As previously mentioned in the Key Performance Indicator (KPI) publication, a way to graphically visualize these KPIs is using a Balanced Scorecard.
This tool assists by integrating indicators related to results and performance. Every indicator is assigned to one of the following perspectives:
- Customer; focused on providing value to their customers
- Internal processes; focused on an increase of efficiency and effectiveness in the processes
- Learn and growth; focused on sustaining innovation through continuous improvement and preparation for future challenges
Recently, some companies have considered other perspectives, such as personal (focused on the welfare and development of staff) and social (focused on environmental protection, waste reduction and sustainable development).
The following figure shows a representation a Balanced Scorecard. Each circle is an indicator and the arrows represent a causal relationship between them. This relationship can be obtained using regression or other statistical methods. As can be seen in the figure, employee training improves revenues by their dependence on other objectives. This kind of indirect relationship is easily visualized using this framework and can be used to identify indirect reasons of underperformance.
The balanced scorecard framework shows at first glance the individual object’s performance, tendency and dependencies. Besides, it provides a comprehensive analysis of the company and it facilitates the permeability of the indicators throughout the organization.
BALANCE SCORECARD EXAMPLE
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