2. 2
The Balanced Scorecard
Agenda
History
Definition
What is it?
Why do it?
Strategic Focus Organization
The Four Perspectives
Measures, Targets and Initiatives
Team Leader and Core Team
3. 3
The Balanced Scorecard
History?
The Balanced Scorecard was developed and first used at
Analog Devices in 1987, by focusing not only on
financial outcomes but also on the human issues.
In 1992, Robert Kaplan and David Norton began
publicizing the BSC through series of journal articles and
then in the 1996 book The Balanced Scorecard.
BSC have become a fertile field of theory and research
& many practitioners have diverted from the original.
4. 4
The Balanced Scorecard
Definition?
The Balanced Scorecard is a management tool
that provides stakeholders with a
comprehensive measure of how the
organization is progressing towards the
achievement of its strategic goals.
5. 5
The Balanced Scorecard
What is it?
Balances financial and non-financial measures.
Balances short and long-term measures.
Balances performance drivers (leading
indicators) with outcome measures
Should contain just enough data to give a
complete picture of organizational
performance… and no more!
Leads to strategic focus and organizational
alignment.
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The Balanced Scorecard
Why do it?
To achieve strategic objectives
To provide quality with fewer resources
To eliminate non-value added efforts
To align customer priorities and expectations
To track progress
To evaluate process changes
To continually improve
To increase accountability
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The Balanced Scorecard
Strategy Focused Organization
Mission: What we do
Vision: What we aspire to be
Strategies: How we accomplish our goals
Measures: Indicators of our progress
9. 9
The Balanced Scorecard
Five Keys to BSC?
1. Translate the strategy to operational terms
2. Align the organization to the strategy
3. Make strategy everyone’s job
4. Make strategy a continual process
5. Mobilize change through executive leadership
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FINANCIAL/REGULATORY
To satisfy our constituents,
what financial & regulatory
objectives must
we accomplish?
CUSTOMER
To achieve our vision,
what customer needs must
we serve?
Quality
To satisfy our customers and
stakeholders, in which business
processes must we excel?
People
To achieve our goals, how
must we learn, communicate
and grow?
The Balanced Scorecard
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The Balanced Scorecard
Possible Performance Measures
Cost / Unit
Unfunded Requirements or Projects
Cost of Service (doing business)
Budget Projections and Targets
Financial Perspective
To satisfy our constituents, what financial and regulatory
objectives must we accomplish?
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The Balanced Scorecard
Possible Performance Measures
Customer Satisfaction Index (Average)
Satisfaction Gap Analysis (Satisfaction vs.
Level of Importance)
Satisfaction Distribution (% of each area scored)
Customer Perspective
To achieve our vision, what customer needs must we
serve?
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The Balanced Scorecard
Possible Performance Measures
Cycle Time
Completion Rate
Workload and Employee Utilization
Transactions per employee
Errors or Rework ratio
Quality Perspective
To satisfy our customers, in which business processes must
we excel?
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The Balanced Scorecard
Possible Performance Measures
Employee Satisfaction
Retention and Turnover (stability ratio)
Training Hours and Resources
Technology Investment
People Perspective
To achieve our goals and accomplish core activities, how
must we learn, communicate and work together?
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The Balanced Scorecard
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
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The Balanced Scorecard
Measurement Should
• Translate customer expectations into goals
• Evaluate the quality of processes
• Track our improvement
• Focus our efforts on our customers
• Support our strategies
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The Balanced Scorecard
Good Performance Measures:
• Provide a way to see if our strategy is working
• Focus employees’ attention on what matters
most to success
• Allow measurement of accomplishments, not just
of the work that is performed
• Provide a common language for communication
• Are valid to ensure measurement of the right
things
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The Balanced Scorecard
Targets
• Targets need to be set for all measures
• Give personnel something for which to aim
(WIIFM)
• If achieved will transform the organization
• 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.
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Initiatives
Once measures and targets are established, it
is the responsibility of management to
determine HOW the organization will achieve
its goals.
Measures are used to determine the
effectiveness of strategic initiatives
The Balanced Scorecard
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The Balanced Scorecard
The Leader Team
Develops the division’s vision, strategy and
goals
Develops organizational objectives and
targets
Provides leadership, endorsement and vision
for the project
Clears barriers to scorecard progress
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The Balanced Scorecard
The Core Team
Drafts the strategy map and scorecard
Works with employees to develop measures
supporting strategic objectives
Works with the Leadership Team to plan and
implement the Balanced Scorecard