The Balanced Scorecard

Presented To

Finance and Administrative Services Division

Presented By

John Sanders

The California State University

Quality Improvement Programs

Seminar Outline
Introduction to the Balanced Scorecard
What is it?
Why do it?
Balanced Scorecard Fundamentals
The Four Perspectives
Measures, Targets and Initiatives
Roles and Responsibilities

The CSUSM Finance & Administrative Services Strategy M

Using the BSC as a Management System

The Balanced Scorecard

What is it?
Definition:
The Balanced Scorecard is a
management tool that provides
stakeholders with a comprehensive
measure of how the organization is
progressing towards the
achievement of its strategic goals.

The Balanced Scorecard

What is it?
The Balanced Scorecard:

Balances financial and non-financial measures

Balances short and long-term measures

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.

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.

The Balanced Scorecard

Why do it?
It works!
In just 90 days, Sandia Labs was able to redirect $190,000
in savings by dropping initiatives that didnt fit their
overall strategy.
The BSC has forced our management team to focus
beyond financial measures too often in the past we
would get sucked into short-term thinking.
The BSC dramatically improved our data analysis we
dont overreact nearly as much as we used to.

The Balanced Scorecard

and The CSU
Campuses currently working on the
BSC

San Luis Obispo

Pomona
San Jose
San Marcos
Sonoma
Fullerton
Long Beach
Chico
Northridge
San Bernardino
Chancellor's Office

The Strategy Focused

Organization
Mission

What we do

Vision

What we aspire to be

Strategies How we accomplish

our goals
Measures
progress

Indicators of our

Environmental Scan

Strengths
Opportunities

A Model for
Strategic
Planning

Weaknesses
Threats

Values

Mission &
Vision

Strategic Issues
Strategic Priorities
Objectives, Initiatives, and Evaluation

The Strategy Focused

Organization
The Five Principles
1. Translate the strategy to
operational terms.
2. Align the organization to the
strategy.
Source: The Strategy Focused Organization, Norton & Kaplan

The Strategy Focused

Organization
The Five Principles (cont.)
3. Make strategy everyones job.
4. Make strategy a continual
process.
5. Mobilize change through
executive leadership
Source: The Strategy Focused Organization, Norton & Kaplan

The Balanced Scorecard

and The Big Picture
Strategic
Planning
Mission
and
Vision
Balanced
Scorecard

Activity Based Costing

Economic Value Added
Forecasting
Benchmarking
Market Research
Best Practices
Six Sigma
Statistical Process Contro
Reengineering
ISO 9000
Total Quality Managemen
Empowerment
Learning Organization
Self-Directed Work Teams
Change Management

Strategic Direction
Create Environment
For Change

Strategic Performance Management

System

Communicate Strategies
Define Objectives
Implement BSC

Balanced Scorecard
Measure Performance
Improve Processes

Linking it all together.

Evaluate and Adjust

Continuous Improvement
Redefine Initiatives

THE BALANCED SCORECARD

FINANCIAL/REGULATORY
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?

Customer Perspective
To achieve our vision, what customer needs
must we serve?
Possible Performance Measures
o Customer Satisfaction (Average)
o Satisfaction Gap Analysis (Satisfaction vs.
Level of Importance)
o Satisfaction Distribution (% of each area scored)

Financial / Regulatory Perspective

To satisfy our constituents, what financial
and
regulatory objectives must we accomplish?
Possible Performance Measures
o Cost / Unit

o Unfunded Requirements or Projects

o Cost of Service
o Budget Projections and Targets

Internal Perspective
To satisfy our customers, in which business
processes must we excel?
Possible Performance Measures
o Cycle Time
o Completion Rate
o Workload and Employee Utilization
o Transactions per employee
o Errors or Rework

Learning and Growth

To achieve our goals and accomplish core activities,
how must we learn, communicate and work
together?
Possible Performance Measures
o Employee Satisfaction
o Retention and Turnover
o Training Hours and Resources
o Technology Investment

Why Measure?

To determine how effectively and efficiently

the process or service satisfies the
customer.

To identify improvement opportunities.

To make decisions based on FACT and

DATA

Measurements Should:

Translate customer expectations into goals.

Evaluate the quality of processes.

Track our improvement.

Focus our efforts on our customers.

Support our strategies.

Targets
If you dont know where youre
going, youre probably not gonna
get there.
Forrest Gump

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

Careful not to develop measures/targets in

a fragmented approach:
i.e. Asking people to increase customer satisfaction has to be
backed up with the knowledge, tools, and means to achieve
that target.

Initiatives
Once measures and targets are
established, it is the responsibility of
management to determine HOW the
organization will achieve its goals.
Measures are used to determine the
effectiveness of strategic initiatives.

The Leadership Team

Develops the divisions vision,

strategy and goals
Develops organizational objectives
and targets
Provides leadership, endorsement
and vision for the project
Clears barriers to scorecard progress

The Core Team

Drafts the strategy map and scorecard

Works with employees to develop

measures supporting strategic
objectives

Works with the Leadership Team to plan

and implement the Balanced Scorecard
in the FAS Division

Finance and Administrative Services

Strategy Map

FUNCTION

DEPT.

DIVISION

Link it together.

FINANCIAL

Hum.Rscrs.

Police

CUSTOMER

Univ.Police

INTERNAL
PROCESS

Facilities

Parking
Measure:SatisfactionIndex
Current:3.0Target:4.0

LEARNING&
GROWTH

The Balanced Scorecard as

a Management System
BSC reviewed regularly to enhance
operational decision-making
Success of initiatives assessed
based on DATA not opinions
Leading indicators evaluated to
confirm accuracy of assumptions

The Balanced Scorecard as

a Management System
The BSC is a Living Document that
requires regular revision of objectives,
measures and initiatives:
How are we doing?
Are we measuring the right things?
What initiatives do we need to get us
where we want to go?
Have our organizational goals
changed?

Advantages to this Approach

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 our Services
Ties QI initiatives together
Serves as a Communication Tool

Suggested Readings
Kaplan, Robert and Norton, Edward. The Balanced Scorecard.
Harvard Business Publishing, 1998

Kaplan, Robert and Norton, Edward. The Strategy-Focused Organizat

Harvard Business Publishing, 2001
Buckingham, Marcus and Coffman, Curt. First, Break All the Rules
The Gallup Organization, 1999
Brown, Mark. Keeping Score. Mark Graham Brown, 1996
http://www.afd.calpoly.edu/afd/Strategic_plan/
http://cqi.csusb.edu/

Thank You
John Sanders
The California State University
(562) 951-4556
jsanders@calstate.edu
www.calstate.edu/qi