By Dr. Warren Helfrich The Balanced Scorecard Originated by Drs. Robert Kaplan (Harvard Business School) and David Norton as a performance measurement framework. Believed that if strategic non financial performance measures were added to traditional financial metrics, it would give managers and executives amore 'balanced' view of organizational performance. What is the Balanced Scorecard approach? Used extensively in business and industry, government, and nonprofit organizations worldwide. Intended to align business activities to the vision and strategy of the organization, improve internal and external communications, and monitor organization performance against strategic goals. 1
What is the Balanced Scorecard approach? Holistically incorporates elements of goal setting, strategy, operational efficiency, continuous improvement, change management, and clear communication and accountability. An integrated system that connects the dots between organization goals and strategy and the day to day work of your employees (i.e., operations) What is the Balanced Scorecard approach? The process of connecting the dots is called cascading, meaning strategic elements at high altitude (organization wide vision, for example) are translated into operational level objectives that support strategy (delivering high quality services on time and at or below budget) and then translated into the activities that staff perform. 2
The Four Perspectives Customer/Client/Stakeholder Perspective The most critical perspective for non profit and government applications of BSC Client and stakeholder experiences (including service outcomes) are considered leading indicators of organizational success they can also predict future decline. In developing metrics for client s and stakeholder s experiences, the processes of providing the services (e.g., client satisfaction) and the intended end result(s) of those services (effectiveness) need to be considered Internal Process Perspective This perspective refers to internal business processes involved in delivering a program or service sometimes referred to as efficiency. Metrics based on this perspective allow a manager to know how well the program or service is running These metrics have to be carefully designed by those who know these processes most intimately. Typically includes what funders refer to as deliverables 3
Learning & Growth or Organizational Capacity Perspective This perspective includes employee training and organizational cultural attitudes related to both individual and organizational self improvement. In a knowledge worker organization (which human services are), people the only repository of knowledge are the main resource. Learning and growth constitute the essential foundation for success of any knowledge worker organization. An organization s adaptive capacity (e.g., ability to innovate) is critical to long term success Learning & Growth Perspective Kaplan and Norton emphasize that 'learning' is more than 'training. It also includes things like; mentors and tutors within the organization ease of communication among workers that allows them to readily get help on a problem when it is needed. Financial Perspective Timely and accurate financial data will always be a priority. Referred to as Financial Stewardship in nonprofit and government application of BSC Can include additional financial related data, such as risk assessment and cost benefit data, in this category. 4
Strategy Maps Strategy Mapping Strategy maps are high level communication tools used to tell a story of how value is created for the organization. Show a logical, step by step connection between strategic objectives in the form of a cause andeffect chain. Connects the dots Strategy Mapping Generally speaking; Improving performance in the objectives found in the Learning & Growth perspective (the bottom row) Enables the organization to improve its Internal Process perspective Objectives (the next row up) Which in turn enables the organization to create desirable results in the Client and Financial perspectives (the top two rows). 5
Strategy Mapping So where does Strategic Planning fit in??? 6
Creating Strategic Themes Once you have agreed upon the mission and vision for your organization (your picture of the future or desired future state), it is systematically decomposed into 3 4 strategic themes. Themes are sometimes referred to as pillars of excellence. The strategic themes are very broad in scope. Creating Strategic Themes They apply to every part of the organization and define what major strategic directions the organization will pursue to achieve its mission and vision. Affect all four balanced scorecard perspectives (i.e., client/stakeholder, financial, business process, and learning and growth) If we excel in these 3 4 areas, will we achieve our vision? 7
Bringing it all together The BSC helps by asking questions across the organization How do we operationalize our high level directions and aspirations into specific, measurable actions? What are the links between performance in different areas or functions of the organization? How might results in one area or function impact results in another area or function? Some Examples. 8
Questions? 9