| Many corporate managers have been introduced to a | | | | every level in an organization, allowing each person to |
| corporate management system called the Balanced | | | | see how his or her specific job duties align and |
| Scorecard. Developed at the Harvard Business School | | | | contribute to the higher-level goals. By cascading |
| by David Norton and Robert Kaplan in the early 1990s, | | | | scorecards, strategy then becomes "everyone's" job. |
| the Balanced Scorecard (BSC) represents the newest | | | | Align existing core processes to objectives |
| and most prolific performance measurement system | | | | As the scorecards are being deployed, managers |
| since Total Quality Management (TQM) and | | | | need to re-examine their existing core processes and |
| Management by Objectives (MBO). A growing number | | | | determine if they are linked to the corporate strategy. |
| of organizations are achieving great financial success | | | | If such linkages are not found, the processes should be |
| through the BSC framework, thereby solidifying the | | | | reconsidered. Aligned processes are often the best |
| BSC as "here to stay" rather than just another passing | | | | places to find appropriate measures for lower level |
| fad. | | | | scorecards. |
| According to studies, the BSC is being implemented in | | | | Deliver measurement-based performance feedback |
| nearly two-thirds of North American corporations. | | | | Managers should accord each employee in an |
| Indicative of the system's growth, many of these | | | | organization periodic feedback on how his or her |
| implementations are less than six months old. Thus, as | | | | individual and corporate measures have progressed. |
| a manager, if the system has not yet been | | | | Monthly reviews of scorecard content and related |
| encountered, it most likely will be in the near future. | | | | improvement initiatives are an ideal format for this |
| What does this mean to managers? | | | | feedback. |
| FIRST, recognize the Balanced Scorecard for what it | | | | Hold people accountable for performance measures |
| really represents. Essentially, the BSC is a | | | | When performance measures go below or above |
| measurement framework through which organizations | | | | pre-determined thresholds, organizations must hold |
| define strategic goals at every level in an organization | | | | specific individuals responsible for explaining the |
| with measures attached to each goal - thus enabling | | | | reason(s) behind a measurement variance. |
| managers to review past and predict future | | | | Empower work groups to implement improvement |
| performance and to take corrective improvement | | | | initiatives |
| action. The BSC is significantly different than other | | | | Managers and employees must be empowered to |
| management systems in that it forces organizations to | | | | take corrective action when performance is suffering |
| measure only the top few strategic goals and to align | | | | and to replicate best practices when goals are |
| every employee behind their interpretation of these | | | | exceeded. |
| goals. Ultimately, the BSC is a proven methodology to | | | | Link initiatives to the budgeting process |
| execute an enterprise strategy. | | | | As an organization tracks its performance measures |
| SECOND, embrace the power of the Balanced | | | | and reacts to shortfalls, the improvement solutions |
| Scorecard. If managers can deftly create their | | | | often require budget support. Hence, a formal budget |
| divisional, departmental or team goals, identify useful | | | | submission and approval process must be integrated |
| measurements, and enable those working for them to | | | | into a strategy execution system to ensure that |
| take predictive action against performance shortfalls, | | | | countermeasures are implemented. |
| the BSC can truly become a value-added manager's | | | | Reassessment of the main strategy |
| tool. | | | | As the closed-loop process returns to the overall |
| THIRD, understand the big picture of enterprise | | | | strategy, it is important to gather the organizational |
| strategy execution. Organizations that have | | | | knowledge and progress toward strategic goals, as |
| successfully deployed a Balanced Scorecard | | | | well as to reassess the market, competitors, and |
| framework and achieved notable results all followed | | | | customers to determine if the high level strategy |
| these 10 steps: | | | | needs to be adjusted or drastically changed. |
| Develop a solid strategy | | | | FOURTH, managers should be aware that they |
| A solid strategy is the keystone to business success. | | | | possess the power to execute enterprise strategies. |
| Without a solid strategy, success is unobtainable. Of | | | | As illustrated in the ten steps above, managers and |
| course, without execution, a solid strategy is | | | | front-line employees translate the objectives and |
| meaningless. | | | | measures into different levels within an organization. |
| Translate the strategy into a scorecard of clear | | | | The accuracy of these measures determines the |
| objectives | | | | effectiveness of the organization and its ability to |
| By translating a strategy into objectives (short | | | | achieve the overall goals. On the other hand, beware |
| verb-noun statements), managers and front-line | | | | of becoming a bottleneck within a strategy execution |
| employees are provided understand both what is | | | | system. Just as a manager's role determines the |
| expected and why. To achieve the best results, the | | | | ultimate success, his or her inaction or inattention to a |
| scorecard should be focused on no more than ten | | | | system can also attract a swift and negative spotlight. |
| strategic objectives. | | | | Strategy systems like the Balanced Scorecard |
| Attach measures to each objective | | | | succeed only when the measures are recorded on |
| After translating a strategy into objectives, managers | | | | time and accurately for each period. Thus, managers |
| and employees must know if and when the objectives | | | | must maintain diligence in the area of system usage or |
| are being achieved. Thus, each objective should be | | | | risk turning the spotlight on themselves. |
| given at least one - but not more than three - | | | | FIFTH, do not forget that a strategy execution system |
| measurements that are accurate milestones for | | | | impacts all those being managed. Thus, it is the |
| achievement. | | | | manager's challenge to empower front-line employees |
| Cascade scorecards to the front line | | | | with the collaborative tools necessary to encourage |
| Operational management and front-line employees do | | | | the swift implementation of improvement initiatives and |
| the actual work that makes strategies happen. Thus, | | | | the replication of best practices. |
| organizations should ultimately develop scorecards at | | | | |