1. Prof. Dr. Dan Dumitru Popescu
Balanced Scorecard
Prof. Dr. Dan Dumitru Popescu

2. Main issues
What is a Balanced Scorecard?
Perspectives of a Balanced Scorecard
Benefits of using the Balanced Scorecard
Implementation principles
Case Study: UNUM Corporation

3. A. What is a Balanced Scorecard?
a management system (not only a measurement system) that enables organizations to clarify their vision and strategy and translate them into action
provides feedback around both the internal business processes and external outcomes in order to continuously improve strategic performance and results
financial measures by themselves are inadequate for guiding and evaluating the journey that information age companies must make to create future value

4. B. Perspectives of a Balanced Scorecard
View the organization from 4 perspectives:
The Learning and Growth Perspective
The Business Process Perspective
The Customer Perspective
The Financial Perspective

5. B. Perspectives of a Balanced Scorecard

6. B. Perspectives of a Balanced Scorecard
The Learning and Growth Perspective
Employee training and corporate cultural attitudes
People are a main resource
Knowledge workers should be in a continuous learning mode
The Business Process Perspective
refers to internal business processes
carefully designed metrics to determine how well the business is running
mission-oriented processes and support processes

7. B. Perspectives of a Balanced Scorecard
The Customer Perspective
the importance of customer focus and customer satisfaction
poor performance from this perspective is a leading indicator of future decline
The Financial Perspective
financial-related data
Total Quality Management
customer-defined quality, employee empowerment
measurement-based management and feedback

8. C. Benefits of using the Balanced Scorecard
Communicates Strategic Objectives
defines key perspectives that will drive the business to success and measurement means
helps align multiple strategies from various divisions and functional units
communicates understandable information to all employees on all levels of the organization
Makes Strategy Understandable
translates the organization’s strategy into understandable goals and objectives
provides management with a comprehensive picture of business operations

9. C. Benefits of using the Balanced Scorecard
Assigns Responsibilities
every key business driver and sub-measure must have a person assigned who has the responsibility for the performance of such driver
Key Measures
key measures are aligned to supporting the performance of key drivers of the business
Processes
management processes (business planning, forecasting, budgeting, performance management, etc.) support the strategy
the balanced scorecard provides the link between priority and activity

10. D. Implementation Principles
Gain senior management support
Gain consensus on terminology and notation
Find your internal sponsors
Find the assessment framework & “Measure what matters”
Communicate and agree on objectives and targets
Align activities and initiatives to objectives and targets.
Implement management processes
Assess performance periodically
Collaborate on opportunities to improve

11. E. Case Study: UNUM Corporation
UNUM Corporation, a risk insurer, developed and implemented a five year balanced scorecard
UNUM has about 7,200 employees and operations in US, UK, Canada, Europe, Latin America.
focused on internal communication and an innovative compensation scheme
developed a balanced set of measures that would reflect the interests of all UNUM’s stakeholder groups
13 senior managers form throughout the corporation developed a set of “balanced” goals and measures that would be meaningful to all employees
the chairman told the team that he wanted financial, customer, employee and productivity targets, gave it a budget and, most importantly, his whole support

12. E. Case Study: UNUM Corporation
UNUM’s balanced scorecard consisted of four perspectives:
UNUM people
Operating effectiveness
Customer satisfaction
Shareholder value.
Each perspective had a vision, quantitative measure and goal. The achievements were time-sensitive
The employees were encouraged to “have the mind of a customer and the pride of an owner” by implementing a Stock Option Plan
A further compensation mechanism used to focus employees’ attention onto the goal was the annual bonus

13. E. Case Study: UNUM Corporation
by the end of the five year period the company made outstanding improvements in areas concerning all four perspectives and obtained very good financial results
the Vice-president of the company commented: “the Balanced Scorecard is an excellent way to focus attention on creating value”.