What can SME’s do to measure their performance?

Balanced Scorecard ProcessTime is what most SME’s lack; often time needed to monitor business performance. Balanced scorecards save time and enable SME’s to analyse their performance metrics in seconds – essential information to make decision making more effective. (Click on the image to make it bigger).

Once the domain of large businesses, balanced scorecards can now easily be implemented by SME’s and not for profits. The internet has transformed how performance information can be graphically represented and then communicated throughout an organisation.

And the benefit is the ability to transform an organisation’s strategic plan from a passive document into something updated and communicated on a regular basis and a powerful day-to-day measure of success to help Managers perform.

It has the power to measure far more than the figures, getting right to the DNA of an organisation. Yet it’s a relatively straightforward process to set up and once in place provides invaluable information about the organisation’s progress.

Generally speaking, four perspectives are used. These are:

Learning & Growth – covering employee training and attitudes related to both individual and corporate self-improvement.

Business Process – exploring the internal business processes. The goal is to provide managers with information to confirm that the business is running well.

The Customer – looks at customer focus and satisfaction, crucial markers of an organisation’s success. Poor performance here often indicate future decline.

The Finances – communicates traditional financial information such as, sales, cash flow, forecasts etc. You can also cover risk assessment and cost-benefit data.

To set up a balanced scorecard, having set the organisation’s strategy and direction, the questions to ask are, “What do I need to know to …..

1. ….keep travelling in the right direction without deviating

2. ….maintain the appropriate speed

3. ….keep our precious cargo in best condition

4. ….exceed our customer’s expectations so they order more”.

Once the perspectives and metrics have been identified, performance management software can then be used to get the right performance information to the right people at the right time, graphically presented for easy understanding.

Unfortunately, many people believe the balanced scorecard to be a piece of software, this isn’t the case. However, having made the initial time investment, the process can be simple and almost run itself. It doesn’t need to be complicated; the simpler the better in my opinion.

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2 Responses to What can SME’s do to measure their performance?

  1. Mike Burrows says:

    I think the balanced scorecard approach is valid and valuable in any enterprise. For SMEs the key is to get away from some of the language barriers like internal business processes and instead form a narrative that is easier for owners, managers, staff, customers, suppliers and other stakeholders. The basic premise is to say that a successful organisation focuses on- how good its people are at what they are employed to do, how effective the organisation is at organising the delivery of its product or service (quality, price and timeliness), how it generates satisfied/delighted customers and how it makes a profit. Within that using balanced measures will make a difference- mind you in the current climate having the cash to keep going tends to be what really matters.

  2. jdw says:

    Hi Mike

    You raise some great points here. I particularly like the one you make about keeping the language simple and forming a narrative. I think this is spot on, as arriving at the points to measure comes out of conversation and they should form part of the natural flow of how the organisation works.

    Thanks for contributing.

    Regards

    Jonathan

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