You can then add KPIs that use other data sources by editing the scorecard after you have created it. Indicators are the graphical symbols that you use in KPIs to show whether performance is on or off target. There are many different kinds of indicators, including gauges, smiley faces, stoplights, and trend arrows. Indicators are organized into two groups: centered and standard.
Standard indicators. Standard indicators are used to show performance for metrics where actual amounts that are higher or lower than target values constitute better performance. For example, suppose a manager wants to monitor performance for a sales team. One KPI in the scorecard might compare actual sales to quota amounts. In this case, values greater than the target value mean better performance. In contrast, another KPI might compare actual discounted amounts to another set of target values.
In that case, actual values that are lower than the target values mean better performance. Centered indicators. Centered indicators are used to show performance for metrics where actual amounts that are closer to target values constitute better performance. For example, suppose a retailer wants to monitor performance in terms of inventory management. KPIs can be thought of as the success measures that you see in your scorecard. KPIs are used to compare actual results to target values.
For example, if you are creating a scorecard for a sales team, you might have a KPI to show sales amounts compared to quota amounts. Depending on the data source that you use for your scorecard, you can either import KPIs from the data source, or you can create your own KPIs.
Scorecards resemble tables that have at least one row and one column. Most dashboard authors create scorecards that have items on rows and either time periods or metrics on columns. When you create a PerformancePoint scorecard, you can either use a wizard to step you through the process or you can create your scorecard manually.
Regardless of the method that you use, you have many configuration options available to you. You can create a simple scorecard that compares actual results to target values. Or, you can create sophisticated scorecards that include advanced functionality, such as Time Intelligence or calculated KPIs. This section provides you with a high-level overview of how to create a scorecard, but it does not cover all the configuration options that are available to you.
Click the Create tab, and then click Scorecards. The wizard guides you through the following process:. Tip: If the wizard does not open, then Dashboard Designer might not be configured to use the wizard. You can easily change this setting. Select a scorecard template. The template that you select corresponds to the data source that you plan to use for your scorecard. You can choose from the following templates in Dashboard Designer:.
In the Microsoft category, you can select Analysis Services. If you select the Blank Scorecard template, do not proceed to Step 2. Instead, the wizard finishes at this point and your scorecard is open for editing in the center pane of the workspace. You then proceed to create and configure your scorecard manually. Select a data source.
The data source that you select must match the scorecard template that you selected. For example, if you select the Analysis Services template, then you must select an Analysis Services data source for your scorecard. The scorecard contains all four perspectives, including objectives, KPIs, targets, and initiatives. The scorecard also includes the reporting frequency, along with a budget for the proposed projects.
What makes the balanced scorecard so successful is its adaptability: you can use it with a wide variety of programs, formats, and templates. Below are two different examples of what your BSC might look like.
The first BSC incorporates a strategy map in the left portion, which outlines the main and lower-level objectives. This BSC also lists the objectives as well as the measures, targets, and initiatives in the traditional BSC format, and leaves room for budget calculations. The second BSC is a simple chart that does not incorporate any fancy graphics or cells. This is an example of a balanced scorecard for a hospital.
This group may include not only the patients but also the health board, staff, and investors. Starting from the customer perspective will give you the transparency that a public agent requires, and enable you to prioritize responsibly. Excel PDF. This is an example of a balanced scorecard for an information technology department. A department like this would not be concerned with external income, but it would have to keep within its allotted company budget and serve the staff accordingly.
Developed uniquely for your company, this holistic system enables you to maintain focus and move in a cohesive, consistent direction. The balanced scorecard includes your overarching objectives, measures key performance indicators or KPIs , targets for your KPIs, and the initiatives that can help you reach those targets.
Part of the benefit of having a scorecard is that you will design it yourself. You and your team design and implement the BSC so that it meets your unique business needs. Essentially, you are flushing out your business goals to determine the best and most realistic course to achieve them.
You may then cascade those goals down through the structure of your business to maintain alignment. When using this management system, you should also perform a strategic mapping of your objectives. A strategy map gives your objectives cause-and-effect directionality. For more information on the balanced scorecard concept, see this BSC guide. You use BSC software to manage your documents and updates. You can work with templates, pre-implemented performance management software modules, or standalone BSC tracking and development programs.
Ideally, you should choose a software system that you can update easily and regularly and that your BSC users have access to. All companies begin with a vision.
Whether that vision is captured informally or formally, in order to get the company off the ground, you must design a strategy. Once the strategy is designed, you may think planning is complete and, therefore, dive directly into running your business. This is what the balanced scorecard does. Further, it is an exercise in getting everyone in your company on the exact same page.
Other benefits of the balanced scorecard include:. For all four perspectives, you should follow a series of loose steps. Also, consider using a template to ask your initial questions.
Here are the five steps to develop a BSC:. The steps above will yield your overarching company BSC. Once you have completed this highest level, however, you need to cascade it down through all of your business units. Do this by having each unit develop their own BSC based on the high-level one. Then, link the BSCs together in your software. Also, remember that these documents are not static. You must update them regularly. If you build your BSCs so that users are comfortable using them, they will make changes as they address the lower-level elements, such as the month-to-month or quarter-to-quarter measures and targets.
Moreover, you should schedule a periodic review of your BSC to determine how it relates to your organizational processes. For example, if you update your budget annually, it is appropriate to conduct an annual review of your BSC that addresses your budgeting processes. By that point, you should have had enough meetings and updates to make clear what changes are necessary. In , Dr. Robert Kaplan and Dr. David Norton introduced the balanced scorecard concept in an article in the Harvard Business Review.
The authors discussed measuring performance across more perspectives than merely the financial one and presented a solution that includes human issues. In addition, they expanded the concept to include government and nonprofits. Kaplan and Norton published several books and papers, most notably their first book The Balanced Scorecard: Translating Strategy into Action. We have set the target date as December , and we can see on the top of the example above that the current time frame combines the first 11 months of the year.
On the example, we can see how, and if, our goals are being met or not. In the financial objective, we have set our yearly targets to increase the total revenue, net profit, profit margin, and profit per customer. The final column shows that we have achieved the target, and even exceeded Mission accomplished. We can see that we have one month left to reach the set target of We see that these targets are not likely or very likely to achieve.
It would be possible to increase the number of active customers by launching a marketing campaign that will focus on this goal, but we see that other targets are unlikely or even very unlikely to reach.
We can notice that we even lost customers and our goal was to sustain the retention. We fall short of The same analysis we can apply to the learning and growth, and internal objectives. Some of the targets are very likely to achieve, some unlikely. This can help in our strategic planning for the next year, and to see what kind of setbacks we had and how to improve them.
If we dig deeper into the daily operations and performance, we might be able to define specific causes that have affected these results. That being said, our next example will focus on the specific performance of an agent working in customer service. One of our performance scorecard examples provides a general overview of an individual or departmental overall performance. Meet Sophie.
She works in customer service in Texas, and her overall performance is superb. She has 18 points above target and she is the second-best customer service agent in the year The manager of the department has set the weighting of her grading system based on percentages that are important to the overall positive performance of the department.
Her specific performance is divided on the gradings set by averages, customer focus, and the weekly call cycle also the average number. These main gradings are distributed even more into detailed aspects during a set time frame, in this case, the year Her target numbers are followed by her actual, so she and her manager can clearly see the exact difference in performance. The next column shows how much she is off-target also exceeded , and the overall score.
Her solved issues are also on a high level of performance which is extremely important in a customer service role. Her manager can easily conclude that Sophie is a top performer, and this employee example shows exactly in which aspects. This employee scorecard example can be also used during and throughout a project or at the end of the project looking back. It is a compact view for project managers, department leaders, and top executives to see how efficiently, successfully, and within expectations, the project or employee performance is progressing.
If you want to go deeper into call center data management, we suggest you read our article on call center reporting. Our next example is a warehouse KPI scorecard that aims to monitor the entire picking and packing process in 4 main areas: financial, effectiveness, utilization, and quality.
By monitoring the performance of these areas in detail businesses like e-commerce or retailers can efficiently manage their supply chain as well as save money and time with effective processes. Let's take a deeper look at the KPI scorecard. Starting off with the financial area, we first see the pick and pack cost per order. This includes all costs related to picking and packing, for example, the workforce, the packaging materials, or the equipment. In this case, costs were higher than the previous period so it is worth taking a deeper look to lower those numbers.
One way of doing this is by analyzing each line of work in detail. Here we can see that line A had higher costs than B and C. A good course of action would be to test different methods on each line and see which one had lower costs in the end. Next to this metric, the dashboard displays the costs of return, this should always be as low as possible since returns are one of the most expensive processes for your warehouse.
The goal here should be to never use more materials than you need to since this can increase the overall costs and give your business a bad reputation for not adopting sustainable practices in regard to materials usage. The effectiveness section of the logistics dashboard aims to monitor the performance of your employees as well as the efficiency of your logistics processes. This is done by measuring the amounts of orders pick and packed per person in an hour and the average length cycle of picking and packing an item.
Last but not least is the quality section, here we see the picking accuracy and the return rate, both of these metrics directly impact the costs of returns as well as customer satisfaction.
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