How Saatchi and Saatchi Implemented the Balanced Scorecard and Its Apparent Effects

Introduction

In the contemporary business environment, the use of balanced scorecards (BSC) contributes to the consistent improvement of the organizational performance. Companies using the BSC can understand better their customers’ needs and wants and develop effective strategies which can help them to improve their marketing position. In this respect, it is possible to refer to the experience of Saatchi and Saatchi, the company, which proved to be extremely successful after the implementation of the BSC. Therefore, it is possible to estimate that the use of the BSC can improve consistently the organizational performance and open larger opportunities for companies to develop new strategies to gain a better marketing position and to expand their market share through the attraction of a larger amount of customers and optimization of the marketing performance.

Analysis

In actuality, Saatchi and Saatchi has proved to be a very successful company, which demonstrate the effectiveness of the implementation of the BSC in its organizational performance. At the same time, in order to understand the factors contributing to the overall success of Saatchi and Saatchi, it is necessary to briefly dwell upon the essence of the BSC. In this regard, it is worth mentioning the fact that specialists argue that “Balanced Scorecard allows better measurement of a firm’s capabilities to create long-term value by identifying the key drivers of this value” (Measurement for Success, 2008, 2). In this regard, the adequate measurement of a company’s capabilities to creating long-term values is particularly important because it allows to develop a long-run strategy of the company’s development. At the same time, it is worth mentioning the fact that the BSC helps to improve the company-customer relationships because it opens wider opportunities for understanding the customers’ needs and wants. At this point, it is worth mentioning the fact that the development of the effective marketing strategy is possible on the condition of the effective implementation of the BSC.

In this respect, it is possible to refer to the experience of Saatchi and Saatchi, which has implemented the BSC successfully. To put it more precisely, on using the BSC, Saatchi and Saatchi introduced consistent structural changes which led to the demerger of the company and its further restructuring. In terms of the demerger and restructuring, Saatchi and Saatchi divided its agencies into three groups, including prosper, drive, and lead agencies.

The first type of agencies was “a ”˜prosper’ agency (most agencies fall into this category) generally has less than 50 employees and limited potential to ever become a gigantic agency” (Greenhalgh, 2004). These small agencies were separated from others to help other agencies to accelerate their development and facilitate their progress, whereas prosper agencies could be sold out or merged in the future.

The second type of agencies are “a ”˜drive’ agency, typically, has between 50 and 150 employees and was given the goal of maintaining or slightly growing their revenue base, but also growing their margins” (Greenhalgh, 2004).

These agencies were supposed to contribute to the steady development of Saatchi and Saatchi and provide it with foreseeable revenue. To put it more precisely, these agencies laid the foundation on the ground of which the company could develop and keep progressing steadily.

However, the third type of agencies was “the largest agencies, such as the UK, New York and China, were assigned ”˜lead’ status. It was here that rapid growth was expected and where the lion’s share of investment would be allocated” (Greenhalgh, 2004). These agencies were the most prospective for Saatchi and Saatchi but, on the other hand, there were high risks associated with their possible failure. Nevertheless, they had the greatest potential and the company could invest in their development the lion share of its financial resources expecting the high return on investments.

Conclusion

Thus, in conclusion, it is important to place emphasis on the fact that the experience of Saatchi and Saatchi proves that the BSC is an effective tool to improve the organizational performance of the company. The demerger of Saatchi and Saatchi contributed to the consistent improvement of its organizational performance.

Evaluation

Obviously, the BSC allowed Saatchi and Saatchi to introduce the restructuring and demerger of the company. Nevertheless, the company can lose potentially well-qualified employees working in prosper agencies. In such a situation, the company should focus on the recruitment of the well-qualified professionals in the lead agencies, which are the most prospective for the company and its further development. In addition, the best professionals can accelerate the development of the lead agencies.