THE BALANCED SCORECARD

Dimensions and Perspectives

By David Iornem, PhD

What is a Balanced Scorecard?

BSC is a measurement tool

• It allows the organization to assess progress in implementing strategy

• It allows the organization to benchmark itsprogress against great practices outside andinside the organization, and over time

• It provides a diagnostic framework for tracking relationships and impact among strategies

What is a Balanced Scorecard?

BSC is a communication tool• It allows an organization to articulate

its chain of value creation within the organization and to the world at large.

• It provides a platform for planning and

communication of planning activities

What is a Balanced Scorecard?

BSC is a strategic management tool

• It allows an organization to see all of the driversof organizational value and performance in aholistic conceptual framework

• It creates a pathway for the creation andimplementation of strategy and measurement ofprogress that is fully aligned throughout theorganization

Balanced Scorecard comprises an integrated system of performance measures which derive

from, and support organization strategy

NATURE OF BSC

Different companies need different balanced

scorecards

Why?

DIFFERENT FOLKS, DIFFERENT STROKES

1. Because they may identify different measures for their

strategy management.

2. Because they may have different strategies

TWO MAIN REASONS

Examples of

Differences in StrategyDell and McDonald emphasize

Operational Excellence

Home Depot emphasizes Customer Intimacy

Intel and Sony emphasize Product Leadership

THE BALANCED CONCEPT

Organizations may emphasize a particular perspective, but

all have to maintain high standards in all the four

perspectives, i.e. a BALANCED approach

The 4 Main Perspectives

•Customer Perspective•Financial / Regulatory

Perspective•Internal Perspective•Learning and Growth

Perspective

Perspectives for NGOs and Govt organisations.

• Mission perspective

• Customer perspective

• Internal perspective

• Learning and growth perspective

• Financial perspective

Perspectives For a Service Organisations.

• Growth• Leadership• Acceleration (Transformational

Change)• Collaboration• Innovation• Execution• Retention

BSC FOR INDIVIDUALS

• Financial Perspective – Investments, Savings, Returns on Savings, Risk Mgt.

• Learning & Growth – Continuing Education, Lifelong Learning, Continuous Education, Personal Capacity Building.

• Internal Process – Self-Management, Managing Time, Personal Effectiveness.

• Relationships (Customer) – Networks, Workplace, Wife, Children.

Customer Perspective

• Customer Satisfaction

• Satisfaction Gap Analysis (Satisfaction vs.

•    Level of Importance)

• Satisfaction Distribution (% of each area scored)

 

Possible Performance

MeasuresTo achieve our vision, what customer needs

must we serve?

Financial / Regulatory Perspective

 

• Cost / Unit • Unfunded Requirements or

Projects • Cost of Services• Budget Projections and Targets

Possible Performance

MeasuresTo satisfy our constituents,

what financial and regulatory objectives must we

accomplish?  

Internal Perspective 

• Cycle Time • Completion Rate • Workload and Employee

Utilization • Transactions per employee • Errors or Rework

Possible Performance

Measures 

To satisfy our customers, in which business processes must

we excel?  

 

Learning and Growth

 

To achieve our goals and accomplish core activities, how

must we learn, communicate and work

together? 

Possible Performance

Measures

• Employee Satisfaction • Retention and Turnover • Training Hours and Resources • Technology Investment

Why Measure? 

• To determine how effectively and efficiently the process or service satisfies the customer.

• To identify improvement opportunities.

• To make decisions based on FACT and    DATA

Measurements Should: 

• Translate customer expectations into goals.

• Evaluate the quality of processes. • Track our improvement. • Focus our efforts on our

customers. • Support our strategies.

IMPORTANCE OF TARGETS

 

“If you don’t know where you’re going, you’re probably not gonna

get there.”                          

  Forrest Gump 

  

Targets • Need to be set for all measures

• Should have a “solid basis”

• Give personnel something for which to aim  

• If achieved will transform the organization

Targets• Careful not to develop measures/targets

in                a fragmented approach: i.e. Asking people to increase customer

satisfaction has to be backed up with the knowledge, tools, and means to achieve that target. 

 

Initiatives 

•Once measures and targets are established, it is the responsibility of management to determine HOW the organization will achieve its goals. 

Initiatives . 

• Measures are used to determine the

effectiveness of strategic initiatives.

WHY IS IT CALLED BALANCED?

 Balance is in 4 Main Ways:

1. Balance between Short and Long Term

2. Balance between 4 Perspectives

3. Balance between how others see us (perspective) and how we see ourselves (focus)

WHY IS IT CALLED BALANCED? (cont)

. 

4. Balance between measuring CHANGE and the SITUATION at a particular time – similar to difference between Profit Statement and a Balance Sheet.

5. Balance between lag and lead Performance Measures

WHY IS IT CALLED BALANCED? (cont)

Questions…

THANK YOU