1. The Balanced Scorecard
A Performance Measurement Tool

2. The Balanced Scorecard What is it?
Provides stakeholders with a comprehensive measure of how the organization is progressing towards the achievement of its strategic goals
Provides a framework for communicating strategy in operating terms (measurements and targets)
Balances financial and non-financial measures
Balances short and long-term measures

3. The Balanced Scorecard What is it?
Balances performance drivers (leading indicators) with outcome measures (lagging indicators)
Should contain just enough data to give a complete picture of organizational performance… and no more
Leads to strategic focus and organizational alignment

4. 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 with the customer
To track progress
To evaluate process changes
To continually improve
To increase accountability

5. The Strategy Focused Organization
Mission – What the company does
Vision – What it aspires to be
Strategies – How it accomplishes goals
Measures – Indicators of progress

6. The Balanced Scorecard and The Big Picture
Activity Based Costing
Economic Value Added
Forecasting
Benchmarking
Market Research
Best Practices
Six Sigma
Statistical Process Control
Reengineering
ISO 9000
Total Quality Management
Empowerment
Learning Organization
Self-Directed Work Teams
Change Management

7. The Four Perspectives FINANCIAL/REGULATORY CUSTOMER
To satisfy our constituents,
what financial & regulatory
objectives must
we accomplish?
CUSTOMER
To achieve our vision,
what customer needs must
we serve?
INTERNAL
To satisfy our customers and
stakeholders, in which business
processes must we excel?
LEARNING & GROWTH
To achieve our goals, how
must we learn, communicate
and grow?

8. The Four Perspectives
Financial: Represents financial outcomes (profits, revenues, etc.)
Customer: Enables financial results (service, image, price, quality, etc.)
Internal Processes: The values added to customers, such as delivery, production, distribution, etc.
Learning & Growth: The people, systems, and organization that enable processes

10. Measurements For each strategic objective, there is one measurement
Measurement provides feedback on meeting the strategic objective
Most organizations will use many of their existing measurements
Organizations requiring major change should include driver type measurements

11. Measurement Criteria
Measurements should drive change, providing teeth to the strategy
Measurements define objectives in specific terms
A good measurement should link to the objective
Measurements should be repeatable, quantifiable, and verifiable

12. Customer Perspective To achieve our vision, what customer needs
must we serve?
Possible Performance Measures
Customer satisfaction survey scores
Response time to customer service
Market share

13. Financial / Regulatory Perspective
To satisfy our constituents, what financial and
regulatory objectives must we accomplish?
Possible Performance Measures
Cost per unit
ROE / ROA
Percentage increase in revenues
Budget projections

14. Internal Perspective To satisfy our customers, in which business
processes must we excel?
Possible Performance Measures
Cycle time
Down time
Testing time
Completion rate
Government approval
Transactions per employee
Errors or rework

15. Learning and Growth
To achieve our goals and accomplish core activities, how must we learn, communicate and work together?
Possible Performance Measures
Employee satisfaction
Retention and turnover
Training hours and resources
Technology investment

16. Why Measure?
To determine how effectively and efficiently the process or service satisfies the customer
To identify improvement opportunities
To make decisions based on FACTS and DATA

17. Measurements Should: Translate customer expectations into goals
Evaluate the quality of processes
Track improvement
Focus efforts on customers
Support strategies

18. Targets
“If you don’t know where you’re going, you may go somewhere else.” Yogi Berra

19. Targets 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
Must be achievable; be careful not to develop measures/targets in a fragmented approach:
e.g., Asking people to increase customer satisfaction has to be backed up with the knowledge, tools, and means to achieve that target

20. For Year Ended December 31, 2014
Expanded Scorecard
ABC Company
Balanced Score Card
For Year Ended December 31, 2014
Strategic Objective
Measure
Target
Initiative
Financial
Customer
Process
Learning & Growth

22. The Balanced Scorecard as a Management System
The BSC is a “Living Document” that requires regular revision of objectives and measures
Assessment of success is based on DATA… not opinions or gut feelings

23. Benefits of the BSC Simple to Use and Understand
Based on Vision and Strategy
Multidimensional
Quantitative and Qualitative Measures
Current and Future
Provides Measurement of and Method for Improving
Products/Services
Serves as a Communication Tool

24. The Balanced Scorecard
A Performance Measurement Tool