Performance

Management & need for

Balance Scorecard
Paul R. Niven;
Balanced Scorecard Evolution;
A Dynamic Approach to Strategy Evolution
Balance Scorecard
History
 Financial preview of performance
 Increasing value of intangible assets in organizations
 Advancement in global competition
 More technology oriented markets
 Acquisition of skilled manpower
 Innovativeness and creativity in ideas
Balance Scorecard
 Robert Kaplan, an accounting professor at Harvard University, and
David Norton, a consultant also from the Boston area.
 In 1990 Kaplan and Norton led a research study of a dozen
companies exploring new methods of performance measurement.
 Kaplan and Norton gave the idea of BSC
 Balanced Scorecard has been adopted by over half of all Fortune
1000 organizations.
 By providing four‐perspective framework of:
1. Financial
2. Customer
3. Internal processes
4. Learning and growth
Barriers to Balance Scorecard
Barriers to Balance Scorecard
What is Balance Scorecard
Elements of Balance Scorecard
 The Balanced Scorecard system, which is designed to help any
organization effectively execute their strategy, is comprised of four
unifying elements:
1. Objectives
2. Measures
3. Targets
4. Strategic initiatives
Example Strategy Map
Strategy through Cause & Effect
Difference between BSC & Dashboard
Balance Scorecard Objectives
Balance Scorecard Objectives
Balance Scorecard Objectives
Balance Scorecard Measures
 Lag Measures: Measures focusing on results at the end of a time
period. Normally categorizing historical performance. Example
revenue generation, employee satisfaction

 Lead Measures: Measures that drive or lead to the performance of

lag measures. Normally measure immediate process and activities.
Example absenteeism, time spent with customer
Balance Scorecard Measures
Balance Scorecard Measures
Balance Scorecard Measures
Balance Scorecard Measures
Measures Definition/ Data Sheet
Balance Scorecard Worksheet
Balance Scorecard Targets
 3 types
 Long‐Term Targets: Big Hairy Audacious Goals (BHAGs)
 10 to 30 years long duration
 To deal sudden losses/ situations and to uplift to a new position
 Japan initiative after Atomic attack

 Midrange Targets: Stretch Goals

 03 to 05 years in duration
 Curtail for success or survival

 Short Term: Incremental Targets

 Short term
 To deal situation like learning language skill
Balance Scorecard Targets
 Do we need all three types of targets?
Setting Performance Targets
Here are a number of places we may find information that will help to
create targets for particular measures.
 Benchmarking
 Trend and baseline
 Industry averages
 Employees
 Feedback from customer
 Feedback from stakeholders
 Executive interviews
 Internal external assessments
Strategic Initiative
Strategic Initiative
Strategic Initiative