How to keep your balance in business
To achieve long term business success and ensure commercial longevity, it is vital to appraise performance in every department of business. This calls for the entrance of some well-proven business rationale, one of which in particular helps to counteract the natural human inclination to live in the short term.
Kaplan and Norton’s Balanced Scorecard approach to delivering on corporate strategy is founded upon both financial and non-financial measures in the following ways:
- Financial: track the profitability of the company strategy and evaluate whether it is creating shareholder value through key indicators such as profit and revenue growth.
- Customer: determine what current and potential customers value and whether your company is successful or not in its target market. Consider monitoring customer behaviour through market research, surveys, complaints and retention rate.
- Internal business process: create internal value for customers. Monitor your customer service response time, % of on-time deliveries, and production process time.
- Innovation and learning: invest in your staff infrastructure and information capabilities necessary to improve and grow. Key metrics may include employee satisfaction surveys, or development time to launch a new product.
In a business environment that presents so much unpredictability and uncertainty, today’s businesses will only really exist tomorrow as they measure business performance through the deadly combination of long-term strategic planning and tracking of key non-financial performance indicators. In more familiar terms, long-term or strategic goals act as the provision of a balanced diet to our businesses, and the use of non-financial factors - such as people, products and processes - imitate the healthy lifestyle required to maintain financial wellbeing and improve welfare.
Over time, every business department commends its own story either to the success or detriment of a company’s overall direction and positioning in the marketplace. Therefore, every business department should be assigned its key survival performance measure(s) upon which they can then report to a board of accountability partners for periodic review and discussion.