Definition

What is the Balanced Scorecard?

The scorecard emerged in response to organizations’ gap between short-term financial

activities and long-term strategy.

It is not a replacement for budgeting but merely a complement in the sense allows

businesses to set performance benchmarks in non-financial areas.

Performance standards are specifically applied to four perspectives: customer relations,

finance, internal processes and learning and growth.

To ensure that both short-term and long-term goals are correlated, the scorecard relies on

four processes: translating the vision, communicating and linking, business planning and

feedback and learning.

provides stakeholders with a comprehensive measure of how the organization is

progressing towards the achievement of its strategic goals.

The Goal of Alignment

Poor Organizational Alignment

Vision & Goals

Good Organizational Alignment

Vision & Goals

Objectives

To achieve strategic objectives.

To provide quality with fewer

resources.

To eliminate non-value added efforts.

To align customer priorities and

expectations with the customer.

To track progress.

To evaluate process changes.

To continually improve.

To increase accountability.

Uses

How is the Balanced Scorecard used?

Translating the vision: helping all employees understand how their day-to-day

work contributes to long-term goals.

Communicating and linking: disseminating long-term goals both up and down an

organizational hierarchy, ensuring that both departmental and individuals

objectives are in alignment.

Business planning: taking long-term strategy and using it as the basis for how

resources and capital are allocated.

Feedback and learning: the scorecard enables strategic and real-time learning

because it measures daily performance and spending in the context of overarching

goals, allowing organizations to make necessary changes.

Framework

Measurement is the

language that gives

clarity to vague concepts.

Measurement is used to

communicate, not to

control.

Building the scorecard

develops consensus and

teamwork throughout the

organization.

"If we succeed, how will we look to our shareholders?”

The Vision

Financial Perspective

"To achieve my vision, how must I look to my

customers?”

Customer Perspective

"To satisfy my customer, at which processes must

I excel?”

Internal Perspective

"To achieve my vision, how must my organization learn

and improve?”

Organization Learning

Issues and Solutions

The Balanced Scorecard addresses these issues:

Problems

1. The Vision Barrier

2. The People Barrier

Solutions

1. Translating the Visiono Identify strategic objectives,

linkages, measures, targets and initiatives

2. Linking the Organizationo Communicate and align with the

strategyo Define individual contribution to the

strategyo Link to performance management

and compensation

Issues and Solutions

Continuation,

Problems

3. The Operational Barrier

4. The Management Barrier

Solutions

3. Aligning Resources with the Strategyo Prioritize strategic initiativeso Link planning and budgeting to the

strategy

4. Feedback and Learningo Focus management meetings on

strategic prioritieso Provide measurement feedbacko Test strategic hypotheses

Strategic Performance Management System

Strategic Direction Create Environment For Change

Communicate Strategies Define Objectives Implement BSC

Balanced Scorecard Measure Performance Improve Processes

Evaluate and Adjust Continuous Improvement Redefine Initiatives

Linking it all together…

The Balance Scorecard

LEARNING & GROWTH

To achieve our goals, how

must we learn, communicate

and grow?

INTERNAL

To satisfy our customers and

stakeholders, in which business

processes must we excel?

FINANCIAL/REGULATORY

To satisfy our constituents,

what financial & regulatory

objectives must

we accomplish?

CUSTOMER

To achieve our vision,

what customer needs must

we serve?

Learning and Growth

To achieve our goals and accomplish

core activities, how must we learn,

communicate and work together?

Possible Performance Measures:

o Employee Satisfaction

o Retention and Turnover

o Training Hours and Resources

o Technology Investment

Internal Perspective

To satisfy our customers, in which

business processes must we excel?

Possible Performance Measures:

o Cycle Time

o Completion Rate

o Workload and Employee Utilization

o Transactions per employee

o Errors or Rework

Customer Perspective

To achieve our vision, what customer

needs must we serve?

Possible Performance Measures:

o Customer Satisfaction (Average)

o Satisfaction Gap Analysis

(Satisfaction vs. Level of Importance)

o Satisfaction Distribution (% of each

area scored)

Financial / Regulatory Perspective

To satisfy our constituents, what

financial and regulatory objectives must

we accomplish?

Possible Performance Measures:

o Cost / Unit

o Unfunded Requirements or Projects

o Cost of Service

o Budget Projections and Targets

Measurement

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

Measurement Should:

Translate customer expectations into goals.

Evaluate the quality of processes.

Track our improvement.

Focus our efforts on our customers.

Support our strategies.

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

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.

Responsibilities

The Leadership 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

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 in the FAS Division

Notes

The Balance Scorecard is a Feedback

Tool

It is not a Strategy or Quality program

Think of it as a “Dashboard”

Should be done in addition to the

other Quality Improvement Initiatives:

o Six-Sigma

o Lean

o Design for Six-Sigma

Strategy is about Choices

There are several ways or strategies to cross the river

o Build a boat

o Build a raft

o Build a helicopter

o Build a bridge

o Dig a tunnel

Each can be successful in achieving the goal.

Thank You!