The Contributions Scorecards and Dashboards Can Make to Strategic Alignment

20 Nov

The emergence of strategic alignment in the last two decades in particular is almost beyond belief. While companies still utilise the old-fashioned, tried and trusted methods of communication such as briefings, conferences, webcasts, seminars, workshops etc, the evolution of strategic alignment has introduced the role of scorecards and dashboards.

Some articles reveal that, despite the significance of strategic alignment, the majority of businesses still elude the duty of addressing the issue on a regular basis. Kaplan & Norton (1992) highlighted the fact that “85% of executive teams spend less than 1 hour per month discussing strategy and only 5% of the workforce understands strategy”. We also learn that many executives spend a lot of time developing strategies but never implement them properly. This is where the significance of communication comes into play.

In their paper The Challenge of Strategic Alignment, Oracle, an American multinational computer technology corporation use the analogy of a football team about to play a vital competitive match. The analogy discusses the role of the manager and how he/she devises a strategy so that each player on the pitch knows what their job is. This way, the team can work effectively as a unit and are more productive. This example corresponds with the management of a firm and the relationship they have with their various employees in their respective departments.

The Oracle paper also addresses the idea of scorecards. However, in order for the scorecard system to be implemented, the objectives and Key Performance Indicators (KPI’s) must be established. Once these have been established the scorecards can establish the dirsction of the company (performance getting better or worse), key responsibilities, and what actions are being taken. So basically, ‘scorecards make users strategically aware, with a precise understanding of how their actions or inactions affect the achievement of the strategy’.

The method of using dashboards is not directly linked to strategic alignment in the same way as scorecards are. Nevertheless, they still play a vital role in ‘shifting the metrics to suit the organisation’. The main point made, to revert back to the Oracle paper, is that dashboards enable users to ‘have immediate visibility of the KPI’s relevant to their role and function and can assess instantly whether performance is on target or within an acceptable range’.

To summarise, it is a valid statement to say that the issue of strategic alignment can be dealt with firstly by addressing the topic efficiently by organising discussions on strategy, setting objectives, and having a clear understanding of the company’s KPI’s. Scorecards could be updated frequently and efficient dashboards designed, bearing in mind the ease of use for each employee.

 

Sources:

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