BALANCED

SCORECA
“The Balanced Scorecard
(BSC) is a top-down
management system that
organizations can use to
clarify their vision and
strategy and transform
them into action.”
 It’s a way of looking at
the organization that
focuses on the big-
picture strategic goals. It
also helps in choosing
the right things to
measure so goals can be
 Dr. David Norton Dr. Robert Kaplan

The Balanced Scorecard was first

introduced by accounting academic Dr.
Robert Kaplan and business executive and
 FINANCIAL

TO BE DELETED “To succeed

financially,
Objectives Measures Targets Initiatives

KUNG MAY how should

we appear to
our
MAHANAP SA shareholders
?”
INTERNET NA
MAGANDA
CUSTOMER INTERNAL BUSINESS PROCESS

“To achieve our Objectives Measures Targets Initiatives “To satisfy our Objectives Measures Targets Initiatives
vision, how should we shareholders and
appear to our
customers?” Vision and customers, what
business processes
must we excel at?”
Strategy

LEARNING AND GROWTH

“To achieve our Objectives Measures Targets Initiatives

vision, how will we
sustain our ability to
change and
improve?”
WHY BUILD A
BALANCED
SCORECARD
Why Build a Balanced Scorecard

You not only need to know today’s

performance and predict tomorrow’s
performance, but you need to be able
to demonstrate how your spending on
strategic projects today will help you
improve your impact in the future.
Why Build a Balanced Scorecard

The organization needs to ask two

important backward- and forward-looking
questions:
1. How did we perform this past
month, quarter, and year?
2. How are we going to do next
month, quarter, and year?
THE FOUR LEGS OF
THE BALANCED
SCORECARD
THE FOUR LEGS OF BALANCED SCORECARD

1. LEARNING AND
GROWTH
2. INTERNAL BUSINESS
PROCESSES

3. CUSTOMER

4. FINANCIAL
THE FOUR LEGS OF BALANCED SCORECARD

1. LEARNING AND
GROWTH
The learning and growth
perspective looks at the
overall corporate culture.
Technology plays a major
role in learning and growth.
 THE FOUR LEGS OF BALANCED SCORECARD

1. LEARNING AND
GROWTH

Possible Performance Measures:

 Employee Satisfaction
 Retention and Turnover
 Training Hours and Resources
 Technology Investment
THE FOUR LEGS OF BALANCED SCORECARD

1. LEARNING AND GROWTH

2. INTERNAL BUSINESS
PROCESSES

3. CUSTOMER

4. FINANCIAL
THE FOUR LEGS OF BALANCED SCORECARD

2. INTERNAL BUSINESS
PROCESSES

The internal business processes

perspective looks at how smoothly the
business is running.
v
This perspective also encourages
company to take a step back and get
a little philosophical about the
company.
THE FOUR LEGS OF BALANCED SCORECARD

2. INTERNAL BUSINESS
PROCESSES

Possible Performance Measures:

 Cycle Time
 Completion Rate
 Workload and Employee Utilization
 Transactions per employee
 Errors or Rework
THE FOUR LEGS OF BALANCED SCORECARD

1. LEARNING AND GROWTH

2. INTERNAL BUSINESS
PROCESSES

3. CUSTOMER

4. FINANCIAL
 THE FOUR LEGS OF BALANCED SCORECARD

3. CUSTOMER

Customer satisfaction is a great

forward-looking indicator of success.
The way company treat their
customers today directly impacts how
much money you’ll make tomorrow.
 THE FOUR LEGS OF BALANCED SCORECARD

3. CUSTOMER

Possible Performance Measures:

 Customer Satisfaction
v (Average)
 Satisfaction Gap Analysis
(Satisfaction vs. Level of
Importance)
 Satisfaction Distribution (% of each
THE FOUR LEGS OF BALANCED SCORECARD

1. LEARNING AND GROWTH

2. INTERNAL BUSINESS
PROCESSES

3. CUSTOMER

4. FINANCIAL
 THE FOUR LEGS OF BALANCED SCORECARD

4. FINANCIAL
The financial health of the
organization may be a lagging indicator
showing the result of past decisions,
but it’s still incredibly important. Money
keeps company alive, and the financial
perspective focuses solely on that.
 THE FOUR LEGS OF BALANCED SCORECARD

4. FINANCIAL

Possible Performance
Measures:
 Cost / Unit
 Unfunded Requirements or
Projects
CONSTRUCTING A
BALANCED
SCORECARD
 CONSTRUCTING A BALANCED SCORECARD

A. STRATEGIC B. C. STRATEGIC D.
OBJECTIVES MEASURES INITIATIVES ACTION
ITEMS
CONSTRUCTING A BALANCED SCORECARD

It is one of those things

that you can’t just
A. STRATEGIC
outsource to a
OBJECTIVES consultant to figure out
on their own. The
involvement of people
who know the intimate
details of organization
CONSTRUCTING A BALANCED SCORECARD

Every strategic
B.
objective should have
MEASURES one or two things that
should be measured to
determine its
performance.
CONSTRUCTING A BALANCED SCORECARD

Strategic Initiatives are the

action projects that are
needed to help the
C. STRATEGIC
INITIATIVES
organization be successful
with its strategy. Strategic
Initiative are tied to
Strategic Objectives, are of
significant importance to
the whole organization, and
 READING A
BALANCED
SCORECARD
STRATEGY MAP
READING A BALANCED SCORECARD
STRATEGY MAP

A strategy map is an
important element. It is
a chart showing
relationships between
strategic objectives.
BENEFITS OF
BALANCED
wl
SCORECARD
 BENEFITS OF BALANCED SCORECARD

There are many reasons why you

should implement the Balanced
Scorecard, and here are ways to look at
it.
 Improve organizational performance
by measuring what matters.
 Increase focus on strategy and
results.
 BENEFITS OF BALANCED SCORECARD

 Align organizational 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.
ADVANTAGES AND
DISADVANTAGES
OF BALANCED
SCORECARD
Advantages of the Balanced Scorecard

1. It gives structure to
your strategy.
Advantages of the Balanced Scorecard

2. It makes it easy to
communicate your
strategy.
Advantages of the Balanced Scorecard

3. It aligns your
departments and
divisions.
 Advantages of the Balanced Scorecard

4. It helps your employees

see how their individual
goals link to the
organizational strategy.
Advantages of the Balanced Scorecard

5. It keeps your strategy

front and center of your
reporting process.
Disadvantages of the Balanced Scorecard

1. It can be an
overwhelming framework.
Disadvantages of the Balanced Scorecard

2. It can’t be copied
precisely from examples.
Disadvantages of the Balanced Scorecard

3. It requires strong
leadership support to be
successful.
Disadvantages of the Balanced Scorecard

4. It can be difficult to
keep everyone on the
same page.
Disadvantages of the Balanced Scorecard

5. It may appear too rigid

for the way you manage.