Balanced Scorecard
Introduction
The balanced scorecard can be used for translating a vision or strategy into specific measures and goals. The setting up
of the scorecard may take a significant amount of time, to identify and put in place appropriate measures. However, once
in place monitoring and measurement should be incorporated into operational tasks rather than be additional activities. A
cross functional team should be involved in the initial set up, to ensure a wide spectrum of perspectives and view points.
The balanced scorecard is designed to identify objectives, measures, targets and actions relating to four key aspects:
Financial; Customer; Internal Business Processes; and Learning and Growth.
The Balanced Scorecard emphasises that financial and non-financial measures must be part of the information system for
employees at all levels of the organisation. Tangible objectives and measures are derived using a top down process,
driven by vision and strategy. In this way the Balanced Scorecard can be used to manage as well as measure strategic
processes:
1. Clarify and translate vision and strategy
2. Communicate and link strategic objectives and measures
3. Plan, set targets, and align strategic initiatives
4. Enhance strategic feedback and learning
Further Information
Kaplan, R., and Norton, D., (1996), ‘The Balanced Scorecard’, Harvard Business School Press, Boston
Instructions
The template below may be used to create a Balanced Scorecard or the company’s new vision
Targets
Measures
Learning and
Growth
“To achieve our
vision, how will
we sustain our
ability to change
and improve?”
Initiatives
Targets
Measures
Objectives
Initiatives
Initiatives
Measures
Targets
Internal Business
processes
“To
satisfy
our
shareholders
and
customers,
what
business processes
must we excel at?”
Vision and
Strategy
Objectives
Initiatives
Targets
Measures
Customer
“To achieve our
vision,
how
should
we
appear to our
customers?”
Objectives
Financial
“To
succeed
financially, how
should
we
appear to our
shareholders?”
Objectives
Key Steps:
• Identify key objectives based on the organisational vision, for each of the four perspectives
• Develop realisable measures to evaluate these perspectives, make sure that they provide a balanced picture
across all four perspectives
• Identify goals and targets for each of the measures
• Develop an action plan to achieve the objectives and targets
• Continuously review and track performance against the measures
Adapted from Kaplan and Norton (1996)
Through linking the scorecard measures to the vision and strategy the scorecard itself helps to communicate the
vision and create a shared understanding. The scorecard also gives a holistic model of the strategy so that people
can see how they can contribute to organisational success. The links between the vision and scorecard is usually
via a set of cause and effect relationships. A scorecard should include both outcome measures (ultimate objectives
of the strategy) and also performance driver measures (leading indicators, what people should be doing today to
create value in the future).
The Balanced Scorecard can be used at an organisational (corporate scorecards) and at a business unit level, or at
function or departmental level. It is important that the scorecard is utilised effectively once it is created. In order for
this to happen the scorecard should be embedded in ongoing management systems such as communications,
reward and recognition, and resource allocation.
TRANSFORMING CAPABILITY SUPPORT MATERIALS
LEADING VISION CREATION
Balanced Scorecard
Financial:
“To succeed
financially, how
should we
appear to our
shareholders?”
Objectives
Measures
Targets
Initiatives
Internal
Business
Processes:
“To satisfy our
shareholders
and customers,
what business
processes must
we excel at?”
Objectives
Measures
Targets
Initiatives
Learning and Objectives
Growth:
“To achieve our
vision, how will
we sustain our
ability to change
and improve?”
Measures
Targets
Initiatives
Customer:
“To achieve our
vision, how
should we
appear to our
customers?”
Objectives
Measures
Targets
Initiatives
TRANSFORMING CAPABILITY SUPPORT MATERIALS
LEADING VISION CREATION