Balanced scorecard is a framework for setting objectives for the business. Ideally, when the company meets these objectives, the company will be successful. To make this happen, the different objectives that the company sets within the balanced scorecard framework should be congruent. That is to say, the different objectives should make sense together (BSI, 2012).
There are four elements to the scorecard — the shareholder value perspective, the customer value perspective, the process perspective, and the learning & growth perspective. For Berry’s Bug Blasters, the shareholder value perspective is represented by financial objectives relating to profit and growth. To this end, Berry’s Bug Blasters has developed a set of financial objectives. The company wants to achieve a revenue growth rate of 50% per year for the first ten years. With franchising and international expansion as part of the company’s plans, this objective is reasonable. Profits should also grow at this rate, something that is reflected in the plan as well. In addition to financial measures that relate to shareholder wealth, the balanced scorecard demands that the path to this shareholder wealth increase are laid out. So for example, BBB has plans to add 10 new franchises per year, and will set revenue growth targets for all franchises so that the growth comes from a combination of opening new territories and maximizing revenue in existing territories. Likewise, there are going to be targets for cost of goods sold (COGS) and the different expense categories, and these targets will help BBB achieve it profit targets. In addition, the number of people served is important, so that the company does not open new territories in underpopulated areas — better to launch in Chicago than in Tumbleweed, South Dakota.
All the new franchises in the world will not help if the customers are not happy. Thus, it is important for the growth of existing business that customer needs are met. The company should rely on proprietary surveys of customers to help gauge whether or not customer satisfaction is being met. Beyond satisfaction, the business will benefit from word of mouth, not only for growth but also to reduce the cost of acquitting new customers. Thus, one customer service target other than satisfaction will be the number of referrals. These can be tracked by using a referral program that encourages existing customers to refer business back to the company. Lastly, a good measure of customer satisfaction is retention. Many of our customers will be one-time customers, but there are also many who are located in areas routinely plagued by random vermin. We want the repeat business from these customers. How much of this repeat business we get will be another measure that can help us to understand how well we are serving our customers.
The third perspective in the balanced scorecard is the process perspective. Consider that profits derive from exceptional customer service. What is customer service for an exterminator? Well, there are two main dimensions. The first is the extermination thing. The chemicals and processes that we use need to be 100% effective, or our customers will go elsewhere. This is something that we pride ourselves on. Our process will be measured against perfection in this regard, because that is the only standard that our customers are going to expect. The other process that we must constantly evaluate is the customer service process. This includes order taking, billing, all types of client interactions, call back times and other elements. The company needs to constantly measure its ability to deliver a high standard of service, and then deliver that standard. We should tailor our processes to achieving this high standard of service, and constantly evaluate our outcomes against our objectives.
The final perspective in the balanced scorecard is the learning & growth perspective. Clearly, to improve constantly, we need to learn and grow. But there is more to it than that. Berry’s Bug Blasters needs to ensure that our customers have their needs met. This means everything from a constant training program for our exterminators so that they are on top of all the latest techniques and technologies, to offering beginner’s Spanish language classes so that our exterminators can interact better with more customers (or other languages, depending on the area). We should never stop trying to improve ourselves or our business. Some objectives here might be to measure how many staff have completed various courses, so that we know the total firm-specific education programs the employees of the company have completed. Naturally, we will demand that management completes the courses first, to set a good example for the rest of the workforce. You have to think that having 100% employee completion of specific training programs is important; having 100% of management have a degree; and having 100% of exterminators in areas with large minority communities establish at least rudimentary capacity in those languages should be good objectives to set.
For the balanced scorecard to work, the different objectives set — and each category must have specific objectives — must support each other. Education supports customer service and better processes. Better process also support better service. Both of those things support increased profits and other financial outcomes. This is how the balanced scorecard works at its best, when each category has finite objectives that work together to deliver superior outcomes to the most important stakeholders.
BSI. (2012). Balanced Scorecard basics. Balanced Scorecard Institute. Retrieved September 10, 2012 from http://www.balancedscorecard.org/BSCResources/AbouttheBalancedScorecard/tabid/55/Default.aspx