The Balanced Scorecard

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Strategy Map
Perspectives
Financial business performance levers How do we create value? Long Term Shareholder Value Growth Strategy Productivity Strategy

Customer Value Proposition What do our customers expect and value?

Cost

Quality

Time

Function

Relationship

Process value chain To satisfy our customers, at what processes must we excel?

Innovation Processes

Customer Management Processes

Operational Processes

Regulatory Processes

Assess Effectiveness in Meeting Need

Enabling capability What capability must we learn, innovate, and improve?

Skills and competencies

Technology and databases

Knowledge assets, best practices

Context, Climate, Culture

Adapted from Kaplan, Robert S. and David P. Norton; The Balanced Scorecard: Translating Strategy Into Action. Boston: Harvard Business School Press, 1996

What is balanced in the BSC ?

Short term Long term

Drivers

Outcomes

Financial

Non-Financial

Internal

External

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Sample Financial Measures

Shareholder Value Added (SVA) Economic Value Added (EVA) Profits/ sales Return on Net Worth (RONW) Gross margin Profit per employee Sales per employee Revenue Revenue from new products Return on Equity (ROE) Return on Capital Employed (ROCE) Value added per employee Compounded Annual Growth Rate (CAGR) of Revenue Dividend payout ratio Earnings per Share (EPS) Shareholder loyalty Cash flow Total cost Variable Cost/ sales Credit rating Debt to Equity Days sales receivable

Sample Customer Measures

Customer satisfaction Customer loyalty Market share Number of complaints Return rates Complaints resolved on first contact Direct price Price relative to competition Customer acquisition rates Win rates (closed/ contacts) Customer visits to company Hours spent with customers Marketing cost/ sales Number of proposals made Brand recall Share of target customer spending

Average duration of customer relationship

Customers lost

Sales per channel

Number of trade shows attended Customer profitability

Sample Internal Process Measures

Average cost per transaction On-time delivery Order fill rate Line item fill rate Average lead time Patents pending R&D Expenses Stock-outs Response time to customer requests Defect percentage Rework percentage Cost of inspections Warranty/ damage claims Products/ services pipeline Capacity utilisation Down time (unplanned) Time to market Time to fulfil order Number of positive media stories Planning/ scheduling accuracy Cash to Cash cycle Inventory turnover Days sales outstanding Community involvement

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Bell Curve Fitment (Normalization)

Parity in Performance Ratings across various Units / Departments Same standards of performance evaluation across organisation Objectivity and transparency in the appraisal system

Bell Curve Distribution for Forced Ranking

Bell Curve Distribution for Forced Ranking
Performance Categories Outstanding Excellent Good Average Needs Improvement Rating 5 4 3 2 1 Population Distribution 10% 20% 55% 10% 5%

Bell Curve

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