The Balanced Scorecard as a Strategic Management Tool

THE BALANCED SCORECARD AS
A STRATEGIC MANAGEMENT
TOOL
Paulino Silva :::::
Professor Adjunto :::::
::::: UNIS Webinar
::::: 24.NOV.2017

My name is Paulino Silva 😊
• ISCAP / IPP Lecturer, since 2003.
• Founding Member of CEOS-P.PORTO Research Centre.
• Background in Management Sciences.
• Author of several scientific papers in Management,
Accounting and Education areas, published in prestigious
international journals and conference proceedings.
• Coordinator and researcher in several international
projects, representing ISCAP / IPP.
• Executive Coach, Speaker and Trainer.
“Looking for Avenues in Management, Accounting and Education”
PaulinoSilva.com | ISCAP-IPP

AGENDA
1. Introduction
2. Historical Context
3. Fundamentals of BSC
4. Implementation of BSC
5. Conclusion

PORTO
Porto is the second largest city in
Portugal, with an enormous tourist
interest.
It is world known for its prestigious
wine: the real PORTO WINE.
Both the name Porto and Portugal
are said to be derived from the
Roman name Portus Cale.

ISCAP
ISCAP was founded as the
School of Commerce of Porto
in 1886.
In 1976 ISCAP was renamed to
its current name, Porto
Accounting and Business
School.

Our School: ISCAP
ISCAP is the Accounting and
Business School of
Polytechnic Institute of
Porto, the largest
Polytechnic of Portugal.
ISCAP has around 4 000
students, 230 teachers and
50 workers.

Our Bachelor Degrees are:
• Accounting and Administration
• International Commerce
• Business Communication
• Marketing
• Administration Assistance and
Translation
• Human Resources Management
• Sciences and Information
Technologies

Our Master Degrees are:
• Specialized Translation and Interpreting
• Accounting and Finance
• Auditing
• Entrepreneurship and Internationalization
• Administration Assistance
• Business Management
• Logistics
• Digital Marketing
• Intercultural Studies for Business
• Human Resources Management and
Development
• Business Information

HISTORICAL CONTEXT

BABYLON
RICTOR NORTON
ANCIENT EGYPT
ANCIENT GREECE

Industrial Revolution started the
golden age of Management
Accounting
http://www.flickr/photos/3424323412

Today, we have a NEW business
environment
In the old days Present
Orientation Product Market
Main components of Industrial
Production Cost (IPC)
Direct Costs Indirect Costs
Life cycle Long Short
Variety range of products Reduced High
Pricing Based on IPC Based on competition
Complexity of the production process Reduced Very high

MA relevance was LOST
1925 - 1980

Why did that happen?
The information provided by
management accounting systems was:
“too late, too aggregated and too
distorted to be relevant for planning
and control decisions”
Johnson & Kaplan, 1987

MA relevance was REGAINED
1980 -

THE BALANCED SCORECARD

What is it?
Basically, BSC is a measurement and
management tool of organizational
performance.

1992

1993

1996

2000

Financial
Perspective
Internal
Perspective
Learning and
Growth
Perspective
Customer
Perspective

2006

BSC is very POPULAR

Vision
and
Strategy
Financial
Perspective
Internal
Perspective
Learning and
Growth
Perspective
Customer
Perspective
Source: Adapted
from Kaplan and
Norton (1996).

Financial
Customer Internal
Learning &
Growth
KPI 1
KPI 2
KPI 3
KPI 1
KPI 2
KPI 3
KPI 1
KPI 2
KPI 3
KPI 1
KPI 2
KPI 3
Vision
and
Strategy

Vision
and
Strategy
Financial
Perspective
Internal
Perspective
Learning and
Growth
Perspective
Customer
Perspective
Source: Adapted
from Kaplan and
Norton (1996).
The BSC main GOALS are:
• Focus on company strategy;
• Align the intellectual capital;
• Share the vision;
• Clarify cause-effect relationships;
• Focus on management.

To succeed
financially how
do we appear
to our
shareholders?
Financial
Objectives Measures Targets Initiatives

To succeed
financially how
do we appear
to our
shareholders?
Financial
• Value creation: EVA, MVA;
• Operational, financial or net income;
• Invested capital;
• Return on equity;
• Financial autonomy, solvency, liquidity.

To satisfy our
vision, how
should we
appear to our
customers?
Customer

To satisfy our
vision, how
should we
appear to our
customers?
Customer
• Customer satisfaction levels;
• Response or attendance times ;
• Number of complaints;
• Market share;
• Number of customers.

To satisfy our
shareholders
and
customers,
what business
processes
must we excel
at?
Internal

To satisfy our
shareholders
and
customers,
what business
processes
must we excel
at?
Internal
• Deadline accomplishments;
• Average time of new products
development;
• Accidents at work rate;
• Production volume;
• Execution times.

To achieve our
vision, how
will we sustain
our ability to
change and
improve?
Learning and Growth

To achieve our
vision, how
will we sustain
our ability to
change and
improve?
Learning and Growth
• Qualification of employees;
• Satisfaction level of employees;
• Absenteeism rate;
• Staff retention rate;
• Investment in R & D;
• Investment in new technologies.

HOW TO IMPLEMENT
A BALANCED SCORECARD?

Let’s implement a BSC

The steps of implementation are:
1. Diagnosis and critical analysis;
2. Strategic issues;
3. Indicators and initiatives;
4. Automation;
5. Alignment and evaluation.

“You can’t manage
what you don’t
measure.”
Peter Drucker

Paulino Silva
Professor Adjunto do ISCAP | IPP
paulino@iscap.ipp.pt
PaulinoSilva.com

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