Strategic success is not just financial success, that is why you need a full strategy scorecard. Then, working with different groups in your organisation you can engage them in the conversation about what part of the final measure they will deliver, and how. Balanced scorecard a strategic management system mircea bacala1 abstract. Conceptual foundations of the balanced scorecard 3. An integrated strategic planning and performance management system that. The balanced scorecard purpose of balanced scorecard. The study focused on examining how kenyatta university implements their strategies and how the balanced scorecard is adopted as a tool for measuring effectiveness of strategy. Norton, alignment boston, harvard business school press, 2006 paul r. Balanced scorecard evolved from the initial focus on performance measures to link measures to strategic goals and objectives and ultimately become a holistic strategic management system. Measuring business strategy financial perspective customer perspective internalbusinessprocess perspective learning and growth perspective linking balanced scorecard measures to your strategy structure and strategy. Niven, balanced scorecard stepbystep for government. Mar 24, 2009 linking multiple scorecard measures to a single strategy roce financial customer loyalty customer ontime delivery internal business process quality process cycle time process infrastructure. Quickscore is corpoarate performance management software package written by spider strategies and aimed at organisations that are defining and executing a strategy.
As part of performance management it is generally agreed that a system should include financial performance indicators and nonfinancial ones. There are some management tools that seem to have enduring appeal and the balanced scorecard, or bsc for short, is one of those. See more ideas about performance measurement, strategic planning and strategy map. The balanced scorecard is an attempt to incorporate both. Balanced scorecard strategyworks business strategy. Thus the em phasis most companies place on shortterm fi nancial measures leaves a gap between the development of a strategy and its implemen tation. Abdullah and hamzah 2006 argue that the balanced scorecard approach primarily serves to transform an abstract strategy into operational action by the use of a rational set of performance metrics. Perhaps more importantly, and what starts to differentiate a wellconstructed balanced scorecard from other measurement systems, is that the scorecard translates the strategy into relevant operational terms and reflects the organisations detailed understanding of the causal linkages between measures and quadrants. Using the balanced scorecard as a strategic management system.
Linking the balanced scorecard to strategy robert s. Planning, setting targets and aligning strategy are two of the key areas where the balanced scorecard can contribute. Some balanced scorecard software packages allow you to build your strategy map directly in the software. The strategy must be covered by a welldefined and clear longterm vision that would represent one common organizational goal. The balanced scorecard perspectives are insisting on examining different strategies and choosing the most appropriate one. The reason is simple the balanced scorecard is about strategy, and your strategy. Balanced scorecard software quickscore from intrafocus. Anytown hospital has just finished a twoday retreat where they revised and updated their mission and vision statements and drafted a strategic plan.
Developed by robert kaplan and david norton, the balanced scorecard method translates an organisations strategy into performance objectives, measures. Financial performance measures indicate whether the companys strategy. The term strategy map has its origin in the balanced scorecard bsc concept of the mid1990s. A gap assessment report will be delivered see example graphic in figure 1, along with customized recommendations for. Whether you choose to purchase the audio course or not, you can also take advantage of our free minilessons on the balanced scorecard. The experts at balanced scorecard institute bsi specialize in providing consultation, training, and professional certification services to all types of organizations. The balanced scorecard is a workshop technique for establishing the most useful high level measures by which to monitor your companys units progress and performance against its strategic goals. The balanced scorecard bsc is an excellent management tool that ensures you have a holistic and balanced strategic plan as well as a way to track performance over time to assess whether goals are being met. Faculty cochair bob kaplan discusses the concept of the balanced scorecard and the driving corporate performance program. Using an internal value chain model, the module illustrates how a balanced scorecard can support and enable customer management, innovation, operations, and postsale service processes. At the highest conceptual level, the balanced scorecard is a framework that helps organizations translate strategy into operational objectives that drive behavior and performance. Strategy strategy is the use of engagements to achieve the objectives of the war strategy determines the plans for individual campaigns, and orders the engagements within them.
The balanced scorecard in healthcare clearpoint strategy. About the balanced scorecard institute bsi bsi provides consulting, training, and professional certification services to organizations worldwide related to strategic planning, balanced scorecard, kpiperformance measurement, and strategic project management. It provides feedback around both the internal business processes. Norton, strategy maps boston, harvard business school press, 2004 robert s. Erica olsen explains the basic concept of the balanced scorecard and how businesses use it to monitor and guide their performance. Building the scorecard requires focus on what you really do and who you really serve. Norton the balanced scorecard tracks all the important elements of a companys strategy from continuous improvement and partnerships to teamwork and global scale. Strategic measures are those that define a strategy designed for competitive excellence.
The balanced scorecard or balance score card is a strategic performance measurement model which is developed by robert kaplan and david norton. Balanced scorecard working for the us military the us army was one of the first users of the balanced scorecard and still uses it today, all round the world. Their combination is a navigational tool to guide the organisation to execute the strategy formulated by the executive team. The purpose of this report is to give you a window on the hospital to see how we are doing in meeting our nine strategic goals that were established in our 201518 strategic plan. Balanced scorecard frequently asked questions faqs what. Balanced scorecard is a strategy performance management tool a semistandard structured report, that can be used by managers to keep track of the execution of activities by the staff within their control and to monitor the consequences arising from these actions the phrase balanced scorecard primarily refers to a performance management report used by a management team, and typically. Performance management ii hr management mbao 6030 performance management ii. Strategy maps and balanced scorecards constitute the measurement technology for managing in a knowledgebased economy. The balanced scorecardmeasures that drive performance. The role of the balanced scorecard as a tool of strategic management and control article pdf available june 2017 with 9,721 reads how we measure reads. The balanced scorecard translates a companys vision and strategy into a coherent set of performance measures.
The balanced scorecard, strategy maps and dashboards. This is the balanced scorecard view of strategy map. Many other themes are possible, and the selection of vision and aligned strategic themes and results make for unique performance scorecard systems for different organizations. If you need help in creating a detailed balanced scorecard with elaborate data on the problem, journey and the steps taken, this template would be handy with its essayed description. Detailed balanced scorecard results for 20082009 appear on pages 217 through 231. This module reading explains how to construct a strategy map and build a balanced scorecard. Researchers have reported conflicting observations concerning the effect of a balanced scorecard on a strategy process ahn, 2001.
Its objective is to translate an organizations mission and vision into actual operational actions strategic planning. Your static strategy map becomes a live performance dashboard. It refers to a 7step model that outlines an approach for hr practitioners who wish to become business partners in their organization. Traditional financial measures roi, net profit, sales growth, and market share fail to capture the true picture of a firms value propositions because they focus on the past. Balanced scorecard, might conjure up an initial impression of a table of measurements or key performance indicators, it is in fact a process comprising of a number of carefully interlinked steps. Managers using the balanced scorecard do not have to rely on shortterm financial mea sures as the sole indicators of the companys performance. Definition and concept an approach to the provision of information to the management to assist with. Niven is a management consultant and noted speaker on the sub jects of performance management and the balanced scorecard. Pdf the role of the balanced scorecard as a tool of. Understanding balanced scorecards and strategy maps. Balanced scorecard balanced scorecard communicating and linking communicating and linking feedback and learning feedback and learning o the strategy is the reference point for the entire management process o the shared vision is the foundation for strategic learning o stretch targets are rationalized and accepted o strategic initiatives are. By translating their strategy into the logical architecture of a strategy map and balanced scorecard, organizations create a common understandable point of reference for all their units and employees.
Norton s everal years ago, we introduced the concept of a balanced scorecard for motivating and measuring business unit performance. Strategy and the balanced scorecard linkedin slideshare. The effect of balanced scorecard on strategy participation. A balanced scorecard approach to strategic planning. Norton, the balanced scorecard boston, harvard business school press, 1996 robert s. Throughout the entire process of building and implementing a balanced scorecard. Balanced scorecard reporting balanced scorecard reporting between 2010 and 2015 increasing from 4% to 26%. The balanced scorecard is a strategic planning and performance management framework used by business, government, and nonprofits to align daytoday activities with. The name balanced scorecard comes from the idea of looking at strategic measures in addition to traditional financial measures to get a more balanced view of performance. With quickscore you can embed strategic processes such as the balanced scorecard. Briefly, the balanced scorecard, popularized by robert kaplan and david norton, is a method for monitoring whether a company is meeting or will meet its strategic objectives. Get a consensus around your strategy map or key goals, and then start using the bsc in your leadership team meetings as you build out the rest.
What parts of the business strategy the john greenfield sketched. Its this focus on both highlevel strategy and lowlevel measures that sets the balanced scorecard apart from other performance management methodologies. Many managers believe they are using a balanced scorecard when they supplement traditional financial measures with generic, nonfinancial measures about customers, processes, and employees. Balanced scorecard example the following is an example of how one might develop a balanced scorecard. Article pdf available december 2010 with 709 reads. Includes index measurement and management in the information age why does business need a balanced scorecard. The information included is fictional and is provided to simply demonstrate the process. This paper uses an experiment to examine whether involvement in scorecard implementation can mitigate the effects of motivated reasoning that occur when the scorecard is framed as a causal chain rather than merely as a balanced set of measures. Scorecard balanced scorecard communicating and linking communicating and linking feedback and learning feedback and learning o the strategy is the reference point for the entire management process o the shared vision is the foundation for strategic learning o stretch targets are rationalized and accepted o strategic initiatives are clearly. Like a laser beam, strategy now has a clear path to everyone in the organization. The balanced scorecard tracks all the important elements of a companys strategy from continuous improvement and partnerships to teamwork and global scale. A balanced scorecard is a performance metric used in strategic management to identify and improve various internal functions of a business and their resulting external outcomes. Balanced scorecard resources what is a balanced scorecard. Balanced scorecard basics communicat business systems.
Tactics tactics deal with the forms of individual engagements references. Linking the balanced scorecard to strategy strimgroup. Using the balanced scorecard as a strategic management. My experiences as a balanced scorecard practitioner with a large canadian company taught me that tremendous results are possible with the tool, but to attain. Since then, strategy map became a buzzword, a synonym of any visual representation of strategy. How to create a balanced scorecard for digital marketing. As both a practitioner and consultant he has developed successful performance management systems for organizations large and small around the globe. Our software for a balanced scorecard management helps automate the process of strategy design and. The contradicting views of researchers concerning a balanced scorecard and strategy participation constitute an interesting basis for this thesis. The balanced scorecard provides a solution for this by breaking down objectives and making it easier for management and employees to understand. Those things we must do for our people so they can perform the internal processes people. A balanced scorecard better measures a firms capabilities to create longterm value by identifying an organizations value drivers.
The balanced scorecard was developed in the early 1990s by two guys at the harvard business school. Strategic planning with the balanced scorecard onstrategy. Apr 09, 2007 the barriers to implementing strategy only 10% of organizations execute their strategy barriers to strategy execution vision barrier people barrier management barrier resource barrier only 5% of the workforce understands the strategy only 25% of managers have incentives linked to strategy 85% of executive teams spend less than one hour per. Clients balancedscorecardinpractice balanced scorecard stepi. That is where the strategy map and its derived balanced scorecard fit in. Strategy map is a visual representation of the organizations strategy. Notably, it centers your vision and strategy around four distinct perspectives. You can hire a consultant who will teach your team the method, help your team to create a balanced scorecard, but dont expect to outsource it 100% to external consultants. Strategybased balanced scorecards for technology companies. For the development and implementation of balanced scorecard bsc for the public administration, the organizations assign a significant amount of time, energy and resources, in order to measure performances in the reaching of the strategic goals.
The balanced scorecard, competitive strategy, and performance article in business horizons 453. At the same time, there probably has never been a more misunderstood tool. The balanced scorecard translating strategy into action. Pdf the balanced scorecard from strategy to action researchgate. Norton, the balanced scorecard bsc is a revolutionary way to handle strategy management and has been one of the most popular methodologies used over the past three decades. Pdf the initial steps for building the strategy map are primarily performed by the executive team. In addition, he shows how to become a strategy focused organization by imbedding the balanced scorecard into critical organizational processes. Relying on traditional financial measures, a single perspective, failed to provide a clear performance on the business. Strategy scorecard 5 easy steps intrafocus strategy. The four perspectives of the scorecard financial measures. The balanced scorecard includes financial measures that tell the results of actions. Despite the best intentions of those at the top, lofty statements about becoming best in class, the. Targets are set out for each of the four perspectives in terms of longterm objectives. The real power of a properly developed balanced scorecard is that it links the performance measures to the organisations strategy.
The sbc examines the following four areas of priorities that are important to your business. Strategy, like any other business process, needs to be measured. Here is the balanced scorecard view of the southwest airlines strategy. The balanced scorecard, competitive strategy, and performance. Linking the balanced scorecard to strategy kaplan, robert s. Balanced scorecard resources business strategy software. A method of implementing a business strategy by translating it into a set of performance measures derived from strategic goals that allocate rewards to executives and managers based on their success at meeting or exceeding the performance measures. The balanced scorecard should be viewed as the instrumentation for a single strategy. The balanced scorecard relies on four processes to bind shortterm activities to longterm objectives. Balanced scorecard step by step guides readers through the processes required for a successful balanced scorecard project. Building on our proven teambased nine step methodology, we will work with you to customize our approach to fit your organization. An expert balanced scorecard institute bsi consultant will provide advisory consulting services as we evaluate your existing strategic planning and performance management strategy and process as compared to best practice. This includes 9 lessons explaining the process of designing the balanced scorecard, implementing it in your business, and testing it to maximize your business performance. The balanced scorecard is a management system not only a measurement system that enables organizations to clarify their vision and strategy and translate them into action.
The balanced scorecard bsc is a business framework used for tracking and managing an organizations strategy. The balanced scorecard was developed to measure both current operating performance and the drivers of future performance. Consultants wont do the balanced scorecard for you. The key problem that kaplan and norton identified in the business of the day was that many companies tended to manage their businesses based solely on financial measures. A strategy map is typically constructed with a set of 15 to 25 causally linked strategic objectives. Balanced scorecards are designed to translate internal audit strategy into action with the aim of helping to manage and measure the performance of the internal audit function.
The book provides an excellent complement to the two kaplan. Strategy based balanced scorecards for technology companies page 4 of 14 technological excellence, strategic partnering, and growth through innovation. Using the balanced scorecard to align your organization. Jan 02, 2012 the authors of the book hr scorecard, dave ulrich, mark a. That is not to say financial success is not important, it most certainly is.
What is a strategy map and how is it different from a balanced scorecard. The purpose of the balanced scorecard is to provide a framework to translate strategy into action on four dimensions. Strategy mapping was introduced as a way of articulating and communicating the relationships. Its a great team building activity, process management tool and, when you do it properly, you end up with an action plan thats fully. Lets see how these principles might fit into a digital strategy. Translating strategy into operational terms with the balanced scorecard the process is iterative and inclusive. Each of our nine strategic goals has a number of objectives and indicators, and in this report you will be able. Key performance indicators both lagging and leading are broken into 4 areas of focus. It identifies the strategic objectives that the management team needs to focus on, and the linkages cause effect relationship that exists between them. The balanced scorecard as a strategyevaluation tool. What follows, provides guidance and advice on the development and implementation of a balanced scorecard for those organisations considering the introduction of a. Develop the balanced scorecard for the norwalk pharmaceutical division of. Strategic planning balanced scorecard bsc in detail. In addition, it can help provide information on the chosen strategy.