2. What is a Balanced Scorecard?
The Balanced Scorecard is a strategic planning
and management system used to align business
activities to the vision and strategy of the
organization by monitoring performance against
strategic goals.
3. Balanced Scorecard Concept
Was first published in 1992 by Kaplan and
Norton, a book followed in 1996.
Traditional performance measurement that only
focus on external accounting data are obsolete.
The approach is to provide 'balance' to the
financial perspective.
4. Why Use a Balanced Scorecard?
Improve organizational performance by
measuring what matters
Increase focus on strategy and results
Align organization strategy with workers on a
day-to-day basis
Focus on the drivers key to future performance
Improve communication of the organization’s
Vision and Strategy
Prioritize Projects / Initiatives
5. 4 Original Business Perspectives
Adapted from The Balanced Scorecard by Kaplan & Norton
The Balanced
Scorecard model
suggests that we
view the
organization from
4 perspectives.
Then Develop
metrics, collect
data and analyze it
relative to each of
these perspectives
6. 4 Business Perspectives Questions
Financial
What must we do to create sustainable economic value?
Internal Business Process
To satisfy our stakeholders, what must be our levels of
productivity, efficiency, and quality?
Learning and Growth
How does our employee performance management
system, including feedback to employees, support high
performance?
Customer
What do our customers require from us and how are we
doing according to those requirements?
8. Key Implementation Success Factors
Obtaining executive sponsorship and
commitment
Involving a broad base of leaders, managers
and employees in scorecard development
Choose the right Scorecard Champion
Beginning interactive (two-way) communication
first
Viewing the scorecard as a long-term journey
rather than a short-term project
Getting outside help if needed
9. Balanced Scorecard Example
STRATEGY MAP
STRATEGY MAP
BALANCED SCORECARD
BALANCED SCORECARD
MEASUREMENT
MEASUREMENTPROCESS: MANUFACTURING EXCELLENCE
PROCESS: MANUFACTURING EXCELLENCE
THEME: ROCE > xx%, VOLUME = xx,xxx units
THEME: ROCE > xx%, VOLUME = xx,xxx units OBJECTIVES
OBJECTIVES
TARGET
TARGET
ACTION PLAN
ACTION PLAN
INITIATIVE
INITIATIVE
BUDGET
BUDGET
FINANCIAL
PERSPECTIVE
Improve
Productivity
Improve
Productivity
OFFER PRODUCTS & SERVCIES
THAT ARE CONSISTENT, TIMELY
and LOW-COST
OFFER PRODUCTS & SERVCIES
THAT ARE CONSISTENT, TIMELY
and LOW-COST
Long-Term Shareholder
Value ROCE > xx%
Long-Term Shareholder
Value ROCE > xx%
Grow
Revenue
Grow
Revenue
CUSTOMER
PERSPECTIVE
•Operating Cost & Efficiency•Operating Cost & Efficiency
•Capacity Utilization•Capacity Utilization
•Capability Utilization•Capability Utilization
•Brand / Image•Brand / Image
• Cost/Unit, Efficiency• Cost/Unit, Efficiency
•% Utilization•% Utilization
• Monthly Monitoring• Monthly Monitoring
• Weekly/Monthly
Monitoring
• Weekly/Monthly
Monitoring
• Monthly Monitoring• Monthly Monitoring
• Weekly/Monthly
Monitoring
• Weekly/Monthly
Monitoring
•Low Cost Manufacturing•Low Cost Manufacturing
•World-Class Quality
Standards
•World-Class Quality
Standards
•World-Class Delivery Timing•World-Class Delivery Timing
•Knowledgeable & Skilled
Partner
•Knowledgeable & Skilled
Partner
•High Customer Satisfaction•High Customer Satisfaction
•Reinforce Brand Image•Reinforce Brand Image
• Man-hour per Unit• Man-hour per Unit
• Defect per Unit• Defect per Unit
• Sales Delivery• Sales Delivery
• Direct Pass Rate• Direct Pass Rate
• Market Feedback• Market Feedback
• Sales Volume• Sales Volume
• Weekly Monitoring• Weekly Monitoring
• Daily Monitoring• Daily Monitoring
• Daily Monitoring• Daily Monitoring
• Daily Monitoring• Daily Monitoring
• Weekly Monitoring• Weekly Monitoring
• Monthly Monitoring
Prod. & Sales Mtg.
• Monthly Monitoring
Prod. & Sales Mtg.
Low
Cost
Low
Cost
World
Class
World
Class
ENSURE OPERATIONAL EXCELLENCE WITH
INNOVATION AS WELL BEING SOCIALLY
RESPONSIBLE
ENSURE OPERATIONAL EXCELLENCE WITH
INNOVATION AS WELL BEING SOCIALLY
RESPONSIBLE
INTERNAL
PERSPECTIVE
Customer
Satisfaction
Customer
Satisfaction
Enhance
Brand
Enhance
Brand
Operational
Excellence
Operational
Excellence
Process
Innovation
Process
Innovation
Alliances with
SBUs
Alliances with
SBUs
Socially
Responsible
Socially
Responsible
•Productivity•Productivity
•Delivery•Delivery
•Continuous Improvement•Continuous Improvement
•NPI•NPI
•Safety & Health•Safety & Health
•Environment•Environment
• Cycle Time• Cycle Time
• Meet Daily Plan
• WIP
• Meet Daily Plan
• WIP
• KAIZEN
• ICC
• KAIZEN
• ICC
• Timely Introduction• Timely Introduction
• Industrial Accident
• Commuting Accident
• Industrial Accident
• Commuting Accident
• Toxic Waste Disposal
• ISO 9002
• Toxic Waste Disposal
• ISO 9002
• Hourly Monitoring• Hourly Monitoring
• Daily Monitoring
• Daily Monitoring
• Daily Monitoring
• Daily Monitoring
• Monthly follow-up
• Specific Programmed
• Monthly follow-up
• Specific Programmed
• Weekly Follow-up• Weekly Follow-up
• Cross Audits
• Defensive Driving
• Cross Audits
• Defensive Driving
• Facility Readiness
• Certification
• Facility Readiness
• Certification
STRATEGIC JOB & SYSTEMSSTRATEGIC JOB & SYSTEMS
LEARNING & GROWTH
PERSPECTIVE
Skills
Skills
Info. System
Info. System
•Develop the Necessary Skills•Develop the Necessary Skills
•Information Systems
Availability
•Information Systems
Availability
•Strategic Awareness•Strategic Awareness
• R&D & Development• R&D & Development
• ALC, Procurement,
Financial
• ALC, Procurement,
Financial
• Alignment• Alignment
• Training and Skill
Build-up
• Training and Skill
Build-up
• Set-up, Test and
Validation
• Set-up, Test and
Validation
• Communication
Programmed
• Communication
Programmed
• Trial Prod.
• Spare Parts Prod
• Trial Prod.
• Spare Parts Prod
•Warranty Cost•Warranty Cost tt
OPEX
RM XX M
CAPEX
RM xx M
OPEX
RM XX M
CAPEX
RM xx M
13. Scorecard Potential Pitfalls & Criticisms
Lack of a well Defined Strategy
The balanced scorecard relies on a well defined strategy and
understanding of linkages between strategic objections and
metrics. Without this foundation the implementation could fail.
Too much focus on the lagging measures
Focusing on only the lagging measures may cause a lack of
priority or opportunity for the leading measures.
Use of Generic Metrics
Don’t just copy metrics from another firm. Identify the measures
that apply to your strategy and competitive position .
Self-serving managers
Managers whose goal is to achieve a desired result in order to
obtain a bonus or other self reward.
14. Balanced Scorecard Benefit Re-Cap
Helps align key performance measures with strategy at all levels of
an organization
The methodology facilitates communication and understanding of
business goals and strategies at all levels of an organization
Strategic initiatives that follow "best practices" methodologies that
cascade through the entire organization
Transforms an organization’s mission statement and strategic plan
from a passive document into the "marching orders" for the
organization on a daily basis.
It enables executives to truly execute their strategies by identifying
what should be done and measured.
To date, some form of a Balanced Scorecard is used by nearly 60% of
Fortune 500 companies
