Business people like talking about “alignment.” It is important to align business actions and KPIs with strategic objectives. What is missing is a “how” part. In most cases behind a buzz word there is no actual tool, just a few Excel spreadsheets, where relevant KPIs are listed next to a business goal and that is supposed to be “alignment.”
Alignment in BSC Designer
In BSC Designer we provide some automation for the alignment. The result is that a manager always knows why he or she needs a certain KPI and how a business objective is supported by an action plan.
There are several levels of alignment in BSC Designer:
1. Business objectives are linked with each other using cause-and-effect links.
2. A KPI can be linked to a business objective.
You are working with these types of alignment when you build a strategy map. Learn how to build a strategy map.
3. An action plan can be linked to a business objective and/or KPI using initiatives. Learn how to work with initiatives.
Cascading or alignment between tiers
As we discussed before, the idea of cascading/alignment is to link local scorecards with higher level scorecards. In BSC Designer this connection can be achieved in two different ways:
- By KPIs. For example a parent scorecard can aggregate some data from low-level scorecards.
- By Business Goals. A goal in the individual level scorecard might be linked to the goal in a department level scorecard.
Alignment by KPIs
Here is an example of how two scorecards can be linked by a KPI:
- Open parent scorecard.
- Go to KPIs tab and create a new KPI.
- Click “KPI data source” button.
- Select “Link to BSC Designer project” option.
- Select a child project that you want to link to.
Please note: A child project might be available locally or might be uploaded to the BSC Designer Online. The last option is recommended for easier data sharing.
Alignment by business goals
Here is an example of how you can align two projects by business goal:
- Open a child project.
- Go to the “business goal” tab and select a business goal.
- Click the “Link to the external project” button and select a parent project.
- Business goals from the parent project will appear in the “Contributes to” and “Contributed by” drop down lists. Choose the appropriate business goal.
- Go to the “Strategy map” tab and create a “Balanced Scorecard” map. The software will visualize the relationship between two scorecards.
In this way you will provide users of the child scorecard with an explanation about how their goals contribute to the overall strategy.
Results of an alignment
Visually the result of an alignment can be seen on a strategy map. Business objectives have a relevant KPI and initiatives linked. What is the main benefit of this type of alignment for a company? Let’s compare the business picture before and after alignment.
Before you had business objectives, KPIs and an action plan. Afterward you also have business objectives, KPIs and action plans. The difference is that a manager and employees know why they need a specific KPI and action plan. They understand how an action plan helps to achieve a business objective and how the progress towards a business objective can be measured by a KPI.
Employees are not just doing their job, they are focusing on what actually matters to the end result. That’s where companies start reporting a cultural shift from “I am doing my job” to “I’m helping a company achieve its stated objectives.”