One of the workshops held at the Balanced Scorecard Forum 2011 Dubai referred to applying the Balanced Scorecard in small and medium-sized enterprises (SMEs). The workshop was facilitated by Alan Fell (Alan Fell Consultancy Ltd, UK), an appreciated management consultant and facilitator, who also moderated the event during the two days of Masterclass with Dr. Kaplan and Dr. Norton and the two days of Conference. Constructed on the premise that most of the Balanced Scorecard (BSC) discussions and literature are build around the experience of large organizations, the workshop addressed some of the issues that were raised also during the presentations and discussions at the Masterclass and Conference.

While the definitions of SMEs can vary from one country to another in terms of figures (number of employees, value of turnover, value of assets etc.), their major role regarding aspects such as people employed, innovation and value creation in economies around the world cannot be neglected. In the European Union, for example, more than 99% of businesses are SMEs and provide more about two thirds of the private sector jobs (European Commission, 2010). Hence, the performance of these SMEs is of major importance, impacting significantly the overall economy.

While SMEs needs and characteristics differ from those of large organizations, there are differenced even between a 5-person and a 250-person business. Thus, “generalization is misleading” and “the challenge is to understand the practicalities of measurement” that relevant for each SME (Fell, 2011). This would be the first step in adopting the Balanced Scorecard in an SME – understand the context and the constraints.

While large organizations have dedicated resources for the strategy management and the Balanced Scorecard implementation, SMEs will probably have no such resources. Thus, decisions such as how many Scorecards to use, how many measures and how much to drill-down in details need to be made depending on the context. However, one general rule should apply, that is to “keep it simple and practical” (Fell, 2011). Regarding the timescale for implementation, Alan Fell (2011) suggests that for microenterprises (made of less than a dozen employees), one meeting to decide on the measures and the targets will suffice, followed by simple measurement and reporting at various time intervals (one scorecard, no cascading). In medium-sized firms there can be two levels, the strategic / corporate level and the functional / departmental level.

Regarding the use of technology, Fell (2011) argues that one major fallback of using complex technology to implement the BSC is the “IT project” syndrome, that is turning the BSC more into an IT project, that will lack vital elements such as implication, communication and other human aspects. While it is a matter of choice to use Microsoft Excel or dedicated software, some other discussions during the Forum emphasized that even in larger organizations, Excel might be a good choice at the first stages of using the BSC, as it provides a good cost/benefit balance until the organization clearly defines what it would like its BSC technology to do and to look like.

All in all, some possible ground rules to follow when measuring performance in SMEs would be the following (Fell, 2011):

Measure only what you need to measure;

Measure only what you don’t already know;

Measure at a frequency which makes sense to managing the business.

Thus re

One of the workshops held at the Balanced Scorecard Forum 2011 Dubai referred to applying the Balanced Scorecard in small and medium-sized enterprises (SMEs). The workshop was facilitated by Alan Fell (Alan Fell Consultancy Ltd, UK), an appreciated management consultant and facilitator, who also moderated the event during the two days of Masterclass with Dr. Kaplan and Dr. Norton and the two days of Conference.  Constructed on the premise that most of the Balanced Scorecard (BSC) discussions and literature are build around the experience of large organizations, the workshop addressed some of the issues that were raised also during the presentations and discussions at the Masterclass and Conference. While the definitions of SMEs can vary from one country to another in terms of figures (number of employees, value of turnover, value of assets etc.), their major role regarding aspects such as people employed, innovation and value creation in economies around the world cannot be neglected. In the European Union, for example, more than 99% of businesses are SMEs and provide more about two thirds of the private sector jobs (European Commission, 2010). Hence, the performance of these SMEs is of major importance, impacting significantly the overall economy. While SMEs needs and characteristics differ from those of large organizations, there are differenced even between a 5-person and a 250-person business. Thus, “generalization is misleading” and “the challenge is to understand the practicalities of measurement” that relevant for each SME (Fell, 2011). This would be the first step in adopting the Balanced Scorecard in an SME – understand the context and the constraints. While large organizations have dedicated resources for the strategy management and the Balanced Scorecard implementation, SMEs will probably have no such resources. Thus, decisions such as how many Scorecards to use, how many measures and how much to drill-down in details need to be made depending on the context. However, one general rule should apply, that is to “keep it simple and practical” (Fell, 2011). Regarding the timescale for implementation, Alan Fell (2011) suggests that for microenterprises (made of less than a dozen employees), one meeting to decide on the measures and the targets will suffice, followed by simple measurement and reporting at various time intervals (one scorecard, no cascading). In medium-sized firms there can be two levels, the strategic / corporate level and the functional / departmental level. Regarding the use of technology, Fell (2011) argues that one major fallback of using complex technology to implement the BSC is the “IT project” syndrome, that is turning the BSC more into an IT project, that will lack vital elements such as implication, communication and other human aspects. While it is a matter of choice to use Microsoft Excel or dedicated software, some other discussions during the Forum emphasized that even in larger organizations, Excel might be a good choice at the first stages of using the BSC, as it provides a good cost/benefit balance until the organization clearly defines what it would like its BSC technology to do and to look like. All in all, some possible ground rules to follow when measuring performance in SMEs would be the following (Fell, 2011): Measure only what you need to measure; Measure only what you don’t already know; Measure at a frequency which makes sense to managing the business. Thus relevance and simplicity represent two major requirements for SMEs engaging in performance measurement and Balanced Scorecard implementation, in order to achieve a good balance between the time and resources invested in the process and the value it generates. References

European Commission, Facts and figures about the EU´s Small and Medium Enterprise (SME), available at: http://ec.europa.eu/enterprise/policies/sme/facts-figures-analysis/index_en.htm (accessed 16 April 2011).

Fell, A. (2011), Post Forum Workshop E – Applying The Baclanced Scorecard to SMEs, 31 March, Balanced Scorecard Forum 2011 in Dubai.

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One of the workshops held at the Balanced Scorecard Forum 2011 Dubai referred to applying the Balanced Scorecard in small and medium-sized enterprises (SMEs). The workshop was facilitated by Alan Fell (Alan Fell Consultancy Ltd, UK), an appreciated management consultant and facilitator, who also moderated the event during the two days of Masterclass with Dr. Kaplan and Dr. Norton and the two days of Conference. Constructed on the premise that most of the Balanced Scorecard (BSC) discussions and literature are build around the experience of large organizations, the workshop addressed some of the issues that were raised also during the presentations and discussions at the Masterclass and Conference. While the definitions of SMEs can vary from one country to another in terms of figures (number of employees, value of turnover, value of assets etc.), their major role regarding aspects such as people employed, innovation and value creation in economies around the world cannot be neglected. In the European Union, for example, more than 99% of businesses are SMEs and provide more about two thirds of the private sector jobs (European Commission, 2010). Hence, the performance of these SMEs is of major importance, impacting significantly the overall economy. While SMEs needs and characteristics differ from those of large organizations, there are differenced even between a 5-person and a 250-person business. Thus, “generalization is misleading” and “the challenge is to understand the practicalities of measurement” that relevant for each SME (Fell, 2011). This would be the first step in adopting the Balanced Scorecard in an SME – understand the context and the constraints. While large organizations have dedicated resources for the strategy management and the Balanced Scorecard implementation, SMEs will probably have no such resources. Thus, decisions such as how many Scorecards to use, how many measures and how much to drill-down in details need to be made depending on the context. However, one general rule should apply, that is to “keep it simple and practical” (Fell, 2011). Regarding the timescale for implementation, Alan Fell (2011) suggests that for microenterprises (made of less than a dozen employees), one meeting to decide on the measures and the targets will suffice, followed by simple measurement and reporting at various time intervals (one scorecard, no cascading). In medium-sized firms there can be two levels, the strategic / corporate level and the functional / departmental level. Regarding the use of technology, Fell (2011) argues that one major fallback of using complex technology to implement the BSC is the “IT project” syndrome, that is turning the BSC more into an IT project, that will lack vital elements such as implication, communication and other human aspects. While it is a matter of choice to use Microsoft Excel or dedicated software, some other discussions during the Forum emphasized that even in larger organizations, Excel might be a good choice at the first stages of using the BSC, as it provides a good cost/benefit balance until the organization clearly defines what it would like its BSC technology to do and to look like. All in all, some possible ground rules to follow when measuring performance in SMEs would be the following (Fell, 2011): Measure only what you need to measure; Measure only what you don’t already know; Measure at a frequency which makes sense to managing the business. Thus relevance and simplicity represent two major requirements for SMEs engaging in performance measurement and Balanced Scorecard implementation, in order to achieve a good balance between the time and resources invested in the process and the value it generates. References European Commission, Facts and figures about the EU´s Small and Medium Enterprise (SME), available at: http://ec.europa.eu/enterprise/policies/sme/facts-figures-analysis/index_en.htm (accessed 16 April 2011). Fell, A. (2011), Post Forum Workshop E – Applying The Baclanced Scorecard to SMEs, 31 March, Balanced Scorecard Forum 2011 in Dubai.

evance and simplicity represent two major requirements for SMEs engaging in performance measurement and Balanced Scorecard implementation, in order to achieve a good balance between the time and resources invested in the process and the value it generates.

References

European Commission, Facts and figures about the EU´s Small and Medium Enterprise (SME), available at: http://ec.europa.eu/enterprise/policies/sme/facts-figures-analysis/index_en.htm (accessed 16 April 2011).

Fell, A. (2011), Post Forum Workshop E – Applying The Baclanced Scorecard to SMEs, 31 March, Balanced Scorecard Forum 2011in Dubai.