 The balanced scorecard is a management and measurement system that enables organizations to clarify their vision and strategy and translate them into action. It provides feedback for both the internal business processes and external outcomes for the purpose of continuously improving strategic performance and results.
The balanced scorecard approach builds on some key concepts of management systems like Total Quality Management (TQM). customer-defined quality, continuous improvement, employee empowerment, and measurement-based feedback.
According to Darrell Rigby at the Bain Company, the measures for Balanced Scorecard usually include the following categories of performance:
- Financial performance (revenues, earnings, return on capital, cash flow)
- Customer value performance (market share, customer satisfaction measures, customer loyalty)
- Internal business process performance (productivity rates, quality measures, timeliness)
- Innovation performance (percent of revenue from new products, employee suggestions, rate of improvement index)
- Employee performance (morale, knowledge, turnover, use of best demonstrated practices)
Benefits
- Clarifies and updates business strategies
- Links strategic objectives to long-term targets and yearly budgets
- Tracks key elements of the strategic plan
- Incorporates strategic objectives into resource allocation and action plans
- Facilitates organizational change and development
- Compares the performance of various business units
- Increases organization’s awareness of vision, mission, and values
Approach
We can incorporate a Balanced Scorecard approach in our Strategic Planning process or take your existing Strategic Plan and create a Balanced Scorecard to fit your objectives.
- Determine vision and mission and values
- Identify performance categories link the organization’s vision and strategy to its results (e.g., financial performance, operations, innovation, employee performance)
- Establish objectives that support the business’s vision and strategy
- Develop effective and meaningful standards and metrics, establishing both short-term milestones and long-term targets
- Obtain buy-in from all key organizational sponsors
- Create links to budgeting, tracking, communication, and reward systems
- Collect and analyze performance data and compare actual results with desired performance
- Create checkpoints to determine gaps and develop plans to close gaps
Would you like to create a Balanced Scorecard for your organization? Let’s Talk
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