaknesses, etc. However, many Russian companies begin the implementation of BSC in a different way - with seminars for top management, analysis of Western cases and study of primary sources. Next, a tree of goals is compiled. That is, here it can be noted that the strategy is often developed without understanding the company’s position in the market, without taking into account prospects and limiting factors.
The projects implemented to date do not cover the entire activities of companies, but either occurred as a pilot project in one division of the company, or were implemented at the level of top management and large divisions; in this case, the changes did not affect ordinary employees. Therefore, we cannot talk about the full implementation of the BSC.

2. internal features of the BSC:

one should take a critical approach to the question of the feasibility of introducing the BSC in the context of the ratio of the expected costs of introducing the BSC to the possible benefits of its use. Initially, the BSC was developed for Western companies operating in saturated market segments, with low growth rates, using regular management, while competing companies have comparable competitive advantages. In this case, the use of the BSC would provide additional competitive advantages, causing an increase in the value of the company. In Russian conditions, in the case of a rapidly developing market, use in the classical form is inappropriate, because the developed strategy will not correspond to the changed market.
A typical case in Russian conditions is the desire to use the BSC in case of a serious crisis in the company. The result of this may be an increase in all (financial, time, labor) costs in the company, and a more detailed depiction of the crisis processes in the company, however, if there are obvious ways out of the situation, there is no need to create additional difficulties in setting up a balanced scorecard system.
setting up a BSC in small and medium-sized companies with a narrow specialization seems ineffective due to the following considerations: firstly, small companies often have quite flexible behavior in the market and their strategic strategies can accordingly change flexibly from external environmental conditions. Secondly, in the case of a small business, when using management accounting, the assessment of the contribution of each link in the production chain to the achieved results (which is what the BSC is aimed at) is quite transparent without the additional use of the BSC.
The BSC does not take into account all interested parties (stakeholders) - authorities, tax authorities, society, etc. The balance of interests of all stakeholders can impose significant restrictions, and if there are conflicting interests of stakeholders, their assessment causes additional difficulties. In this case, additional perspectives can be used:

- “Russian Troika” (finance; internal business processes; external world);

Natural expansion (finance; marketing; internal business processes; growth and learning (personnel); external world);

Advanced classics (finance; marketing; internal business processes; products; growth and innovation; personnel; external environment; suppliers).

Despite the fact that the very possibility of achieving strategic goals often depends on the accuracy of the established cause-and-effect relationships, the BSC does not detail the decision-making mechanism for selecting alternative options or determining the degree of influence of indicators on higher-level indicators. Often, determining the degree of influence of indicators is not obvious and requires the use of mathematical tools to find it.
BSC takes into account only the occurrence of direct effects arising from the activities of companies. At the same time, side effects arising in the process of activity can provide additional opportunities for the company. However, there is no methodology for their management in the BSC.
when developing long-term indicators, the BSC does not include an assessment of uncertainty and risks. There is no assessment of changes in financial values over time. The authors of the BSC limit themselves to general words that certainties and risks must be taken into account, but there is no detailed study of them.
unclear goals in the BSC must be measured using clear indicators. There is a risk that the goals will never be achieved.

The implementation of the BSC in Russian companies has its own specifics, which significantly affects the success of the BSC implementation. The lack in many companies of regular management, complete and reliable information necessary for making management decisions in all functional areas, imperfect business processes - managers have to face these and other problems today. This does not allow full use of such a powerful tool for achieving strategic goals as the BSC. It should be noted that the BSC concept itself contains internal factors that limit the application of the concept. To overcome them, the integration of the BSC concept with other management concepts and the use of mathematical tools are required, which will reduce the impact of restrictions on the effectiveness of the implementation of the balanced scorecard system in Russia and will provide additional positive synergistic effect

The difficulties experienced by Russian enterprises that have decided to implement this strategy implementation methodology lie in how to automatically collect the values of BSC indicators. Many companies think that there is a ready-made set of standard BSC indicators that will allow them to achieve the desired results, but experts in this field note that the balanced scorecard is not a set of recipes; This system requires creative strategic thinking and serious decisions individual for a given organization. In addition, the BSC is based on leadership, training, and communications. BSC is a serious innovative management system that can change the status quo in a large company. As noted earlier, creating an effective and efficient BSC in a large company is a long-term, expensive and very complex task.

The implementation of such a system requires the support of the company's top management. Therefore, in this situation, the most important qualities are leadership, readiness for change, difficulties, etc.

In addition, experts in the field of BSC note that it is important not only to build a system of indicators, but also to maintain it. Since the business environment is constantly changing, the indicator system must be constantly updated. The main principle of the effectiveness of the BSC is to keep it relevant to the strategy, which it is desirable not to change frequently. However, despite the difficulties of implementing this system, it is very relevant and vital for organizations in various industries: financial organizations, industrial enterprises, various service structures, innovative companies, 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

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

Preparation for the development of the BSC;

Development of BSC;

Cascading BSC;

Control of strategy implementation.

Preparation for the development of the BSC.

At the stage of preparation for building a BSC, it is necessary to develop a strategy, determine prospects and make a decision for which organizational units and levels need to develop a BSC.

It is important to always remember that the BSC is a concept for implementing existing strategies, and not for developing fundamentally 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 BSC will be developed, the following must be taken into account: the more divisions of the enterprise are managed strategically with the help of 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 preparation for the development of the BSC is the selection of perspectives (components). 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 (initiatives) from several perspectives are designed to provide a comprehensive review of the company's activities.

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 focused on their business processes and do not pay attention to market aspects. Equal consideration of multiple perspectives avoids such imbalance.

So, the initial prerequisites for the development of the BSC are:

Prospects (components) of the BSC;

Informed and motivated senior management team;

A strategy that is “mature” for developing a BSC.

Development of BSC.

At this stage, the BSC is developed for one organizational unit. This could be the company as a whole, a division or department.

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

Specification of strategic goals;

Linking strategic goals with cause-and-effect chains, i.e. building a strategic map;

Selection of indicators and determination of their target values;

Determining the relationship between indicators and business processes;

Development of strategic activities (initiatives).

Strategic goals have the status of decisive and key goals of the company. In order to plan and ensure the process of achieving goals, corresponding financial and non-financial indicators are developed for each of them, according to which, in turn, target, planned and actual values are determined. The implementation of strategic measures is intended to ensure the achievement of the developed goals. For each strategic measure, the timing of its implementation, budget and clear responsibility are determined.

The result of this stage provides a common understanding of the strategy and is the starting point for continuous monitoring of the implementation of the strategy. Only after informing the organization about the BSC, transferring goals to lower levels (cascading), creating an adequate planning and reporting system, and adapting the management and motivation systems for employees, the BSC becomes a management concept.

At the stage of developing the BSC, it is necessary to take into account that strategic goals, and not their indicators, form the core of a balanced scorecard. The best metrics are useless if the underlying objectives do not adequately describe the strategy that leads to sustainable competitive advantage.

Cascading BSC.

Cascading leads to improved quality of strategic management in all organizational units involved, 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. This increases the likelihood that the strategic goals of the entire enterprise or large divisions will be achieved.

When cascading, the strategy specified in the corporate Balance Sheet applies to all levels of management. Strategic goals, indicators, targets and improvement actions are then specified and adapted across business units and departments. Those. The corporate BSC must be linked to the BSC of divisions, departments and individual work plans of employees. Based on the BSC of its division, 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.

Figure 4 shows the cascading of the BSC, the implementation of which establishes a bridge between successive levels of the organizational hierarchy. At the same time, corporate strategy consistently moves downwards.

Figure 4 - Balanced Scorecard cascading process

The level of detail in the top-down decomposition of balanced scorecards depends on the organizational structure and size of the company. Each division includes in its system of indicators only those tasks and performance indicators of the general (corporate) BSC that it influences.

Control of strategy implementation.

If the implementation of the BSC ended with the development of strategic goals, cause-and-effect chains, indicators, target values and strategic activities for one organizational unit, this would only mean a one-time strong focus on strategy. To ensure long-term implementation of the strategy formulated in the BSC, it is necessary to integrate the BSC into the management system.

The implementation of strategy implementation methodology today is continuously associated with automation. Implementation of the BSC, for example, using MS 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 is going to develop balanced scorecards for several structural divisions and periodically refine and adjust them, then it cannot do without using the advantages of information technology.

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.

It is only after the implementation phase is completed that the balanced scorecard operates as a management concept and not just as a scorecard.

We know that the BSC greatly contributes to the translation and dissemination of information about strategy at all levels of your enterprise, thereby strengthening the understanding of strategy in the broadest sense of the word and developing knowledge about it in every possible way. But to truly set in motion the mechanisms that ensure individual contribution from employees at all levels of the organization, people need to be given the opportunity to demonstrate how their daily actions make a difference and contribute to the achievement of the company's strategic goals. A proven method to achieve this is BSC cascading.

Cascading is the process of developing balanced systems for each level of the organization. These systems are aligned with the scorecard for the top level of the organization by defining strategic goals and metrics that lower-level departments and teams will use to track their contribution to overall company goals. Although some of the metrics used will be the same as those used throughout the organization, most lower-level systems may contain metrics that reflect specific opportunities and challenges at their level. You know that as soon as you open the curtains in a dark room, every corner of it will be filled with sunlight. Likewise, cascading illuminates all aspects of strategy, transforming it from an obscure document imposed by senior management into a set of simple metrics and goals that explain how I, the employee, can directly contribute to the success of my organization.

In the following pages, we'll take a closer look at the beneficial effects of cascading, explore ways to cascade effectively, and what to consider when evaluating cascaded scorecards. This process can seem quite complex due to the many factors that need to be considered and the decisions that need to be made. But despite this, your efforts will pay off with interest. In fact, Kaplan and Norton found that the significant difference between BSC Hall of Fame organizations and all other companies was the ability to create unity in strategy execution. “This proves that effective organizational cohesion, although difficult to achieve, is clearly a fundamental outcome of any management practice.” It's not surprising when you think about the fact that through unity, you have the ability to leverage the greatest resources known to man: the hearts and minds of your employees.

Develop implementation principles for successful cascading

Over the years, I have learned from bitter experience that I cannot be called a master of “golden hands.” This can be confirmed, for example, by one famous episode from the life of the Niven clan, when my brother and I tried to replace the lamp in the brake light of his car and as a result, one of us (I won’t specify which one!) had to get stitches in the hospital! As far as I know, this car was subsequently sold for next to nothing with a broken brake light. If we had read the instructions then and planned our actions in advance, bloodshed could have been avoided. Before you begin any project, try to create a plan that will guide you in your work. The same advice can be given regarding cascading: first you need to plan your actions in order to then confidently follow the plan.

Chances are, your top-level BSC was created by a cross-functional team that worked together and sought to bring together different perspectives to ultimately create a product that reflects the characteristics of the entire organization. With cascading, there is little, if any, chance that the entire team will be involved in working on each cascaded system. This would be illogical and, moreover, would take too much time. A more plausible scenario is that your team's efforts will now be dispersed throughout the organization, with each team member leading cascaded scorecard development activities in their own department or group. This approach is more effective, but does not exclude the possibility that each department will use its own methods and techniques, which is completely unacceptable in the process of developing and applying the BSC. Consistency in system implementation across all levels of your organization is a must if you want to benefit from a truly unified strategic focus. If each group develops a scorecard based on its own interpretation of a given concept, it is likely that many of the systems created in this way will bear little resemblance to your top-level scorecard, leading to confusion, frustration and, most importantly, a lack of cohesion across the board. achieving common goals. To prevent this from happening, consider the following elements that you should consider when creating your BSC cascading plan.

Components of a Balanced Scorecard. Do all groups need the four components of a balanced system: financial, customer, internal processes, training and personnel development? Or can individual groups, at their own discretion, create their own components and give them new names? Personalizing a balanced system has benefits in terms of strengthening local support and understanding. But at the same time, the variety of terms used in different departments of the company can lead to confusion.
Number of goals and indicators. Should there be a limit on the number of goals and indicators that a group can include in its balanced framework? Don't forget that when you start cascading a system, you can suddenly increase the number of performance indicators in the organization to tens or even hundreds.
Mention of corporate goals. Should teams developing their balanced systems include specific corporate-wide goals, or should they be given free rein to develop their own specific goals to illustrate their strategies? In some organizations, business units and divisions should include in their systems (to the extent possible) the same objectives that are mentioned in the corporate BSC. The challenge here is to ensure coherence and consistency across the company. A likely downside to this approach is that it stifles the creativity of teams that would like to independently determine how they can have the greatest impact on achieving corporate goals and overall performance metrics. As a compromise, organizations often limit the number of goals for each group, and at the same time, interdependent groups must include common goals as well as their own in their balanced systems.

Understanding of the top-level balanced scorecard

Understanding the key elements of the top-level BSC (often called the enterprise-wide BSC) is the basis for effective cascading. Without a firm grasp of the goals and metrics that make up the strategic plan, employees will be groping in the dark to create meaningful, balanced systems that reflect their contributions to the organization's success. Imagine a meeting about cascading a balanced system. Those present sit around the table, eager to get started on developing their system, and see the goal of a company-wide balanced system as “customer satisfaction.” Without knowing in what context, why and how a given goal was developed, meeting participants will not understand what it means to them and how they can (if at all?) contribute to its achievement.

Throughout this book, I often refer to the incredible power of the BSC as a tool for disseminating information, but despite the best efforts of system architects, the knowledge hidden in this tool is not always obvious upon superficial examination. Communication and education activities are essential, such as communicating the Balanced Framework to your employees, discussing with them what certain goals and metrics mean, why they were chosen, and how they contribute to the company's strategic plans. Employees can be informed in various ways. These include press conferences with management, during which senior company officials talk about the indicator system, and videos, and pages on the local intranet dedicated to the system, as well as presentations given by representatives of the team for the development and implementation of a balanced system . How you achieve the goal is not as important as the actual task of communicating and communicating the strategy to all employees to ensure they understand the elements that make up your Balance Sheet. By understanding the fundamental aspects of the top-level system, people in the organization can translate it into their own metrics that describe their impact on the overall corporate strategy and show how their day-to-day activities contribute to the achievement of strategic goals.

Influence as the basis of cascading

The purpose of cascading is to give all groups in the organization the opportunity to demonstrate how their actions contribute to overall success. To do this, each group must ask itself how its members actually influence the achievement of the goals included in the higher-level BSC. To study this concept, we will use Fig. 6.1.

From the book by Paul R. Niven Balanced Scorecard Step-by-Step: Maximizing Performance and Maintaining Results(New York: John Wiley & Sons, Inc., 2002) (“The Balanced Scorecard Step by Step: Maximizing Performance and Sustaining Results”).

Rice. 6.1. Cascading process

It all starts with the highest level BSC, the so-called corporate or organization-wide scorecard. The goals and indicators contained in this system reflect what are considered the critical variables that determine the success of the organization. Consequently, any BSC subsequently created at any level of the organization must be associated with this document.

The first level of cascading is formed when business units (according to Figure 6.1, you can use your own terminology) look at the system of indicators at the highest level and ask themselves the question: “What goals can we influence?” The answers to it will form the basis of these business units’ own systems of indicators. They probably will not be able to influence all the goals present in the highest-level indicator system. After all, organizations create value by combining the diverse skills of all employees employed in functional units. Therefore, each group should focus directly on those goals and indicators that it can influence. Still, if a group cannot demonstrate a connection to any of these goals, you should seriously consider what added value (value) it creates for the organization as a whole. An entity can choose to use the terms used in the top-level BSC or create goals and metrics that more accurately reflect how the group contributes to value creation in the organization.

Once business units have developed their BSCs, groups one level below them are ready to participate in the process. Now specific departments will have to study the system of indicators of the business unit to which they are accountable and determine which of the set goals they can influence. This is an important point; divisions reporting to a specific business unit, in the process of cascading, rely on the balanced system of this particular higher-level unit, and not on the general corporate system. To achieve unity, they must focus on the strategically significant goals and indicators of the business unit to which they are directly related.

As noted, they can use the same statements of goals and indicators or develop unique names for the elements to be included in the system.

Let's look at cascading using the example of a fictitious taxi company. In Fig. 6.2. depicts excerpts from the BSC at three levels of this organization, reflecting the principles of cascading just described.

In the client component, the choice was made on the goal of ensuring safety and convenience of transportation for clients. To assess the effectiveness of achieving this goal, an indicator of an increase in the average volume of passenger traffic is used. The established norm is to increase this indicator by 10% per year.

The fleet maintenance department is one of several business units of the company. When developing their own system, the department's employees began by carefully studying the company-wide Balance Sheet to determine which of the goals specified in the system they could influence. Employees in the Fleet Maintenance Department, like other business units of the company, are eager to show how their important work is connected to the achievement of overall corporate goals. As they looked at the customer side of a city-wide balanced system, they focused on the goal of providing safe, convenient transportation for customers and realized they were having a significant impact on achieving that goal. The Fleet Maintenance Department has this same goal, and has therefore been included in the department's own scorecard. Yet the increase in passenger traffic was not relevant for the fleet maintenance department. This is a critical indicator, but it was necessary to develop an indicator that shows exactly how the fleet maintenance department influences the increase in passenger traffic. This is done by taking care on a daily basis to ensure that there are serviceable vehicles available to transport passengers. Thus, the department contributes to an increase in transportation volumes. Therefore, the indicator chosen for evaluation was the percentage of serviceable vehicles in the taxi fleet.

Rice. 6.2. Cascading BSC
(Click on the image to enlarge it)

The fleet maintenance department consists of several groups, one of which is repair. Her many responsibilities include ensuring efficient maintenance of the taxi fleet. When developing their own BSC, the staff began by studying the system of indicators of the business unit to which the repair group reports - the vehicle fleet maintenance department. As a result, the group focused on the goal of providing safe and convenient transportation and realized that they had a significant impact on achieving this goal, and therefore chose it to include in their own indicator system. By asking themselves how they affected the availability of serviceable vehicles, employees realized that if they could make repairs in a timely manner, the company would have more vehicles at its disposal and customers in need of taxi services would not have to wait too long. The repair team strives to complete at least 75% of vehicle repairs within 24 hours.

Although each of the BSCs described in this example has one common goal, the indicator selected at each level is a reflection of what a given group must do to contribute to overall success. These interconnected indicators serve as a key factor in ensuring the unity of all divisions of the company. Maintenance team employees can now clearly demonstrate how their work is connected to achieving the most important goal for the company. Moreover, senior management can be confident that the fleet service department's attention is focused on the necessary elements to create value for the company's customers.

Evaluation of Cascaded Balanced Scorecards

As with the development of the overall BSC, cascading can either be completed in a few weeks or several months, depending on the size of your organization and the scale of implementation of the balanced system. I advocate maintaining the momentum set by a rigorous, fast-paced implementation schedule because intense activities often bring people together in pursuit of a common goal. However, rapid cascading of scorecards comes with significant hidden risks. In the rush to achieve unity as quickly as possible, some organizations neglect the task of evaluating cascaded metrics and determining whether they are truly aligned with the overall strategy and moving everyone in the organization in the same direction. Neglecting such an important task often results in cascading activities that create a unique combination of BSCs scattered haphazardly throughout the company. Not only does this discourage workers from uniting their efforts toward a common strategic goal, but it can even impede joint action, jeopardize resource allocation decisions, and generally create confusion and hostility in the process.

Just as a simple consultation with a doctor can reduce the likelihood that you will experience suffering and pain later, a cascaded scorecard assessment is a diagnostic that is sure to result in benefits such as focus, cohesion, and understanding of overall corporate strategy. As a starting point for the assessment, have your BSC team review the systems developed by the relevant business units or divisions. Team members' in-depth specialist knowledge, coupled with experience with the balanced framework, enables them to provide critically informed assessments of the scorecards developed by individual teams. To help your team evaluate cascaded scorecards, consider the following elements:

Compliance with cascading principles. The first and simplest diagnostic technique is to check the compliance of the indicator systems with the rules and principles of cascading that you have developed. For example, pay attention to the use of consistent terminology and the mandatory inclusion of specific objectives.
Influencing goals. The main goal of cascading is to create unity, and therefore all cascaded indicator systems must contain goals and indicators that influence the indicator system of the next level. Particular caution should be exercised in any cascaded system that includes goals that are understandable only to the initiated, and indicators that have no obvious connection with the indicators of the system one level above. It is possible that some of these indicators play a decisive role in the successful performance of a given unit. But if they don't move the organization in the desired direction, what is their true strategic value?
An acceptable number of goals and indicators. Cascading can lead to a rapid growth of the number of indicators into hundreds, and with the advent of highly complex software systems, even thousands of performance indicators, especially in large organizations. Don't forget that the essence of the BSC is to focus on the main thing. Remember the words of Charles Hendy that I quoted in the section on developing metrics: “Measuring more is easy, measuring better is difficult.” Yes, it's difficult, but it's worth the effort because a limited number of performance measures that directly follow strategy are far more valuable in setting your course than a plethora of operational measures that are of questionable relevance to strategy.
Relevant standards. As discussed in Chapter 5, norm setting is not a core competency of most organizations. Establishing appropriate standards requires a careful assessment of environmental conditions, current performance, future projections, etc. Ensure that the standards included in the cascaded scorecards reflect the proper balance between aspirational, high-stakes objectives and real-world goals. reality. In addition, from a mathematical point of view, it is necessary to ensure that the sum of the relevant norms is equal to the established corporate norm. For example, at the corporate level, the BSC may include a cost reduction target of $1 million per year. The amount of the relevant standards established according to cascaded systems of indicators must be at least $1 million, which makes it possible to ensure compliance with this standard throughout the entire enterprise.
Complete coverage of all targets. An enterprise-wide scorecard contains goals and metrics that directly translate into your strategy. These are the ones that will be used to measure your success. They were chosen through heated debate and debate and represent your best judgment on certain issues. Taking into account the obvious importance of goals for the implementation of strategy, it is extremely important that cascaded indicator systems, when studied at the macro level, provide full coverage of all corporate goals. If, as a result of assessing cascaded balanced systems, you see that corporate-level goals are not reflected at lower levels, this means that representatives at lower levels do not consider these goals to be critical to success. At this point, you must either re-evaluate the need for the goal to be included in the company-wide system, or take action to provide additional training and communication to employees about the critical role of the goal in achieving the success of the enterprise.
A combination of leading and lagging indicators. Cascaded systems of indicators should contain not only lagging or leading indicators, but be based on a reliable combination of these two types of parameters, which together contribute to achieving the goals of the business unit.

Have you ever participated in a team building event and watched as fierce competition and a real fight broke out among the participants? If so, I sincerely hope that you did not have to suffer bitter failure in this struggle and end up overboard. To come out of such a competition “dry and clean”, you need a strong “anchor”, that is, a person on whom you can rely and who will help you avoid a shameful defeat. But even a person with incredible strength will not be able to defeat a single team of people working together and in concert to pull the other end of the rope. The same can be said for cascading. Your fulcrum should be the top-level BSC, which is a complete illustration of the strategy of the enterprise as a whole. But no matter how compelling this story may be, you cannot do it without the commitment and effort of every single employee working in unison at every level of the company to achieve material success. Cascading a balanced system provides the ability to anchor, creating additional power and knowledge throughout the process, and ultimately helps unite the organization towards a common goal and unite all employees in the pursuit of effective strategy implementation.

Self-test questions

1. Before starting cascading the BSC, were we able to develop implementation principles, paying attention to:

– terminology of components;
– number of goals and indicators;
– use of general corporate purposes?

2. Have we made enough efforts to disseminate information about the content of the top-level BSC among the organization’s employees? Were they able to gain an understanding of the system before developing cascaded systems?

3. Have we developed a process for assessing cascaded balanced scorecards, taking into account the following elements: - adherence to agreed cascading principles, - the impact of goals on lower-level balanced systems, - an acceptable number of goals and indicators, - appropriate coverage of corporate-wide goals, - a combination of leading and lagging indicators indicators?

Notes

1. Paul R. Niven, Balanced Scorecard Step by Step: Maximizing Performance and Maintaining Result s (New York, NY, John Wiley & Sons Inc., 2002).

2. David P. Norton and Randall H. Russell, Best Practices in Managing the Execution of Strategy, Balanced Scorecard Report, July-August 2004, p.3

3. Some fragments of this part are taken from: Paul R. Niven, Balanced Scorecard Step by Step for Government and Nonprofit Agencies(New York, NY, John Wiley & Sons Inc., 2003).

Development of a balanced scorecard

Methodology

Introduction. 3

1. Terms, definitions and abbreviations. 4

1.1. Terms and Definitions. 4

1.2. Abbreviations. 5

2. What does the use of BSC give? 6

2.1. Features of the use of BSC. 6

2.2. Benefits of using BSC. 7

2.3. Difficulties in using BSC. 8

3. Technology for the development and implementation of BSC. 10

3.1. Basic principles of the BSC. 10

3.2. Stages of development and implementation of the BSC. 12

4. Development of the BSC and monitoring the implementation of the strategy using Business Studio. 15

4.1. BSC data structure. 15

4.2. Definition of strategic goals. 17

4.3. Construction of cause-and-effect relationships. 18

4.4. Definition of indicators and target values. 20

4.5. Determining the connection with business processes. 25

4.6. Definition of strategic activities. 27

4.7. Collection, evaluation and analysis of information. 28

Bibliography. 43

Appendix A. Example of a “Strategic Map” report. 44

Appendix B. Example of a report “Values of goal indicators for the period.” 47

Appendix B. Example of the “Current values of goal indicators” report. 48

Appendix D. Example of the “Indicator values for the period” report. 49

Appendix E. Example of a report “Current values of indicators controlled by an official” 52

Appendix G. Example of a “Project Report” report. 54

Introduction

This document contains a description of the methodological principles and solutions used in building a balanced scorecard using the Business Studio software product.

The idea of using a balanced scorecard as a tool for managing the performance of a company was proposed by Robert Kaplan and David Norton. They called their development “Balanced Scorecard” (BSC) to emphasize the balance (“Balanced”) of the system, which should be measurable using a system of indicators (“Scorecard”). The main purpose of the BSC concept is to translate the vision of the company's management into reality, and also to link strategy with operational activities and cost factors.

The main feature of the balanced scorecard (hereinafter referred to as the BSC) is that it is closely related to business processes that are aimed at meeting customer needs and in which all company employees are involved. The BSC guides the company's management towards adequate strategic development, in contrast to traditional management, which, as a rule, is too focused on financial indicators.

This technique is intended for users of the Business Studio system.

The methodology was developed by the Group of Companies “Modern Management Technologies” www. *****.

1. Terms, definitions and abbreviations

1.1. Terms and Definitions

Vision is a view of the desired, practically achievable future of the organization, as well as how to achieve this future.

Time horizon determines the type of indicator (delayed or leading) and shows for what period the activity is planned.

Cascading– this is the construction of a BSC for the company’s structural divisions (in horizontal and vertical aspects). The result of this work is the creation of balanced scorecards for various organizational units and various levels of the organizational hierarchy. Vertical cascading is also called decomposition.

Prospects(components) are the most significant areas in which the company strives to achieve results. Typically, there are four perspectives: finance, customers (marketing), internal processes (production), training and development (personnel). Other perspectives may exist or be replaced depending on the specific needs of strategy developers. Perspective is a critical element of strategy, often representing the owner's category or point of view.

Index– this is a target meter. Indicators are a means of assessing progress towards the implementation of a strategic goal. 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.

Leading indicator– an indicator that changes over time over a short period of time.

Delayed indicator– an indicator that speaks about the ultimate goals of corporate strategy.

Cause-and-effect relationships. Strategic goals are related to each other by cause-and-effect relationships, which are similar to “if-then” relationships. For example, if a bank reduces customer service time (Goal 1), then it will require fewer staff (Goal 2), customers will be more satisfied with the reduction in time (Goal 3) and prestige, therefore, the bank's profitability will increase (Goal 4). This is an obvious cause and effect relationship. Such connections are depicted in the strategic map of the enterprise.

Process (business process)– a sequence of actions (subprocesses) aimed at obtaining a given result that is valuable to the organization. Not only the organization’s success in the present, but also its survival in the future depends on how an organization develops and improves its business processes. The BSC identifies those business processes that are decisive for the successful implementation of the strategy.

Balanced Scorecard (BSS) 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.

Strategic map is a diagram or drawing that describes a strategy in the form of a set of strategic goals and cause-and-effect relationships between them.

Strategic goal- this is the main goal, the achievement of which is most important for the survival of the organization, for its success. Strategic goals differ from operational goals in that they have a significant impact on the company’s competitiveness and are highly difficult to implement.

Strategic activities (projects) ensure the implementation of the strategy. All projects carried out in the organization must be linked to the strategy in the BSC. Projects aim to achieve set goals within a given period of time and within a specified budget.

Strategy is a plan or model for the long-term development of an organization. Strategy is a path consisting of several stages that an organization must go through from its current state to the target state that is planned and anticipated.

Target value of the indicator– this is the numerical value of the indicator to which you should strive to achieve the goal.

Target is a measurable result that is planned to be achieved. A company's system of goals shows what the company as a whole must achieve (strategic goals) and how the strategy will be implemented at the operational level (operational goals or performance goals). The system of goals in the balanced scorecard is visualized using a strategic map and serves to visually represent the chosen strategy and bring it to the level of implementers.

1.2. Abbreviations

BSC – Balanced Scorecard (balanced scorecard)

QMS – quality management system

BSC – balanced scorecard

2. What are the benefits of using BSC?

2.1. Features of the use of SSP

Let's assume that the main goal of a certain company is to increase profitability. To achieve this goal, the company's management decides to sell more and spend less. Cost reduction is directly related to the accounting and measurement of relevant indicators. Cost accounting systems are excellent at this. But where can you get information on how to sell more? To do this, it is necessary to evaluate such intangible assets as the promotion of a new product to the market, potential opportunities, customer loyalty, experience, interest and flexibility of employees. All this is unlikely to be reflected in the balance sheet.

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. Accordingly, it is necessary to use a system of comprehensive accounting of all indicators - a balanced scorecard.

The balanced scorecard complements the system of financial parameters of the already accomplished past, as well as:

Indicates where revenue 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 direct investments and orient in this direction work with personnel, development of internal company 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. When formulating a strategy based on the BSC, the company’s activities are considered within four perspectives ( Fig.1):

Finance;

Clients;

Internal business processes;

Education and 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 highlights 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, namely training and development, there is no doubt that serious investment in retraining, information technology and systems, as well as in improving organizational procedures, is 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.

Rice.1 . Prospects for the Balanced Scorecard

The essence of the BSC is to formulate a strategy from several perspectives, set strategic goals and measure the degree of achievement of these goals using indicators. The word “balanced” in the name of the methodology means equal importance of all indicators. The BSC is projected onto the entire organization by developing individual goals within the framework of already developed corporate strategies and stimulates employees' understanding of their place in the company's strategy.

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.

The main purpose of the BSC is to ensure the development of indicators and control the implementation of the strategy. The BSC is an integral part of the organization's management system and may be its main core.

With the help of the BSC, it is possible to make the implementation of the strategy a regular activity of all departments, managed through planning, accounting, control and analysis of balanced indicators, as well as motivating personnel to achieve them.

2.2. Benefits of using BSC

A necessary condition for creating a BSC is the development of a company strategy

The development of a company's strategy in itself is a very important stage of development, and the beginning of such a process indicates the maturity of the company and its fairly high achievements. But without a clear strategy, the development of a BSC is impossible. Therefore, the desire to implement it at home, the desire to better understand your business and its prospects inevitably entails the need to develop a strategy. Working on the development of a mission and strategic goals will allow you to look from the outside at the activities of each of the company’s areas, allow you to assess the potential of each area and discover real-life problems that, until a certain point, were not given much importance. Systematization of these problems will allow us to develop specific steps to eliminate them.

Control of strategy implementation

One of the main problems of management is control. Having reached the development of strategy, and sometimes even implementation, enterprises are faced with the need to evaluate the success of their efforts, especially since the strategy development process is cyclical. It is at this moment that the problem of assessing a specific change arises - whether it is positive or negative, and with what it should be compared. In the absence of appropriate indicators, these questions hang in the air. The BSC allows you to specify the situation and track specific changes, while simultaneously adjusting the strategy.

Ease of understanding for performers

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

Accelerating the implementation of a quality management system

The balanced scorecard is a tool with which the implementation of a quality management system can be accelerated.

Integration of the BSC into the QMS allows:

Move from strategy to a set of business processes that require attention, and reasonably apply the full power of performance improvement methods to these processes;

Link quality policy to strategy;

Determine the cause-and-effect set of quality goals for processes and indicators for achieving these goals;

Determine the activities, resources, deadlines and responsibilities necessary to achieve the established goals.

Bringing the company's strategy to specific goals for each employee

With the successful implementation of the BSC, the staff has a clear guideline for their activities. And not just in the form of a plan handed down from above, but in the awareness of their role in the organization, and through this awareness they come to conscious involvement in the implementation of the strategic goals of the company as a whole, as their own.

Improving the staff motivation system

The BSC has an impact on improving the motivation system, since the goals formulated for employees influence their behavior. When goals are correctly defined, employees begin to understand their contribution to achieving the company's strategic goals, thereby increasing the likelihood of implementing the developed strategy.

2.3. Difficulties in using BSC

The blurring of BSC implementation

It is very difficult to evaluate the process of implementing BSC in an organization, since it takes years to obtain objective results. During this time, much has changed in the company's activities. Implementation at the first stage, that is, the development of strategic goals for top management, proceeds quite quickly and clearly, but further advancement becomes fraught with problems, as it requires a large amount of preparatory and explanatory work. Moreover, in this case, the participation of the head of the relevant department is mandatory.

Lack of quick results

Obtaining evaluated results of activities according to the BSC is possible only within several years of the actual implementation of the strategic plan. Therefore, a serious problem may be the lack of understanding by top management of the goals of implementing the BSC in a rapidly changing market situation.

Impossibility of developing a BSC without the initiative of top management

When developing a BSC for a separate division of a company, the advantages of the BSC are not used throughout the entire organization, and the result is a much smaller effect, especially since any division of the organization interacts with a number of other divisions and, undoubtedly, depends on the quality of their work.

Difficulty assessing the importance of key indicators

The selection of key indicators is a rather responsible and ambiguous process. This becomes especially obvious when non-financial indicators are determined. Financial indicators in companies are constantly monitored, but determining non-financial indicators, especially at the first stage, is quite difficult due to their ambiguity. When evaluating indicators, it makes sense to rank them in order of importance in each of the four perspectives and leave no more than five key and most important ones for each perspective.

3. Technology for the development and implementation of BSC

3.1. Basic principles of the BSC

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

Preparation for the development of the BSC;

Development of BSC;

Cascading BSC;

Control of strategy implementation.

Preparation for the development of the BSC

At the stage of preparation for building a BSC, it is necessary to develop a strategy, determine prospects and make a decision for which organizational units and levels need to develop a BSC.

One of the important activities in preparation for the development of a BSC is the selection of prospects. 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.

So, the initial prerequisites for the development of the BSC are:

BSC Prospects;

Informed and motivated senior management team;

A strategy that is “mature” for developing a BSC.

BSC development

At this stage, the BSC is developed for one organizational unit. This could be the company as a whole, a division or department.

In this case, the development 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;

Determining the relationship between indicators and business processes;

Development of strategic activities.

Cascading BSC

When cascading, the strategy specified in the corporate Balance Sheet applies to all levels of management. Strategic goals, indicators, targets and improvement actions are then specified and adapted across business units and departments. That is, the corporate BSC must be linked to the BSC of divisions, departments and individual work plans of employees. Based on the BSC of its division, 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.

On Fig.2 cascading of the BSC is presented, the implementation of which establishes a bridge between successive levels of the organizational hierarchy. At the same time, corporate strategy consistently moves downwards.

Rice.2 . BSC cascading process

Strategy execution control

The implementation of strategy implementation methodology today is continuously associated with automation. Implementation of the BSC, for example, using MS 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 is going to develop balanced scorecards for several structural divisions and periodically refine and adjust them, then it cannot do without using the advantages of information technology.

It is only after the implementation phase is completed that the balanced scorecard operates as a management concept and not just as a scorecard.

3.2. Stages of development and implementation of the BSC

Specification of strategic goals

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.

Strategic goals describe planned results. Each strategic goal is associated with one of the organization’s development prospects (see. Fig.1).

You should not define too many strategic goals for the corporate level of the organization. A maximum of 25 targets will be enough. It is necessary to select the most important goals based on the following criteria:

Goals should be measurable;

The achievement of goals can be influenced;

Goals are acceptable to different groups of people in the organization and are consistent with the overall purpose of the organization.

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.

Linking strategic goals with cause-and-effect chains

Determining and documenting the cause-and-effect relationships between individual strategic goals is one of the main elements of the 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. Those that do not contribute to the realization of the main goal are excluded from consideration.

The cause-and-effect chain is a convenient tool for bringing the BSC to lower organizational levels. A strategic map is used to graphically display the relationship between strategic goals and prospects.

Selection of indicators and determination of their target values

The indicator is a measure of the degree of achievement 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 objectives.

Without target values, indicators designed to measure strategic goals are meaningless. Determining target values of 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, the BSC 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.

The content of short-term plans is detailed by periods (quarters, months, weeks, days) and expressed in the form of planned indicator values. Indicators and their target values 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.

Determining the relationship between indicators and business processes

As mentioned above, 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 in the BSC serve both to assess the effectiveness of business processes and to assess the degree of achievement of the goal at the same time.

Definition of strategic activities

In cases where strategic goals cannot be achieved through regular activities (within the framework of the company's business processes), the achievement of strategic goals is carried out through 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.

Collection, assessment and analysis of information on the implementation of the strategy

Implementation of a BSC is a process that requires significant time, part of which is spent on debugging the system and its support. To improve the BSC, top management and those in charge must constantly analyze and evaluate the organization's activities.

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?

Have the structural units achieved the target values of the developed indicators?

Have the target values of corporate goals 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 to help achieve the higher-level goals.

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

Activities must also be analyzed, namely, it is necessary to evaluate:

Were all activities implemented according to the approved plan?

Were the time budget and financial resources respected?

Did the implementation of activities affect the achievement of goals?

If previously developed activities have not yet been completed, they should be completed. If necessary, new measures should be developed.

4. Development of a BSC and control of strategy implementation using Business Studio

4.1. BSC data structure

This section discusses the technology for using Business Studio in developing a balanced scorecard. More information about working with Business Studio can be found in the User Guide.

All basic data related to the BSC is stored in the hierarchical directories of the Navigator in the “Goals and Indicators” subsection of the “Management” section ( Fig.3).

Rice.3 . Hierarchical directories of BSC

The hierarchical directory “Strategic Map Perspectives” allows you to enter the perspectives by which the strategic goals of the BSC are grouped. The four perspectives most commonly used are ( Fig.4), however, you can always add a new perspective.

Rice.4 . Directory "Strategic Map Perspectives"

The hierarchical directory “Goals” allows you to enter the strategic goals of the BSC. Goals can be grouped into folders, for example, with the names of perspectives ( Fig.5).

Rice.5 . Directory "Goals"

Indicators of the degree of achievement of strategic goals are stored in the hierarchical directory “Indicators”. Indicators can be grouped by folders or by indicators ( Fig.6).

Strategic and tactical management goals

Stages of main work

Goal “Reduce management costs”

Motivation indicators for top managers: example for 5 positions

Principle of distribution of the annual bonus fund Distribution of payment amounts for the year in monthly terms (using the example of a position with a remuneration of 100,000 rubles)

Develop implementation principles for successful cascading

Understanding of the top-level balanced scorecard

Influence as the basis of cascading

Evaluation of Cascaded Balanced Scorecards

Self-test questions

Notes

1. Terms, definitions and abbreviations

1.1. Terms and Definitions

1.2. Abbreviations

2. What are the benefits of using BSC?

2.1. Features of the use of SSP

2.2. Benefits of using BSC

A necessary condition for creating a BSC is the development of a company strategy

Control of strategy implementation

Ease of understanding for performers

Accelerating the implementation of a quality management system

Bringing the company's strategy to specific goals for each employee

Improving the staff motivation system

2.3. Difficulties in using BSC

The blurring of BSC implementation

Lack of quick results

Impossibility of developing a BSC without the initiative of top management

Difficulty assessing the importance of key indicators

3. Technology for the development and implementation of BSC

3.1. Basic principles of the BSC

Preparation for the development of the BSC

BSC development

Cascading BSC

Strategy execution control

3.2. Stages of development and implementation of the BSC

Specification of strategic goals

Linking strategic goals with cause-and-effect chains

Selection of indicators and determination of their target values

Determining the relationship between indicators and business processes

Definition of strategic activities

Collection, assessment and analysis of information on the implementation of the strategy

4. Development of a BSC and control of strategy implementation using Business Studio

4.1. BSC data structure

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Principle of distribution of the annual bonus fund
Distribution of payment amounts for the year in monthly terms
(using the example of a position with a remuneration of 100,000 rubles)