Measuring & Balancing the 4 Key Aspects of Your Agency

January 30, 2019

I first heard of the “balanced scorecard” back when I was in consulting with the “Big 5” (for those of you old enough to remember the “Big 5”). It was being pitched as a best practice for running a business, and we’d be wrapping consulting engagements around this new “tool” for current and prospective clients.

I wasn’t a buyer.

Later while in graduate school, I was exposed to a great book called Strategy Maps: Converting Intangible Assets into Tangible Outcomes by Robert Kaplan and David Norton. The authors, coincidentally, are the founding fathers of the balanced scorecard, and their book put the once overly-theoretical (in my mind) tool into practice.

I’ve been a disciple ever since.

The book’s subtitle is the key to understanding the practicality of the balanced scorecard: “Converting intangible assets into tangible outcomes.”

Are you measuring the right assets?

As business owners, we spend an inordinate amount of time fixating on our financials. And with good reason – we need to pay the bills. But more so, we’ve all likely been taught that the measure of any business is in the financial results.

But what about the other aspects of the business that are so critical?

What about the other aspects that without them, we wouldn’t be in business?

What about our customers – how do we measure their sentiment and engagement with us?

What about our operations – how do we measure the effectiveness and priorities of our operation, presumably delivering value to our customers?

And what about our people – how do we measure staffing, our staff’s knowledge capital and their employee engagement?

All those aspects – the customers, the operations and the people – of a business matter. A lot. More than the financials, I’d argue. But before you call me crazy, take a few minutes to understand how managing your business with a balanced scorecard works.

How the “balanced scorecard” works

The balanced scorecard is a management tool that provides a balanced view of any operation, of any business, of any size.

It brings together a balanced view of the four most important perspectives of a business:

  • The financial perspective
  • The customer perspective
  • The operations (or internal) perspective
  • The people perspective

What the balanced scorecard quickly brings to light is the relationship between these four core aspects of a business while illustrating the cause-and-effect proven by the financial results. Financial results are simply outcomes, and they generally tend to generate more questions than answers (like “why is a certain product’s revenue behind or ahead?”)

How do we find the accurate answers to these questions? Here is where the balanced scorecard comes in to play.

The Financial Perspective

The financial perspective of the balanced scorecard measures the health of your financial results typically measured by:

  • Revenue
  • Expenses
  • Net operating income (loss)
  • New revenues

The Customer Perspective

The customer perspective of the balanced scorecard measures the health of your customer base. This is typically measured by:

  • Number of new customers (acquired)
  • Net Promoter Score (NPS) or another customer satisfaction or loyalty measure
  • Customer retention
  • Total customers
  • New product adoption rate

The Operations Perspective

The operations (or internal) perspective of the balanced scorecard measures the health of your operations and how it adds value for your customers. This is typically measured by:

  • Service level standards
  • New product development
  • Inventory management
  • Marketing campaign effectiveness
  • Service request handling

The People Perspective

The people perspective of the balanced scorecard measures the health of your most valued asset – your people. This is typically measured by:

  • Employee engagement
  • Staff development
  • Staff retention
  • New hires

Bringing it all together

Your answers appear when you evaluate all four scorecard perspectives and how they are intertwined. Let’s start where we always start – the financials.

If your financial results are not where you’d like to see them, quickly look at the customer perspective of your balanced scorecard. You will likely find dissatisfied customers, higher customer attrition, or a lag in customer acquisition.

As you find issues with your customer’s perspective, you can immediately look to your operations perspective. You’ll likely find poor performance in your service levels, poor quality in new products, or more service requests than planned.

And as you uncover issues in your operations, you can quickly look to your people perspective. Here you’ll likely find that you’re understaffed, your team is disengaged, or you’re experiencing higher than expected staff turnover.

Or worse, all of that.

Quick tip: Evaluate your people first.

To bring the point home, consider evaluating your business from your people perspective first. All roads lead to our people, their development, and their engagement. It’s the old adage: having the right people in the right seats doing the right things. If we don’t have that, you will feel the impact in the rest of your business.

How are you measuring the success of your operations, the happiness of your customers, and the productivity of your people? What are you doing next to get to a balanced scorecard?

“Measurement is the first step that leads to control and eventually to improvement. If you can’t measure something, you can’t understand it. If you can’t understand it, you can’t control it. If you can’t control it, you can’t improve it.” ― H. James Harrington


Chad Eddy, MBA, is the CEO and fearless leader at Indium. He has more than 20 years of multifaceted, multi-industry experience. In addition to serving independent agents, Chad is passionate about spending time with his family, playing and watching hockey, listening to good music, reading, and raising money for cystic fibrosis research.