2. What is a Balanced Scorecard?
The Balanced Scorecard is a strategic planning
and management system used to align business
activities to the vision and strategy of the
organization by monitoring performance against
strategic goals.
3. Balanced Scorecard Concept
Was first published in 1992 by Kaplan and
Norton, a book followed in 1996.
Traditional performance measurement that only
focus on external accounting data are obsolete.
The approach is to provide 'balance' to the
financial perspective.
4. Why Use a Balanced Scorecard?
Improve organizational performance by
measuring what matters
Increase focus on strategy and results
Align organization strategy with workers on a
day-to-day basis
Focus on the drivers key to future performance
Improve communication of the organization’s
Vision and Strategy
Prioritize Projects / Initiatives
5. 4 Original Business Perspectives
The Balanced
Scorecard model
suggests that we
view the
organization from
4 perspectives.
Then Develop
metrics, collect
data and analyze it
relative to each of
these perspectives
Adapted from The Balanced Scorecard by Kaplan & Norton
6. 4 Business Perspectives Questions
Financial
Internal Business Process
To satisfy our stakeholders, what must be our levels of
productivity, efficiency, and quality?
Learning and Growth
What must we do to create sustainable economic value?
How does our employee performance management
system, including feedback to employees, support high
performance?
Customer
What do our customers require from us and how are we
doing according to those requirements?
8. Key Implementation Success Factors
Obtaining executive sponsorship and
commitment
Involving a broad base of leaders, managers
and employees in scorecard development
Choose the right Scorecard Champion
Beginning interactive (two-way) communication
first
Viewing the scorecard as a long-term journey
rather than a short-term project
Getting outside help if needed
9. Balanced Scorecard Example
STRATEGY MAP
STRATEGY MAP
BALANCED SCORECARD
BALANCED SCORECARD
PROCESS: MANUFACTURING EXCELLENCE
PROCESS: MANUFACTURING EXCELLENCE
THEME: ROCE > xx%, VOLUME = xx,xxx units
THEME: ROCE > xx%, VOLUME = xx,xxx units
FINANCIAL
PERSPECTIVE
OFFER PRODUCTS & SERVCIES
OFFER PRODUCTS & SERVCIES
THAT ARE CONSISTENT, TIMELY
THAT ARE CONSISTENT, TIMELY
and LOW-COST
and LOW-COST
World
World
Class
Class
Enhance
Enhance
Brand
Brand
INTERNAL
PERSPECTIVE
ENSURE OPERATIONAL EXCELLENCE WITH
ENSURE OPERATIONAL EXCELLENCE WITH
INNOVATION AS WELL BEING SOCIALLY
INNOVATION AS WELL BEING SOCIALLY
RESPONSIBLE
RESPONSIBLE
Operational
Operational
Excellence
Excellence
Alliances with
Alliances with
SBUs
SBUs
Process
Process
Innovation
Innovation
Socially
Socially
Responsible
Responsible
LEARNING & GROWTH
PERSPECTIVE
STRATEGIC JOB & SYSTEMS
STRATEGIC JOB & SYSTEMS
Skills
Skills
TARGET
TARGET
INITIATIVE
INITIATIVE
Info. System
Info. System
•Operating Cost & Efficiency
•Operating Cost & Efficiency
• Cost/Unit, Efficiency
• Cost/Unit, Efficiency
•Capacity Utilization
•Capacity Utilization
•% Utilization
•% Utilization
• Trial Prod.
• Trial Prod.
• Spare Parts Prod
• Spare Parts Prod
• Weekly/Monthly
• Weekly/Monthly
Monitoring
Monitoring
•Capability Utilization
•Capability Utilization
•Brand // Image
•Brand Image
•Warranty Cost
•Warranty Cost
• Man-hour per Unit
• Man-hour per Unit
• Weekly Monitoring
• Weekly Monitoring
•World-Class Quality
•World-Class Quality
Standards
Standards
• Defect per Unit
• Defect per Unit
• Daily Monitoring
• Daily Monitoring
•World-Class Delivery Timing
•World-Class Delivery Timing
• Sales Delivery
• Sales Delivery
• Daily Monitoring
• Daily Monitoring
•Knowledgeable & Skilled
•Knowledgeable & Skilled
Partner
Partner
• Direct Pass Rate
• Direct Pass Rate
• Daily Monitoring
• Daily Monitoring
•High Customer Satisfaction
•High Customer Satisfaction
• Market Feedback
• Market Feedback
• Weekly Monitoring
• Weekly Monitoring
•Reinforce Brand Image
•Reinforce Brand Image
• Sales Volume
• Sales Volume
• Monthly Monitoring
• Monthly Monitoring
Prod. & Sales Mtg.
Prod. & Sales Mtg.
• Cycle Time
• Cycle Time
• Hourly Monitoring
• Hourly Monitoring
• Meet Daily Plan
• Meet Daily Plan
• WIP
• WIP
• KAIZEN
• KAIZEN
• ICC
• ICC
• Daily Monitoring
• Daily Monitoring
• Daily Monitoring
• Daily Monitoring
• Monthly follow-up
• Monthly follow-up
• Specific Programmed
• Specific Programmed
• Timely Introduction
• Timely Introduction
• Weekly Follow-up
• Weekly Follow-up
• Industrial Accident
• Industrial Accident
• Commuting Accident
• Commuting Accident
• Toxic Waste Disposal
• Toxic Waste Disposal
• ISO 9002
• ISO 9002
• Cross Audits
• Cross Audits
• Defensive Driving
• Defensive Driving
• Facility Readiness
• Facility Readiness
• Certification
• Certification
BUDGET
BUDGET
• Monthly Monitoring
• Monthly Monitoring
•Productivity
•Productivity
Grow
Grow
Revenue
Revenue
CUSTOMER
PERSPECTIVE
Low
Low
Cost
Cost
Customer
Customer
Satisfaction
Satisfaction
MEASUREMENT
MEASUREMENT
•Low Cost Manufacturing
•Low Cost Manufacturing
Long-Term Shareholder
Long-Term Shareholder
Value ROCE > xx%
Value ROCE > xx%
Improve
Improve
Productivity
Productivity
OBJECTIVES
OBJECTIVES
ACTION PLAN
ACTION PLAN
•Delivery
•Delivery
•Continuous Improvement
•Continuous Improvement
•NPI
•NPI
•Safety & Health
•Safety & Health
•Environment
•Environment
•Develop the Necessary Skills
•Develop the Necessary Skills
• R&D & Development
• R&D & Development
•Information Systems
•Information Systems
Availability
Availability
• ALC, Procurement,
• ALC, Procurement,
Financial
Financial
•Strategic Awareness
•Strategic Awareness
• Alignment
• Alignment
• Monthly Monitoring
• Monthly Monitoring
tt
• Weekly/Monthly
• Weekly/Monthly
Monitoring
Monitoring
• Training and Skill
• Training and Skill
Build-up
Build-up
• Set-up, Test and
• Set-up, Test and
Validation
Validation
• Communication
• Communication
Programmed
Programmed
OPEX
RM XX M
CAPEX
RM xx M
13. Scorecard Potential Pitfalls & Criticisms
Lack of a well Defined Strategy
The balanced scorecard relies on a well defined strategy and
understanding of linkages between strategic objections and
metrics. Without this foundation the implementation could fail.
Too much focus on the lagging measures
Focusing on only the lagging measures may cause a lack of
priority or opportunity for the leading measures.
Use of Generic Metrics
Don’t just copy metrics from another firm. Identify the measures
that apply to your strategy and competitive position .
Self-serving managers
Managers whose goal is to achieve a desired result in order to
obtain a bonus or other self reward.
14. Balanced Scorecard Benefit Re-Cap
Helps align key performance measures with strategy at all levels of
an organization
The methodology facilitates communication and understanding of
business goals and strategies at all levels of an organization
Strategic initiatives that follow "best practices" methodologies that
cascade through the entire organization
Transforms an organization’s mission statement and strategic plan
from a passive document into the "marching orders" for the
organization on a daily basis.
It enables executives to truly execute their strategies by identifying
what should be done and measured.
To date, some form of a Balanced Scorecard is used by nearly 60% of
Fortune 500 companies
