Balanced Scorecards explanation, examples, aims, implementation and teaching aid diagram for the concept.
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balanced scorecard
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In the beginning was darkness. We went to work, did our job (well or
otherwise) and went home - day in and day out. We did not have to
worry about targets, annual assessments, metric-driven incentives,
etc. Aahh… life was simple back then.
Then there came light. Bosses everywhere cast envious eyes towards
our transatlantic cousins whose ambition was to increase production
and efficiency year-by-year. Like eager younger siblings we trailed
behind them on the (sometimes) thorny path to enlightenment.
Early Metric-Driven Incentives - MDIs - were (generally) focused on
the financial aspects of an organization by either claiming to increase
profit margins or reduce costs. They were not always successful, for
instance driving down costs could sometimes be at the expense of
quality, staff (lost expertise) or even losing some of your customer
base.
Two eminent doctors (Robert S Kaplan and David P Norton) evolved
their Balanced Scorecard system from early MDIs and jointly produced
their (apparently) ground-breaking book in 1996. Many other 'gurus'
have jumped on the Balanced Scorecard wagon and produced a
plethora of books all purporting to be the ‘Definitive' book on Balanced
Scorecards. Amazon.com shows over 4,000 books listed under
Balanced Scorecards, so take your pick - and your chances!
balanced scorecard - definition
What exactly is a Balanced Scorecard? A definition often quoted is: 'A
strategic planning and management system used to align business
activities to the vision statement of an organization'. More cynically,
and in some cases realistically, a Balanced Scorecard attempts to
translate the sometimes vague, pious hopes of a company's
vision/mission statement into the practicalities of managing the
business better at every level.
A Balanced Scorecard approach is to take a holistic view of an
organization and co-ordinate MDIs so that efficiencies are experienced
by all departments and in a joined-up fashion.
Balanced Scorecards explanation, examples, aims, implementation and teaching aid diagram for the concept.
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To embark on the Balanced Scorecard path an organization first must
know (and understand) the following:
The company's mission statement
The company's strategic plan/vision
Then
The financial status of the organization
How the organization is currently structured and operating
The level of expertise of their employees
Customer satisfaction level
The following table indicates what areas may be looked at for
improvement (the areas are not exhaustive and are often company-
specific):
balanced scorecard - factors examples
Department Areas
Finance Return On Investment
Cash Flow
Return on Capital Employed
Financial Results (Quarterly/Yearly)
Internal Business Number of activities per function
Processes Duplicate activities across functions
Process alignment (is the right process
in the right department?)
Process bottlenecks
Process automation
Learning & Growth Is there the correct level of expertise
for the job?
Employee turnover
Job satisfaction
Training/Learning opportunities
Customer Delivery performance to customer
Quality performance for customer
Customer satisfaction rate
Customer percentage of market
Customer retention rate
Once an organization has analysed the specific and quantifiable results
of the above, they should be ready to utilise the Balanced Scorecard
approach to improve the areas where they are deficient.
The metrics set up also must be SMART (commonly, Specific,
Balanced Scorecards explanation, examples, aims, implementation and teaching aid diagram for the concept.

Measurable, Achievable, Realistic and Timely) - you cannot improve on

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what you can't measure! Metrics must also be aligned with the
company's strategic plan.
A Balanced Scorecard approach generally has four perspectives:
1. Financial
2. Internal business processes
3. Learning & Growth (human focus, or learning and development)
4. Customer
Each of the four perspectives is inter-dependent - improvement in just
one area is not necessarily a recipe for success in the other areas.

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balance scorecard implementation

Implementing the Balanced Scorecard system company-wide should
be the key to the successful realisation of the strategic plan/vision.
A Balanced Scorecard should result in:

Improved processes
Motivated/educated employees
Enhanced information systems

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Balanced Scorecards explanation, examples, aims, implementation and teaching aid diagram for the concept.

Monitored progress
Greater customer satisfaction
Increased financial usage

There are many software packages on the market that claim to

support the usage of Balanced Scorecard system.
For any software to work effectively it should be:

Compliant with your current technology platform

Always accessible to everyone - everywhere
Easy to understand/update/communicate

It is of no use to anyone if only the top management keep the

objectives in their drawers/cupboards and guard them like the Holy
Grail.
Feedback is essential and should be ongoing and contributed to by
everyone within the organization.
And it should be borne in mind that Balanced Scorecards do not
necessarily enable better decision-making!
Here's a helpful webpage for further in-depth information on Balanced
Scorecards.

See the other free resources on this website for ethical personal and
organizational development, for example:
Quality Management
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Balanced Scorecards explanation, examples, aims, implementation and teaching aid diagram for the concept.

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