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Balanced Scorecard: Performance Management Guide

The Balanced Scorecard is a performance management tool used by management teams to evaluate organizational performance across four key perspectives: financial, customer, internal processes, and learning and growth. It was developed in the 1990s as an extension of traditional financial metrics to include additional dimensions of performance. The Balanced Scorecard translates an organization's vision and strategy into objectives and measures across the four perspectives, and allows organizations to track strategic performance and link long-term strategic objectives to short-term actions.

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149 views12 pages

Balanced Scorecard: Performance Management Guide

The Balanced Scorecard is a performance management tool used by management teams to evaluate organizational performance across four key perspectives: financial, customer, internal processes, and learning and growth. It was developed in the 1990s as an extension of traditional financial metrics to include additional dimensions of performance. The Balanced Scorecard translates an organization's vision and strategy into objectives and measures across the four perspectives, and allows organizations to track strategic performance and link long-term strategic objectives to short-term actions.

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Balanced

Scorecard

Student 1
Student 2
The Balance  Refers to a performance management report used by
management team. It is used to assess activities of an
Scorecard organization through four main aspect:The client, The
process, The capacity to improve and the Finance.
History

 Early 20th century work of French process engineers « tableau de bord »


 1950’s proneering work of General Electric on performance measurement
 The 1987 Analog Devices Balanced Scorecard
 1992 havard business review article (about Kaplan and Norton researches)
 1996 The Balanced scorecard book (Robert S. Kaplan & David P. Norton)
Revisions

Three generations of Balanced scorecard:


 1st gen: Were hard to design in a way that builds confidence
 2ndgen: (Since 1996) Improvements made regarding:
 The measures selection through a « strategy map »
 The objectives distributions accross 4 measurement perspectives
 The justification of measures choices.

 3rdgen: (2002)
Gives more relevance and functionnality to strategic objectives
How to apply the tool

Step 1 Step 2 Step 3 Step 4 Step 5


Strategy Define Define Determining Gather all
definition strategic Targets and Projects the data
objectives measures
Strategy Definition

 Vision: What and how we want to


achieve our goals
 Mission: Precisely define our goal
 Strategic priorities: State the strategic
priorities in other words the domains on
which we will focus the most.
 Strategic results: State how we will
achieve our strategic priorities, which
actions are going to lead to our
objectives.
Define strategic
objectives
Define Targets
and measures

 Translating Objectives to
measures
 Setting Values for our measures
Determining
Projects

 Projects are the actions that


are supposed to accomplish
our objectives.
Gather all the data
Potential perspective
Financials
Strategic Objectives Measures Targets Employees development
Financial perspective Net Profit ↗ 5% per year Net Profit plans
Operation Cost ↖ 3% per year
Operation Cost Technology training index
Revenue in target market ↗ 12% per year
Customer Perspective % Market Share index ↗ 3% per year Revenue in target market Supply chain efficiency
% Customer satisfaction 85% this year index
index > 90% each focus
% Focus group user index session
Internal process New product as % of sales 12% this year Vision &
perspective Brand awareness score ↗ 5% this year
Cost efficiency index >90% every reporting Strategy
period
Potential perspective Employees development 95% in place
Customer
plans 90% efficient Internal Process
Technology training index 95% Market Share Index
Supply chain efficiency New product as % of sales
index Customer satisfaction
Brand awareness score
index
Cost efficiency index
Focus group user index
Usage in DMAIC cycle
Advantages / Disadvantages

 Provides a management framework to the  The performance and encouragement of the


organization individuals can be lost
 It’s a logical and structural help for the leaders
of an organization to ensure that all the areas
 Expensive and time consuming
of the organization are covered
 Provides visual means to see how the goals are
being met  Requires Data mining from managers.
 You remain focused on the goals

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