Organizational Dynamics, Vol. 37, No. 4, pp.
378393, 2008 ISSN 0090-2616/$ see frontmatter
2008 Elsevier Inc. All rights reserved.
www.elsevier.com/locate/orgdyn
The Aligned Balanced Scorecard:
An Improved Tool for
Building High Performance
Organizations
KENNETH R. THOMPSON
T he improvement of organizational and
employee performance is an ongoing
journey. Researchers have consistently iden-
tified effective goal setting as a major factor in
the improvement of performance. However,
the key is effective. As quality examiners who
continuously use the Baldrige criteria, we
have seen abundant examples of organiza-
tions that poorly articulate goals and strate-
gies into a poorly aligned set of actions. Goals
and strategies that are not translated into
measures of performance and that are not
well-linked lead to an unfocused and unco-
ordinated effort for reaching key goals across
the organization.
The development of the Balanced Scor-
ecard (BSC) approach, an excellent tool for
improving organization goal alignment and
focus, has been attributed to several sources
in Europe and to David Norton and Robert
Kaplan in the United States. The name
Balanced Scorecard comes from the idea that
measurable statistics form the basis of the
approach (a scorecard) and metrics are
applied for different but related elements
important to the organizations success.
The categories of metrics form a balanced
set of measures to assess organizational per-
formance. Since its inception, the BSC
approach has been adopted in many forms
by numerous organizations with fairly con-
sistent and positive results. Some reports
doi:10.1016/j.orgdyn.2008.07.006
NICHOLAS J. MATHYS
estimate that forty percent of the Fortune
top 1000 companies will have used, by the
end of 2007, some form of the Balanced
Scorecard.
Unfortunately, there have not been well-
documented longitudinal studies to support
the efficacy of the Balanced Scorecard
approach. As the BSC approach has been
modified to meet different organizational
applications, measurement of its efficacy
across organizations in a controlled setting
has been difficult. While the specific BSC
approach has not been assessed through a
robust statistical methodology, hundreds of
studies that have used rigorous statistical
methodology have supported the efficacy
of goal setting. The Aligned Balanced Scor-
ecard approach that we advocate adds two
dimensions to goal setting: (a) the alignment
of goals across organizational units and (b)
the linking of components through down-
stream and upstream goal structures.
This article advocates the use of an
Aligned Balanced Scorecard (ABS) as a
means to enhance the scorecard approach
in order to improve leadership effectiveness
as a tool for developing high performance
management systems. First, we will review
the evolution of the Balanced Scorecard and
then we will indicate some current problems
in the application of the scorecard. We will
then propose the use of the Aligned
378
Balanced Scorecard as a way to better con-
nect strategies with organization perfor-
mance. The last section of the paper will
explain the advantages to the leader using
the ABS to improve individual and organiza-
tional performance.
THE BALANCED SCORECARD
APPROACH
A Balanced Scorecard consists of four major
perspectives: (1) financial, (2) customer, (3)
internal processes, and (4) organizational
learning and development. The scorecard
approach is a means of translating an orga-
nizations vision into actions that support the
desired organizational performance (see
Fig. 1).
The organization establishes objectives,
measures, and targets for each of the four
areas focusing on the following four ques-
tions:
FIGURE 1 THE BALANCED SCORECARD FRAMEWORK AS PRESENTED
BY KAPLAN AND NORTON.
1. Financial: to succeed financially, how
should we appear to our shareholders?
2. Customer: to achieve our vision, how
should we appear to our customers?
3. Internal Business Processes: to satisfy
our shareholders and customers, at what
processes must we excel?
4. Learning and Growth: to achieve our
vision, how will we sustain our ability to
change and improve?
By covering each of these four areas, the
organization attains a more balanced perspec-
tive of what needs to be considered in the
effective development of the strategic plan.
The Baldrige Criteria and
Alignment
Many of those that used the BSC did not
fully recognize the interrelationships
between the four areas. The importance of
379
integration across areas within the organiza-
tion has been stressed elsewhere, such as the
United States National Baldrige Criteria for
Performance Excellence. The Baldrige Cri-
teria has seven major criteria interrelated
by eleven core values. Mark Blazey, pioneer
in the use of the Baldrige criteria, divides
these seven criteria into major interrelated
groupings (see Fig. 2). The Driver Triad
(Category 1, Leadership; Category 2, Strate-
gic Planning, and Category 3, Customer and
Market Focus) provides direction for the
organization. Leadership provides vision,
values, and the systems to foster communi-
cations and to sustain a performance focus.
Customer and Market Focus provide key
information about customer requirements
and satisfaction measures along with an
understanding of the competitive environ-
ment. Categories 1 and 3 provide direction
for the development of the strategic plan.
Strategic Planning focuses on providing
direction for the organization through stra-
tegic planning, and deployment of strategies
through the action planning process.
The strategic plan provides focus to areas
that Blazey designate as the work core (Cate-
FIGURE 2 BLAZEYS ORGANIZATION OF THE BALDRIGE CRITERIA.
380 ORGANIZATIONAL DYNAMICS
gory 5, Workforce Focus and Category 6,
Process Management). The Work Core is
the part of the organization that gets the work
done. The Work Core involves the organiza-
tion of the work and the management of the
workforce to support meeting organizational
goals. Activities in the Work Core lead to the
Results (Category 7) where performance of
the organization is tracked and compared
with competition and benchmarks in the
industry. Underlying these six criteria areas
is Category 4, which Blazey calls, the data
platform because of its importance in pro-
viding information about the organization,
its customers, competitors, and its environ-
ment.
In 2000, Norton and Kaplan appeared to
realize the need to reinforce the linkage of
elements of their scorecard, as advocated in
the Baldrige criteria, more than they did in
their initial work. In their 2000 article, they
made a hierarchical connection between ele-
ments. They advocated that strategies are
reached through financial outcomes. The cus-
tomer outcomes relate to reaching financial
goals while internal processes relate directly
to meeting either customer or financial out-
comes or both. Learning and Growth activities
link directly to modifying processes.
Problems in the Application of
Balanced Scorecard
Even after Norton and Kaplans 2000 arti-
cle, problems still occur with effective appli-
cation of the scorecard. These problems seem
to focus on four major issues: (1) lack of
understanding of the importance of pro-
cesses within organizations, (2) lack of
understanding of the alignment between
items within the scorecard, (3) the need for
appropriate metrics, and (4) the need for an
understanding of how organizational strat-
egy relates to the scorecard.
Lack of centrality of processes. The Baldrige
criteria focus on the importance of processes
in organizations. Processes are the elementary
building blocks in understanding organiza-
tional operations. Category 6 of the Baldrige
criteria focuses on the identification of key
work processes. In each category of the Bal-
drige process, however, the scoring docu-
ment requires an identified process. For
example, in Category 1.1, Senior Leadership,
a defined process for setting and deploying
visions and values to create a sustainable
organization is required. In addition, defined
processes are required to support senior lea-
derships two-way communication and to
support high employee performance. Each
of the twelve items of the approach/deploy-
ment criteria (categories 16) requires that an
effective, systematic approach (a process) be
used to meet the elements of the criteria. The
board of overseers, which develop and
review the criteria to ensure its relevancy,
views processes as both the primary building
block on which the organization operates
and the driver for the business platform,
which guides employees work and directs
organizational strategies.
The primacy of processes is overlooked by
many who use the scorecard because a lack of
emphasis on processes. Although Norton
and Kaplan realized the importance of pro-
cesses (since they included it as one of the
four perspectives of the scorecard), they gen-
erally use them not as a foundation for get-
ting things done within the organization but
as an equal focus with the other three per-
spectives: customer, finance, and learning
and growth. Their approach mutes the
importance of processes, leading to confu-
sion regarding the significant role that pro-
cesses play in the organization.
Lack of understanding of the alignment
between items within the scorecard. The sec-
ond major issue concerns the lack of under-
standing of the alignment needed between
items within the scorecard. In Kaplan and
Nortons 1992 article, they listed the four
perspectives of the BSC and indicated they
were related. However, they did not overly
stress these relationships. In their 2000 arti-
cle, though they did link the four areas in a
hierarchical order, they did not make it clear
how strategy is enacted in the BSC and how
items in the scorecard are aligned in order to
support reaching the desired strategies and
organizational goals.
The need to measure the right stuff. Given
the causal relationships indicated above, the
third major issue concerns the need to link
measures between related items. Some users
of the BSC do not understand the linkages,
thus users often fail to recognize that metrics
are needed to assess process performance and
that process measures need to be related to
meeting key customer satisfaction or finan-
cial performance measures. When these rela-
tionships are defined, the process measures
become tools to help reach overall perfor-
mance goals.
The need to understand how organization
strategies influence BSC elements. The
fourth issue is the need to understand how
strategies relate to the scorecard. Since pro-
cesses are the basic building blocks of getting
things done in the organization, strategy is
enacted through processes. Processes are
improved through activities and programs
enacted within the learning and growth per-
spective. Therefore, strategies should be
381
translated into action in the learning and
growth part of the BSC. While Norton and
Kaplan show the relationship between the
Learning and Growth Perspective and Inter-
nal Process Perspective, the role of learning
and growth in enacting strategy is not clear.
THE ALIGNED BALANCED
SCORECARD (ABS)
The Aligned Balanced Scorecard (ABS) is
proposed to address the four problems dis-
cussed above. The ABS enhances the benefits
of the scorecard and improves its usefulness.
This proposed extension of the Balanced
Scorecard applies the Baldrige concept of
alignment and the primacy of internal pro-
cesses as major drivers of the organizations
financial performance and customer satisfac-
tion goals.
FIGURE 3 ALIGNED BALANCED SCORECARD.
382 ORGANIZATIONAL DYNAMICS
Fig. 3 gives an overview of the Aligned
Balanced Scorecard (ABS). Organizational
goals are translated into strategies as means
to accomplish the desired goals. Strategies
are further translated into action plans as they
are translated into learning and growth activ-
ities to improve processes. In the ABS, the
action plans become learning and growth
activities that are directed toward improving
specific internal processes. Internal process
improvements are the key drivers that influ-
ence meeting key customer requirements or in
improving the organizations financial perfor-
mance. Meeting customer requirements, an
important activity for the long-term sustain-
ability of the organization, will improve
future financial performance by satisfying
customers who then may return to the orga-
nization and tell others about their positive
experiences. Improving financial perfor-
mance directly relates to the attainment of
strategic plans which then supports meeting
overall organizational goals. The ABS con-
nects each scorecard element into a cohesive,
aligned plan that will support meeting orga-
nizational goals and provides leaders with a
set of key measures of performance of those
items that matter most in reaching organiza-
tional goals. To see how the ABS works in
practice, we will apply each element of the
ABS to a small delivery package organization.
Applying the Aligned Balanced
Scorecard (ABS)an Example
FastDel is a small package delivery service
that has applied the ABS to help reach its
goals. The overall financial goal of FastDel is
increasing its profitability for the next year to
earnings per share of $2.15. FastDel plans to
do this by using two strategies, one strategy is
to increase revenue growth by 7% through
aggressive marketing and a half-day
decrease in average delivery time. The sec-
ond strategy, increasing net income as a
percentage of sales, will be accomplished
by increasing average productivity per unit
by 10%, and decreasing general and admin-
istrative costs as a percentage of sales by 5%.
To see how outcomes are built upon internal
processes and how outcome goals will dic-
tate how processes will need to be modified,
the FastDel example will proceed backwards
through Fig. 3 model. However, at end of the
example, all elements will be linked and
aligned as presented in Fig. 3.
Financial and customer satisfaction mea-
suresoutcomes of internal processes. To
meet FastDels strategies, the key financial
metric for revenue growth (the first strategy)
will be market share for each of its customer
segments. For example, specific segment per-
formance goals are established for business-
to-business revenue, business to consumer
revenue and nonbusiness package delivery
revenue. These performance goals directly
link to the revenue strategy of revenue
growth. Using this linkage, the effects of
the marketing approaches and improved
delivery time can be correlated to customer
satisfaction and to resulting increases in cus-
tomer demand for the services. For the strat-
egy of increasing net income as a percentage
of sales, the financial measures would be
average productivity, and general and
administrative cost as a percentage of total
revenue. Each of the financial measures used
by FastDel is a measurable element that can
be tracked over time to assess how well the
organization is doing. Not all of these ele-
ments are necessarily true financial mea-
sures. Some, such as market segment share,
are considered by convention to be an out-
come of customer satisfaction but are placed
in the financial perspective of the Balanced
Scorecard as well as the ABS. These financial
measures are downstream measures of inter-
nal process performance and customer satis-
faction outcomes, that is, they are the
consequences of what has been done in other
parts of the organization.
For the most part, financial goals measure
the consequences of activities within the
organization. In the Norton and Kaplan
2000 model, customer satisfaction perspec-
tives, internal process perspectives, and
learning and growth perspectives influence
financial measures. This is also true in the
ABS model. Fig. 4 shows this relationship
between overall organizational goals, strate-
gies, and financial measures for FastDel.
Revenue increasing strategies usually
depend on the effectiveness of the organiza-
tions market focus, therefore, the inclusion
of the customer perspective in the Aligned
Balanced Scorecard acknowledges the
importance of satisfying customer needs,
i.e., the organization will need to meet the
key requirements of the customers within
each segment. Customer satisfaction, in the
Baldrige framework, is based up attainment
of key customer requirements. This is true in
the ABS model as well so measures focus
upon assessment of customer satisfaction in
meeting the key customer requirements. In
addition, an overall measure of satisfaction is
taken to track overall performance for each of
the key customer segments.
At FastDel, key customer requirements for
each segment have been determined using
383
 FIGURE 4 ABS EXAMPLE: FASTDEL OVERALL GOAL, STRATEGIES, AND FINANCIAL
MEASURES.
focus groups and open-ended surveys. Fast-
Del also correlates these current customer
assessment approaches with historical satis-
faction measures, segment performance, and
competitive analysis. Using this process, the
organization identified nine customer satis-
faction measures crucial to increased rev-
enue growth:
 Value of service compared to its cost,
 speed of service,
 service reliability, and
 employee courtesy and helpfulness.
For drop-off site locations, additional satis-
faction measures are assessed concerning:
 Site location convenience,
 adequacy of final drop off times, and
 location safety.
384 ORGANIZATIONAL DYNAMICS
For staffed drop-off sites, measures of
the friendliness and helpfulness of staff
and the speed in processing customers
are assessed because these measures were
found to be important to those who use this
service.
For each customer segment, FastDel
tracked the percent of respondents who said
they were satisfied or very satisfied on
the specific key customer requirements along
with a measure of overall satisfaction. Cus-
tomer satisfaction is tracked because higher
customer satisfaction acts as an early indica-
tor of financial performance. Satisfied custo-
mers are likely to use the service more and
often share their satisfaction with others
(friends, family, etc.) who then purchase
products or services from the same organiza-
tion. The tracking of satisfaction levels over
each customer requirement helps the com-
pany to identify performance levels for
related processes, as will be reviewed
below.
It make good sense to assess customer
satisfaction on key requirements as key
requirements are the critical factors that lead
to customer acquisition, satisfaction, loyalty,
and retention; all of which are important to
FastDel in achieving the organizations
growth strategies. As shown in a case study
of the United States Postal Service and
Department of Defense Finance and
Accounting Services, measures of customer
satisfaction are used to drive changes in
processes. In the ABS, customer satisfaction
measures are considered outcome measures
of processes that are essential in meeting
customer needs. Thus, internal process man-
agement is the driver of customer satisfaction
outcomes much as internal processes are
central to meeting the financial measures
needed for the organization to meet its stra-
tegic goals, as described in the next section.
Internal processesdrivers of organiza-
tional performance. Internal processes are
central to getting things done in an organiza-
tion. Once organizational leaders determine
what aspects of the product or service are
most important in influencing customer
satisfaction or financial performance, the
next step is identifying the key processes that
influence these outcomes.
Process/customer satisfaction interrelation-
ship. In the FastDel example, the organiza-
tion targeted key processes for each customer
need. For example, one of the customer
requirements listed above is speed of ser-
vice. FastDel has identified the following
four processes related to the customer
requirement of speed of service:
 Scheduling Pick-ups,
 sorting packages,
 transporting between sort facilities,
and
 final delivery process.
A measure related to the average time of
each process is used to assess the adequacy of
the process in meeting the customer needs on
that dimension. There would also be an over-
all measure of all the processes related to the
time it takes for a package to get from point A
to point B, much as used in the United States
Postal Service. These process measures are
correlated with the customer satisfaction sur-
vey measures to compare actual process per-
formance to the customer perception of the
quality of service.
The same processes may be part of differ-
ent customer satisfaction measures. For
example, customer satisfaction with the
value of the service versus costs is another
key customer requirement, which includes
each of the four processes listed above. How-
ever, in this case the process performance
measures would be different, focusing on the
average cost per package for that process. As
managing costs is a prerequisite to setting
price, FastDel must address the question,
Can we make a profit at a specific service
pricing point based on our costs of providing
the service? Therefore, in addressing the
key customer need of value of the service,
the organization focuses on cost manage-
ment.
Samples of these correlations are shown in
Table 1. The first two columns headings
show examples of customer requirements.
The left hand side identifies the key pro-
cesses in the organization. Within the cells
are the process performance measures that
are related to that process and are related to
the customer requirements identified in the
column heading.
Customer satisfaction measures would not
be appropriate for measures of process per-
formance as they measure two different
things. Process measures focus on processes.
Customer satisfaction measures focus on per-
ceptions of outcomes that may cover multi-
ple processes related to that customer
requirement. To have a more sensitive indi-
cator of process performance, process mea-
sures are more effective. In addition, being
able to correlate process changes with
changes in customer satisfaction, help orga-
nization leaders to know the importance of
the process to the customer. The ABS
385
 TABLE 1 FASTDEL ABS EXAMPLE: PARTIAL PROCESS/CUSTOMER SATISFACTION
MATRIX AND A PARTIAL PROCESS/FINANCIAL PERFORMANCE MATRIX
encourages building a customer satisfaction/
process matrix that relates the processes to
key customer requirements as shown in
Table 1.
Process/financial performance measures. -
While some process measures relate directly
to improving customer satisfaction, others
may focus on directly improving a financial
outcome. A process/financial measure
matrix can be made to demonstrate the rela-
tionship between process and financial per-
formance. In the FastDel example, employee
productivity and administrative costs as a
percent of revenue are the key financial out-
come measures FastDel managers have cho-
sen. They would then relate the key
processes of the organization to the financial
measures and determine how each process
might contribute to reaching that goal. For
example, employee productivity financial
goals might relate to specific productivity
386 ORGANIZATIONAL DYNAMICS
of each process. In Table 1, the two far right
columns show the metrics that FastDel used
to track their process performance that
relates to financial performance.
In the matrix, only the processes that relate
to the outcomes (customer satisfaction or
financial performance) have process perfor-
mance measures. In areas where there is not
a direct correlation, there are not measures,
as indicated by the X in the cells. The
matrices are important tools to help the man-
ager realize connections between processes
and outcomes, which as indicated below,
are important in building action plans from
strategic plans.
Learning and growth perspective: improving
processes/enacting strategy. If processes are
the means of getting things done in organi-
zations, changing the organization and
enacting strategies would need to be trans-
lated into process improvements. Learning
and growth, the final element of the ABS, is
the driver of process improvement. The
learning and growth activities of the Aligned
Balanced Scorecard focus on translating stra-
tegies into actions to improve the ability of
the organization, through its employees, to
compete in the future and to meet current
organization goals.
In the FastDel example, demonstrated in
Table 2, the same processes are used that
were used in Table 1. In Table 2, strategies
are translated into action plans (or what
needs to be done for each process to help
the organization reach its desired strategies)
to meet FastDels main organizational goal
for the period.
The role of learning and growth supports
the current and future development of
knowledge and skills (competencies) needed
to perform specific key processes adequately.
Improvements in the technical, operational,
TABLE 2 FAST DEL ABS EXAMPLE: TRANSLATING STRATEGIES INTO LEARNING
AND GROWTH ACTION PLANS
and human aspects of processes are demon-
strated in this part of the scorecard. Improv-
ing processes and people who operate these
processes can be of three types: (1) looking at
new ways of addressing needs, (2) making
modifications in an existing process, and (3)
developing employees and leadership to
improve operations and management of
these processes. Learning and development
action plans can be focused upon immediate
changes needed or upon the longer-term
goals of the organization. A major frontier
on process improvement relates to the rein-
forcements and work climate of employees
as it is the employees that work in and
through processes to meet organization
goals. The connection of employee perfor-
mance to process performance is where the
ABS can significantly improve a leaders
understanding of how to get performance
results in the organization.
387
ADVANTAGES OF USING THE
ALIGNED BALANCED
SCORECARD (ABS)AN
IMPROVED TOOL FOR OF THE
LEADER
As demonstrated in the FastDel example
above, the Aligned Balanced Scorecard
improves on the traditional Balanced Score-
card in five key ways.
1. The ABS focuses on the primacy of
processes as a means to understand how to
manage an organizations operations.
2. The ABS strengthens the alignment
between causal elements in the organization,
such as the relationship between process
performance measures and customer satis-
faction or financial outcomes.
3. The ABS stresses importance of devel-
oping appropriate metrics to assess each area
of the ABS.
4. The ABS translates proposed strate-
gies into learning and growth actions in
order to improve key processes within the
organization that are directly related to
reaching organizational goals.
5. The ABS provides a different way of
looking at the leadership role in managing
people in processes and providing a culture
to support a high performance organization.
The Primacy of Processes
A main advantage of the ABS is the impor-
tance of internal processes as the main driver
of organizational performance. By focusing on
the management and development of pro-
cesses, the leader spends less time on activities
that do not lead to significant outcomes for the
organization. Key processes and support pro-
cesses are managed by establishing measures
of performance to track performance over
time. Many of processes have multiple mea-
sures assessing different aspects of the process
that are important to the organization as
demonstrated in the FastDel example above.
These competing goals need to be reconciled
in order to balance the various goals of the
388 ORGANIZATIONAL DYNAMICS
organization, such as cost management
(needed to meet the customer requirement
of value vs. cost of service) and service that
is responsive to other customer needs (for
example, the speed of service). The prudent
leader balances these varying goals in a man-
ner that best sustains the organization in the
long run. The ABS helps to articulate these
goals to keep the focus on processes.
Aligning the Causal Elements in
the Organization
Another focus of the ABS is linking related
elements across the four categories (financial,
customer, internal process, and learning and
growth). Outcome measures such as finan-
cial and customer satisfaction are carefully
correlated with the relevant processes that
drive results in these outcome measures.
Strategies are defined, in the growth and
development perspective, into processes that
need to be revised in order to meet the
desired strategies and, therefore, the desired
overall goals of the organization. The result
of this clarity is the maintenance of a focus
upon the processes that drive organizational
performance. Knowing the strength of rela-
tionships between process performance and
the outcomes of customer satisfaction and
financial performance helps the leader to
understand where efforts should be placed
that have the most direct result on perfor-
mance.
The matrix in Table 1 demonstrates how
FastDel related its process performance mea-
sures to measures of customer satisfaction.
This matching of process performance to
measures of customer satisfaction allows
for comparing the effects of changing levels
of process performance on customer satisfac-
tion for the identified key customer require-
ment and comparing the effect of changes in
process performance on overall customer
satisfaction. The United States Postal Service
(USPS) has made this possible in their scor-
ecard as well. Performance measures such as
the percent of mail delivered within the
three-day goal can be related to customer
satisfaction levels giving the USPS the ability
to determine the consequences of changing
process performance levels upon customer
satisfaction measures. The alignment of vari-
ables at the Department of Defense Finance
and Accounting Service (DFAS) led to its
entire reorganization adding direct client
executives to be more responsive to the var-
ious customer groups served by the organi-
zation (branches of the military, defense
contractors, military and civilians, and other
organizations that DFAS serves).
Developing Appropriate Metrics
to Assess Each Area of the ABS
Appropriately used, the ABS helps define
the appropriate metric for each of the four
parts of ABS model. Central, to ABS are
processes as indicated in Table 1, where each
applicable cell in the matrix provides a pro-
cess performance measure that aligns with
the relevant process and connects to a key
customer requirement or financial perfor-
mance measure. In Table 1, each measure,
for example below speed of service, relates traditional Balanced Scorecard. Strategies are
to a measure of process performance key in
meeting this customer requirement.
Very specific measures are used in each of
the other parts of the model. Customer satis-
faction measures are used to assess how well
the organization processes are meeting key
customer requirements. For example, with
the key customer requirement, speed of
service, the customer satisfaction measure
would be, How satisfied are you with the
length of time that is takes to deliver a pack-
age? A Likert scale would be applied pro-
viding responses to the customer satisfaction
questions from extremely dissatisfied to
extremely satisfied. Financial performance
measures are tied directly to strategies as
shown in Fig. 4. Lastly, in the learning and
development part of the ABS, metrics should
be developed for tracking how well the
improvement efforts are succeeding.
The choice of metrics helps to focus the
organization. Both DFAS and USPS anchor
their scorecards to specific measures and
provide for measure experts or champions
to support the chosen measures. At DFAS,
there are measure proponents, measure
experts, and unit leaders. Measure propo-
nents advocate specific metrics to be used
in the scorecard. Measure experts perform
detailed and root cause analysis on measures
to determine if the advocated measures sup-
port the goals of the organization and do so
in a manner that is aligned with other ele-
ments of the organization. Unit leaders, who
are accountable for the results in their unit,
act as a further check in defining appropriate
measures. USPS, in like manner, has metric
champions to ensure units have measures
supporting the goals of the organization
and, because of how the scorecard is linked
to unit performance, metrics leading to per-
sistent employee effort.
Translating Strategies into
Learning and Growth Activities
The ABS clarifies how strategies are
defined into organizational action. This cen-
tral feature differentiates the ABS from the
translated into action plans that are focused
on key and support processes through the
learning and growth perspective. Table 2
gives an example of this process using the
FastDel case. Linking strategy to learning
and development activities helps articulate
strategies into specific action steps for the key
processes of the organization. Given the cen-
trality of processes to the organization, the
translation of strategy to specific process
action plans will lead to changes that are
more specifically directed toward those per-
formance requirements needed for reaching
the strategies. Process performance improve-
ments can take the form of redesign of the
process, adding technology, improving the
performance of employees through training,
performance incentives, or improving the
overall work environment of the process.
People complete processes, so a major
aspect of improving processes involves
improving the skills and the ability of the
people completing these processes. Therefore,
a focus of the ABS is to provide for the effective
management of processes. As employees are
389
central to the effectiveness of most processes,
management of processes also includes the
effective management of people in those pro-
cesses. The ABS provides an effective tool to
support the leaders role in making a perfor-
mance-focused organization.
The Leadership Role in
Managing People in Processes
The ABS focus on process performance
helps leaders to set performance goals for
employees. Process performance measures
are usually defined as the cost of the process
or the cost of the product produced by the
process (such as sorting cost in the FastDel
example), reliability or error rate, volume of
output from the process, or cycle time (the
length of time for one process cycle) of the
process. As process performance is mostly a
function of the employee or employee team
operating the process, process performance
measures are natural measures for tracking
individual or group performance. Perfor-
mance is tracked either through the full cycle
of the process or through an individual
employees performance during part of the
process. For example, at United Parcel Ser-
vices Chicago Area Consolidated Hub facil-
ity, truck unloaders performance is tracked
even though they are only part of the process
performance. Measures of individual perfor-
mance are taken over the volume of work and
the accuracy in placing the package on the
conveyer belt correctly so the optical scanner
can read the label.
Building incentive systems. Given the ability
for leaders to establish performance objectives
in the ABS, the approach makes it easier to
enhance employee performance using incen-
tives. For example, the United States Postal
service has had dramatic performance
improvement using its National Performance
Assessment approach. From the position of
manager of a post office to senior leader, each
leader is assessed using multiple measures of
performance that are related to some of the
key processes, which they influence. For
example, the postal service uses wait time
390 ORGANIZATIONAL DYNAMICS
averages for customers in line; the time is
takes to deliver priority surface, first class
mail, and express mail; employee satisfaction
measures; and costs compared to budget as
means to assess individual and unit perfor-
mance. Some of these measures are under the
direct control of the leader and others cut-
across over several work units. At first look, it
would seem that measures that cut-across
individual accountability might be viewed
as unfair, as the individual should not be held
accountable for what occurs outside his or her
responsibility. However, the postal service
found that shared responsibility for the
accomplishment of goals leads to cooperation
between units. So for example, the manager of
the Louisville sort facility must work with the
Chicago facility leader in order to reach their
mutual goal of three-day delivery of first class
mail between the two locations.
Focusing on employee performance, as
occurs with use of the ABS, increases
employee awareness of their contribution
to accomplishing organizational goals and
increases organizational leaders ability to
provide connections to performance goals
and incentives that will mean most to the
organization. Greater clarity occurs, thus the
employee better understands task signifi-
cance, and knowledge that helps build
higher levels of motivation. Performance
measures support better feedback to employ-
ees, thus improving job satisfaction.
Developing a positive work culture. An-
other consequence of the Aligned Balanced
Scorecard is that the ABS clarifies employee
roles and builds a high-performance culture
by creating a more positive work environ-
ment. An emerging area of study over the
past decade has focused on the importance of
creating a positive work climate. This focus
has emerged from the idea of creating a more
positive life experience. Cameron and Caza,
2002 and 2003, applied the importance of
positive culture to leadership virtues, orga-
nizational ethics, and performance. Luthans
and others developed the idea of Positive
Organizational Behavior. Luthans and others
defined three positive psychological aspects
considered in Positive Organizational Beha-
vior; hope, optimism, and resilience. Orga-
nization leadership can support the
development of these positive aspects
through leadership actions that create a more
positive work environment along with devel-
oping employees.
One of the main actions leaders can take is
setting clear, challenging, yet reachable goals.
An extensive set of literature exist that support
goal setting at the individual performance
level in order to achieve high organizational
performance. The ABS facilitates a more effec-
tive translation of organizational goals into
individual performance goals. Knowing the
correlation between processes and outcomes
helps the organization to better articulate its
own plans and to translate those plans into
unit and personal work plans. This increased
linkage across and down the organization
enables greater clarity when determining
needed actions. At the same time, the ability
to link individual incentives to demonstrated
process improvements or outcome measures
is enhanced. In this manner, it is possible to
create a better understanding of the path
between performance and desired employee
outcomes, thus supporting greater percep-
tions of efficacy and enhancing the employees
perception of goal achievability. The result is
more positive work environments that
enhance the Positive Organizational Behavior
concepts of hope, optimism, and enhanced
persistence in performance.
If leadership uses the Aligned Balanced
Scorecard as a development rather than as
an evaluative tool, a positive work environ-
ment will be supported. Predicating rewards
based upon performance improvement rather
than only goal attainment will support a more
collaborative relationship between leader and
employee. The history of management by
objectives and other similar programs, which
required an employee to reach specific goals
in order to receive any incentive, created an
environment that pitted leader against
employee with the employee focused on
efforts to reduce goal levels. In this environ-
ment, leadership was viewed as the enemy.
With a focus upon performance improve-
ment, sustained motivation is more likely.
For example, the National Performance
Assessment Program of the United States Post
Office (USPS) uses fifteen gradients to encou-
rage low performing groups and high per-
forming groups to reach the next gradient or
higher. The leader, in this process, becomes a
coach supporting performance improvement
rather than the traditional evaluator, creating
a more positive organizational climate.
In conclusion, if used as proposed in this
article (as shown in Fig. 3), the Aligned Bal-
ance Scorecard can become a more useful tool
in organizations than the traditional score-
card. The ABS becomes a management tool,
which clarifies the interrelationship between
the internal business processes and the
desired outcome goals of the organization.
Development and learning dimensions focus
on improving these processes in order to
increase the performance of the organization.
We have demonstrated how the Aligned
Balanced Scorecard can be a means for linking
elements within the organization and creating
an aligned and integrated performance sys-
tem as advocated by the National Baldrige
Performance Award criteria. Once processes
are aligned with outcomes, leaders attention
can be focused upon aligning unit and indi-
vidual performance goals with reinforcement
structures supporting the goals of the organi-
zation. The ABS approach provides greater
leader understanding of how to organize pro-
cesses and how to improve employee motiva-
tion in order to have the greatest impact upon
the organization. In addition, using the scor-
ecard as a management tool rather than an
evaluative tool will change the focus of the
leader/subordinate relationship. Employees
become more actively engaged in reaching
organizational goals. Application of the ABS
creates a more positive performance-centered
work climate with high impact leadership,
contributing to the health and vitality of the
organization culture and to positive work
outcomes.
391
 SELECTED BIBLIOGRAPHY
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son and J. George-Falvy, Goal Setting:
Theory and Practice, in Industrial and Orga-
nizational Psychology, Blackwell 2000, 216
249. For more recent coverage, see G. P.
Latham and E. A. Locke, Enhancing the
Benefits and Overcoming the Pitfalls of Goal
Setting, Organizational Dynamics, 2006, 35,
332339; and E. A. Locke and G. P. Latham,
Building a Practically Useful Theory of Goal
Setting and Task Motivation: A 35 Year
Odyssey, American Psychologist, 2002, 57,
705717. The use of stretch goals to enhance
performance is discussed in K. R. Thompson,
W. Hochwarter, and N. Mathys, Stretch
Targets: What Makes Them Effective, Acad-
emy of Management Executive, 1997, 11, 4860.
David P. Norton and Robert S. Kaplan
provided earlier models of the Balanced Scor-
ecard. Their initial work appeared in R.
Kaplan and D. Norton, The Balanced Scor-
ecardMeasures that Drive Performance,
Harvard Business Review, 1992, 72(1), 7179.
This initial work was expanded in 1996: R.
Kaplan and D. Norton, The Balanced Scorecard:
Translating Strategy in Action (Boston: Harvard
Business School Press, 1996).
In 2000, Norton and Kaplan provided a
hierarchical model of the Balanced Scorecard
that related strategies to financial perfor-
mance, to customer satisfaction, and then
to process management and learning &
development. See, R. S. Kaplan and D. P.
Norton, Having Trouble with Your Strat-
egy? Then Map It, Harvard Business Review,
2000, 80, 167176.
The Baldrige National Quality Award is
administered through the National Institute
for Standards and Technology (NIST). The
most comprehensive source of direct materi-
392 ORGANIZATIONAL DYNAMICS
als on the Baldrige Award can be found at
www.quality.nist.gov: The current criteria
are posted along with the applications of
previous Baldrige Award winners. There
are three sets of criteria, one for business &
government organizations, one for educa-
tion, and one for health care. Government
organizations became eligible for the Bal-
drige Quality Award with the 2007 change
in the federal authorization law. Mark L.
Blazey is a major source of information con-
cerning the application of the criteria into
direction for performance excellence: M. L.
Blazey, Insights to Performance Excellence 2007
(Milwaukee, WI: American Society for Qual-
ity, 2007).
The applications of aligned goals help
organizational leadership establish direction
and translate overall goals into action plans
and personal work plans. These plans should
help support the building of a cohesive team.
See G. P. Latham, A Five Step Approach to
Behavioral Change, Organizational Dynamics,
2003, 32, 309318.
Engaging the workforce is a key concept
in the 2007 Criteria and involves directing
employee involvement and commitment to
the organizations goals. The importance of
engagement has been demonstrated in W. A.
Kahn, Psychological Conditions of Personal
Engagement and Disengagement at Work,
Academy of Management Journal, 1990, 33, 692
724.
Positive aspects of leadership are out-
lined in F. Luthans, Positive Organizational
Behavior: Developing and Managing Psy-
chological Strengths, Academy of Manage-
ment Executive, 2002, 16, 5772, and F.
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 A complete explanation of the United
States Post Office National Performance
Assessment Program can be found in N. J.
Mathys and K. R. Thompson, Using the
Balanced Scorecard: Lessons Learned from the
United States Postal Service and the Defense
Finance and Accounting Service (Washington,
DC: IBM Center for the Business of Govern-
ment, 2007).

Kenneth R Thompson is currently professor of management in the

Kellstadt Graduate School of Business at DePaul University. He has
published in the areas of total quality management, leadership, and goal
setting. Ken has co-authored four books dealing with management,
ethics, and organizational behavior. Ken has served as an examiner for
the National Quality Awards for three years and as an eleven year senior
lead examiner for the State of Illinois Quality Award. Kens current
research interests include assessing the use of the Balanced Scorecard
within varying organizational settings, building an ethical and positive
organizational behavior culture, and goal setting (The Charles H.
Kellstadt Graduate School of Business, DePaul University, One East
Jackson Boulevard, Chicago, IL 60604, United States. Tel.: +1 312 362
5211. e-mail: kthompso@depaul.edu).

Nicholas Mathys is currently professor of management in the Kellstadt

Graduate School of Business at DePaul University. He has published in
the areas of total quality management, human resources, and goal
setting. Nick co-authored four textbooks dealing with management and
human resource topics, and has served as a State of Illinois quality award
examiner for the past five years. Nicks current research interests include
applying the Balanced Scorecard in strategic management, developing
performance-based management systems, and management develop-
ment approaches (The Charles H. Kellstadt Graduate School of Business,
DePaul University, One East Jackson Boulevard, Chicago, IL 60604,
United States. e-mail: nmathys@depaul.edu).

In 2006, Nick Mathys and Ken Thompson published a monograph: a case

study on the use of the Balanced Scorecard by the Department of Defense
and United States Postal Service. This was funded through an IBM
business of government grant.

393