BALAACED BUSIAESS SCORECARD

The balanced business scorecard is a process that allows Iirms to evaluate strategies Irom 4
diIIerent perspectives: Iinancial perIormance, customer knowledge, internal business processes
and learning and growth. The inIormation collected Irom the balanced business scorecard allows
the organization to adequately and more eIIectively evaluate strategies that are being
implemented.


Why Implement a Balanced Scorecard?
O ncrease Iocus on strategy and results
O mprove organizational perIormance by measuring what matters
O lign organization strategy with the work people do on a day-to-day basis
O ocus on the drivers oI Iuture perIormance
O mprove communication oI the organization`s Vision and Strategy
O !rioritize !rojects / nitiatives
!otential !itfalls
The Iollowing are potential pitIalls that should be avoided when implementing the Balanced
Scorecard:
O ack oI a well-deIined strategy: The Balanced Scorecard relies on a well-deIined strategy
and an understanding oI the linkages between strategic objectives and the metrics.
Without this Ioundation, the implementation oI the Balanced Scorecard is unlikely to be
successIul.
O &sing only lagging measures: Many managers believe that they will reap the beneIits oI
the Balanced Scorecard by using a wide range oI non-Iinancial measures. However, care
should be taken to identiIy not only ,3 measures that describe past perIormance, but
also 0,/3 measures that can be used to plan Ior Iuture perIormance.
O &se oI generic metrics: t usually is not suIIicient simply to adopt the metrics used by
other successIul Iirms. Each Iirm should put Iorth the eIIort to identiIy the measures that
are appropriate Ior its own strategy and competitive position.



The Iollowing is an example oI a balanced business scorecard that aysal Bank can use to better
evaluate its` strategies.




Financial


Objectives

Measures Targets Initiatives
Maximum Returns

Return on Equity

13

EIIicient utilization
oI Iunds
&tilization oI sset

&tilization Rates

8

Reduce overhead
expenses

Revenue Growth

Change in
Revenues

11

ncrease
investments and
advances

Customer:



Objectives

Measures Targets Initiatives
Customer Retention

Retention

75

Customer Relations
Management
(CRM)


Int
ern
al
!r
oce
sses:


Objectives

Measures Targets nitiatives
EIIective Service

1st time resolvement
oI complaints

75

Customer Relations
Management
(CRM)

Resource &tilization

!roductivity
ndicator

80

Training

Learning and Growth:


Objectives

Measures Targets nitiatives
High Skill evels

Skill set ratio

68

Open Corp
&niversity

Employee
SatisIaction

Survey ndex

77

Employee Iriendly
HR policies such as
mentoring program

Outstanding eaders

5 point ranking

4.8

Special Training
!rogram




n the above example we can see that employee satisIaction leads to eIIective service which
leads to customer satisIaction and customer retention and which in turn leads to revenue growth.



Customer
SatisIaction

Survey Rating

85

Conduct customer
satisIaction surveys

High personal
quality service

Number oI
complaints

5

Customer
nterviews