Operating a balanced scorecard 1 of the 6 key functions of the effective manager

In recent blog I wrote that at People Based Solutions we believe that those individuals who lead the organisation must also manage it.  I suggested Mangers ensure that while undertaking the highly volatile business of the organisation, there is predictability and order.

I outlined the 6 key functions of the effective manager:




 

      1.      They set SMART objectives

2.      They stay in control

3.      They understand and manage risk

4.      They operate a balanced scorecard

5.      They create a “golden thread”

6.      They plan for tomorrow.

In a recent  blog I wrote about how effective managers understand and manage risk.  In this blog I will deal with how effective Mangers operate a “balanced score card”.

 Seeing the bigger picture

Effective managers keep their eyes on the prize. They appreciate that the business has a purpose and a business plan to achieve that purpose. They also understand that it is as important to manage what’s going to happen in the future, as it is to understand what has happened in the past.  The effective manager agrees with the old adage “what get measured gets managed”, but their focus is on management rather than measurement.  They understand that measuring performance is critical, however, they also know that there’s more to running an organisation than measuring past performance.

They appreciate that at the heart of any management system is the purpose of the organisation, and the plan to achieve that purpose.  Having specified the purpose and developed a plan to achieve that purpose, the effective manager puts systems in place to help them understand how the business is operating.   The effective manager understands that to do this they need more than financial Key performance indicators (KPI’s).  They understand that the data they need isn’t just financial and they are aware of the danger of suboptimal performance.  Efficiency in one KPI can be achieved at the overall effectiveness of the organisation.

Effective managers don’t just rely on financial performance, they judge business performance using a “balanced scorecard”:

·         They track financial performance: Return on investment, cashflow, budget compliance.

·         They gather information on what their customers want and need, and how they feel about the products or services they receive: market research, customer satisfaction, customer retention.

·         They understand and measure business processes: non-value adding activities, process bottlenecks and poor quality.

·         They have measures to understand their staff: skills profiles, training needs, staff turnover, staff absence, staff satisfaction, job performance.

 The effective manager tracks the performance of the plans to deliver the business objectives using the criteria outlined above. These 4 legs are often referred to as the “balanced score card”.  The effective manager appreciates it isn’t enough just to measure performance against each of the 4 legs, but they have to set strategies, goals, objectives, and tactics to make them happen. They use the “balanced Scorecard” to change and improve those areas where the business plan objectives are not being met.   They use the information from the “balanced scorecard” to create SMART objectives that ensure all operational activity is aligned with the strategic plan.   

This article has been posted by Sean McCann, the Managing Director of People Based Solutions an HR consultancy specialising in Management Development. If you would like to know more about the Effective Manager Programme, either public courses or in house for your organisation contact us at:

enquiries@peoplebasedsolutions.com