BALANCED SCORECARD

Introduction
1
History and Description of the Tool

Tutorial
2
Discussion Step-by-step process of the Framework

Outline Application
3
Example showing how to use Balance Scorecard

Outcomes and Limitations

4
Results and Limits of Balance Scorecard
 Balanced Scorecard: An Introduction

Starting in the early 1990s, Robert S. Kaplan and

David P. Norton advocated a “balanced scorecard”
as a top-down management system.
 What is a Balanced Scorecard?

• Refers to a strategic management performance metric used to identify and

improve various internal business functions and their resulting external
outcomes.

• About 80% of companies across the world use a balanced scorecard

 Author/Proponent of Balanced
Scorecard:

• Dr. Robert Kaplan -

Accounting Academic
• Dr. David Norton -
Business Executive and
Theorist
 Where is it appropriately used?

This tool is used for PLANNING.

For-profit Non-profit
Government Healthcare
Organization Organization
The Four Perspectives of Balanced Scorecard

1
FINANCIAL PERSPECTIVE
2
CUSTOMER PERSPECTIVE
3
BUSINESS PROCESSES PERSPECTIVE
4
LEARNING AND GROWTH PERSPECTIVE
STEPS TO USING A BALANCED SCORECARD
• Assess the organization’s internal and external environment.

• Clarify and translate the organization’s mission and vision statements.

• Set objectives and targets, develop strategies, and establish metrics and KPIs
in each perspective.

• Communicate objectives and strategies to the organization’s employees and

review the progress towards the achievement of each objective through
metrics and KPIs.
 SMITH
NATIONAL BANK
(FICTIONAL BANK)

BALANCED SCORECARD EXAMPLE:

SMITH NATIONAL BANK
 Step 1: Assess the organization’s internal and
external environment.

Internal External
• Highly complex • Highly competitive
processes • Highly regulated
• Steep learning curve • Very risky due to
• Awards-driven employee VUCA
performance
 Step 2: Clarify and translate the organization’s
mission and vision statements.

VISION 2025
The No. 1 Savings Bank in North America

MISSION
Empower everyday Americans to reach their
financial goals.
Step 3: Set objectives and targets, develop strategies, and
establish metrics and KPIs in each perspective.
Step 4: Communicate objectives and strategies
and review progress.

• Conduct Upper-Middle Management

Alignment Meetings

• Facilitate departmental 'groupthink'

sessions to operationalize initiatives.

• Implement weekly, monthly, quarterly

and annual performance reviews.
 Balanced Scorecard Outcomes

SMITH NATIONAL BANK

Improved Effective evaluation of

People excellence
resource usage. potential projects
Linking budget to strategy allows for The Balanced scorecard can help in
The balanced scorecard will help for
a more efficient use of resources identifying and setting appropriate
better alignment of project goals to
linked to specific objectives employee goals. Connecting
organizational goals. This will give
identified by the company. This type employee goals to organizational
way to better decision-making on
of budgeting approach helps goals both creates accountability
whether or not it is necessary to
translate high-level strategy down and also helps motivate employees
take on specific projects.
into actionable operational plans. to perform at their best.
 OUTCOME OF USING THE
BALANCED SCORECARD

• Compels managers to view the company in its

entirety resulting in a more accurate assessment
of the organization’s overall state.
• Provides a strategy map that would help
management achieve the organization’s
strategic objectives
 Limitations

• Objective and definitions of measures exclude other key stakeholders.

• Have an obscure relationship with organizational performance.

• Key success factors needed to identify relevant KPIs are not defined.

• Its four perspectives limit the view of the organization.