Balanced Scorecard the Traditional Way

Balanced Scorecard

The traditional way of measuring success is a one-dimensional approach that considers only financial results (Balanced Scorecard 101). But, these numbers do not give McDonalds the insight into the underlying factors that impact financial results and what actions it needs to take to increase sales.

Financial numbers only tell McDonald's how it is doing. The Balanced Scorecard provides McDonald's with the opportunity to obtain a number of unique perspectives on how to actually measure and manage the underlying factors that affect profitability, often referred to as key performance indicators (KPIs).

The two most important ways for McDonald's to increase sales are to increase trial and increase frequency (Marketing your restaurant: Part I). Increasing trial means getting more customers in the door that may have never "tried" a restaurant; increasing frequency means bringing them back more often. The most common ways to increase trial include marketing campaigns such as a targeted advertising promotion, some type of sales promotion or public relations effort or some type of direct customer contact such as a direct mail or flyer (Marketing your restaurant: Part I). To determine if campaigns are increasing trial, McDonald's should measure customer visits before and after the campaign execution.

Frequency is usually related to customer satisfaction with a restaurant's food and service. First, and foremost, it's important to find out if customers are satisfied and, if not, why they are not happy. Thus, obtaining the customer perspective should be one of the key elements of McDonald's Balanced Scorecard effort (Balanced Scorecard 101). An overall score on customer satisfaction surveys would be a KPI that McDonald's could leverage to determine why its frequency is decreasing or increasing over time.

Ultimately, McDonald's will have to drill down into the business processes that influence customer satisfaction and thus, frequency. Is service quick and efficient and are employees appropriately trained (Balanced Scorecard 101)?

McDonald's could measure such elements as the amount of time from order to delivery, the number of employees attending and passing training classes (Balanced Scorecard 101) and employee retention (Wendy's). Most large organizations such as McDonald's have a strategy in place and know the business processes that will help support the strategy. But, it's difficult to bring that strategy down to its front lines so that the processes are executed efficient and effective (Wendy's). The Balanced Scorecard will help McDonald's align its various divisions and restaurants with its strategy.