The Balanced Scorecard is a strategic planning tool used to align business activities with organizational vision and strategy. It monitors performance across financial measures as well as customer, internal process, and learning/growth perspectives. Developed in the 1990s, the Balanced Scorecard framework provides a more balanced view of organizational performance than financial measures alone. When implemented properly with executive support and involvement across levels, it can improve performance, focus on strategic goals, and enhance communication of strategy throughout an organization.

1. The Balanced Scorecard Approach

2. What is a Balanced Scorecard?
The Balanced Scorecard is a strategic planning
and management system used to align business
activities to the vision and strategy of the
organization by monitoring performance against
strategic goals.

3. Balanced Scorecard Concept
 Was first published in 1992 by Kaplan and
Norton, a book followed in 1996.
 Traditional performance measurement that only
focus on external accounting data are obsolete.
 The approach is to provide 'balance' to the
financial perspective.

4. Why Use a Balanced Scorecard?
 Improve organizational performance by
measuring what matters
 Increase focus on strategy and results
 Align organization strategy with workers on a
day-to-day basis
 Focus on the drivers key to future performance
 Improve communication of the organization’s
Vision and Strategy
 Prioritize Projects / Initiatives

5. 4 Original Business Perspectives
Adapted from The Balanced Scorecard by Kaplan & Norton
 The Balanced
Scorecard model
suggests that we
view the
organization from
4 perspectives.
 Then Develop
metrics, collect
data and analyze it
relative to each of
these perspectives

6. 4 Business Perspectives Questions
 Financial
 What must we do to create sustainable economic value?
 Internal Business Process
 To satisfy our stakeholders, what must be our levels of
productivity, efficiency, and quality?
 Learning and Growth
 How does our employee performance management
system, including feedback to employees, support high
performance?
 Customer
 What do our customers require from us and how are we
doing according to those requirements?

7. Balanced Scorecard Measurements

8. Key Implementation Success Factors
 Obtaining executive sponsorship and
commitment
 Involving a broad base of leaders, managers
and employees in scorecard development
 Choose the right Scorecard Champion
 Beginning interactive (two-way) communication
first
 Viewing the scorecard as a long-term journey
rather than a short-term project
 Getting outside help if needed

9. Balanced Scorecard Example
STRATEGY MAP
STRATEGY MAP
BALANCED SCORECARD
BALANCED SCORECARD
MEASUREMENT
MEASUREMENTPROCESS: MANUFACTURING EXCELLENCE
PROCESS: MANUFACTURING EXCELLENCE
THEME: ROCE > xx%, VOLUME = xx,xxx units
THEME: ROCE > xx%, VOLUME = xx,xxx units OBJECTIVES
OBJECTIVES
TARGET
TARGET
ACTION PLAN
ACTION PLAN
INITIATIVE
INITIATIVE
BUDGET
BUDGET
FINANCIAL
PERSPECTIVE
Improve
Productivity
Improve
Productivity
OFFER PRODUCTS & SERVCIES
THAT ARE CONSISTENT, TIMELY
and LOW-COST
OFFER PRODUCTS & SERVCIES
THAT ARE CONSISTENT, TIMELY
and LOW-COST
Long-Term Shareholder
Value ROCE > xx%
Long-Term Shareholder
Value ROCE > xx%
Grow
Revenue
Grow
Revenue
CUSTOMER
PERSPECTIVE
•Operating Cost & Efficiency•Operating Cost & Efficiency
•Capacity Utilization•Capacity Utilization
•Capability Utilization•Capability Utilization
•Brand / Image•Brand / Image
• Cost/Unit, Efficiency• Cost/Unit, Efficiency
•% Utilization•% Utilization
• Monthly Monitoring• Monthly Monitoring
• Weekly/Monthly
Monitoring
• Weekly/Monthly
Monitoring
• Monthly Monitoring• Monthly Monitoring
• Weekly/Monthly
Monitoring
• Weekly/Monthly
Monitoring
•Low Cost Manufacturing•Low Cost Manufacturing
•World-Class Quality
Standards
•World-Class Quality
Standards
•World-Class Delivery Timing•World-Class Delivery Timing
•Knowledgeable & Skilled
Partner
•Knowledgeable & Skilled
Partner
•High Customer Satisfaction•High Customer Satisfaction
•Reinforce Brand Image•Reinforce Brand Image
• Man-hour per Unit• Man-hour per Unit
• Defect per Unit• Defect per Unit
• Sales Delivery• Sales Delivery
• Direct Pass Rate• Direct Pass Rate
• Market Feedback• Market Feedback
• Sales Volume• Sales Volume
• Weekly Monitoring• Weekly Monitoring
• Daily Monitoring• Daily Monitoring
• Daily Monitoring• Daily Monitoring
• Daily Monitoring• Daily Monitoring
• Weekly Monitoring• Weekly Monitoring
• Monthly Monitoring
Prod. & Sales Mtg.
• Monthly Monitoring
Prod. & Sales Mtg.
Low
Cost
Low
Cost
World
Class
World
Class
ENSURE OPERATIONAL EXCELLENCE WITH
INNOVATION AS WELL BEING SOCIALLY
RESPONSIBLE
ENSURE OPERATIONAL EXCELLENCE WITH
INNOVATION AS WELL BEING SOCIALLY
RESPONSIBLE
INTERNAL
PERSPECTIVE
Customer
Satisfaction
Customer
Satisfaction
Enhance
Brand
Enhance
Brand
Operational
Excellence
Operational
Excellence
Process
Innovation
Process
Innovation
Alliances with
SBUs
Alliances with
SBUs
Socially
Responsible
Socially
Responsible
•Productivity•Productivity
•Delivery•Delivery
•Continuous Improvement•Continuous Improvement
•NPI•NPI
•Safety & Health•Safety & Health
•Environment•Environment
• Cycle Time• Cycle Time
• Meet Daily Plan
• WIP
• Meet Daily Plan
• WIP
• KAIZEN
• ICC
• KAIZEN
• ICC
• Timely Introduction• Timely Introduction
• Industrial Accident
• Commuting Accident
• Industrial Accident
• Commuting Accident
• Toxic Waste Disposal
• ISO 9002
• Toxic Waste Disposal
• ISO 9002
• Hourly Monitoring• Hourly Monitoring
• Daily Monitoring
• Daily Monitoring
• Daily Monitoring
• Daily Monitoring
• Monthly follow-up
• Specific Programmed
• Monthly follow-up
• Specific Programmed
• Weekly Follow-up• Weekly Follow-up
• Cross Audits
• Defensive Driving
• Cross Audits
• Defensive Driving
• Facility Readiness
• Certification
• Facility Readiness
• Certification
STRATEGIC JOB & SYSTEMSSTRATEGIC JOB & SYSTEMS
LEARNING & GROWTH
PERSPECTIVE
Skills
Skills
Info. System
Info. System
•Develop the Necessary Skills•Develop the Necessary Skills
•Information Systems
Availability
•Information Systems
Availability
•Strategic Awareness•Strategic Awareness
• R&D & Development• R&D & Development
• ALC, Procurement,
Financial
• ALC, Procurement,
Financial
• Alignment• Alignment
• Training and Skill
Build-up
• Training and Skill
Build-up
• Set-up, Test and
Validation
• Set-up, Test and
Validation
• Communication
Programmed
• Communication
Programmed
• Trial Prod.
• Spare Parts Prod
• Trial Prod.
• Spare Parts Prod
•Warranty Cost•Warranty Cost tt
OPEX
RM XX M
CAPEX
RM xx M
OPEX
RM XX M
CAPEX
RM xx M

10. Balanced Scorecard Strategy Map

11. Department Level Scorecard Example

12. Scorecard Potential Pitfalls & Criticisms

13. Scorecard Potential Pitfalls & Criticisms
 Lack of a well Defined Strategy
 The balanced scorecard relies on a well defined strategy and
understanding of linkages between strategic objections and
metrics. Without this foundation the implementation could fail.
 Too much focus on the lagging measures
 Focusing on only the lagging measures may cause a lack of
priority or opportunity for the leading measures.
 Use of Generic Metrics
 Don’t just copy metrics from another firm. Identify the measures
that apply to your strategy and competitive position .
 Self-serving managers
 Managers whose goal is to achieve a desired result in order to
obtain a bonus or other self reward.

14. Balanced Scorecard Benefit Re-Cap
 Helps align key performance measures with strategy at all levels of
an organization
 The methodology facilitates communication and understanding of
business goals and strategies at all levels of an organization
 Strategic initiatives that follow "best practices" methodologies that
cascade through the entire organization
 Transforms an organization’s mission statement and strategic plan
from a passive document into the "marching orders" for the
organization on a daily basis.
 It enables executives to truly execute their strategies by identifying
what should be done and measured.
To date, some form of a Balanced Scorecard is used by nearly 60% of
Fortune 500 companies

15. Thank You for Your Time
Questions?