1. The Balanced Scorecard Approach

2. 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.
What is a Balanced Scorecard?

3. 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.
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Balanced Scorecard Concept

4. Improve organizational performance by
measuring what matters
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Increase focus on strategy
Align organization strategy
day-to-day basis
and results
with workers
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on a
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Focus on the drivers key to future performance
Improve communication of the organization’s
Vision and Strategy
Prioritize Projects / Initiatives
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Why Use a Balanced Scorecard?

5. The Balanced
Scorecard model
suggests that we
view the
organization from
4 perspectives.
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Then Develop
metrics, collect
data and analyze it
relative to each of
these perspectives
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Adapted from The Balanced Scorecard by Kaplan & Norton
4 Original Business Perspectives

6. Financial
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What must we do to create sustainable economic value?
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Internal Business Process
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To satisfy our stakeholders, what must be our levels of
productivity, efficiency, and quality?
Learning and Growth
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How does our employee performance management
system, including feedback to employees, support high
performance?
Customer
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What do our customers require from us and how are we
doing according to those requirements?
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4 Business Perspectives Questions

7. Balanced Scorecard Measurements

8. 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
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Key Implementation Success Factors

9. PROCESS: MANUFACTURING EXCELLENCE
THEME: ROCE > xx%, VOLUME = xx,xxx units
FI
PERSPECTIVE
Monitoring
Monitoring
CUSTOMER
PERSPECTIVE
OPEX
RM XX M
Prod. & Sales Mtg.
I
CAPEX
PERSPECTIVE
RM xx M
• Specific Programmed
Operational Process
• Defensive Driving
• Certification
LEAR
PERS
• Communication
•Strategic Awareness
Programm
• Cycle Time
•Productivity
THAT ARE CONSISTENT, TIMELY
• Man-hour per Unit
•Low Cost Manufacturing
Standards
NANCIAL
Long-Term Shareholder
Value ROCE > xx%
Improve Grow
Productivity Revenue
• Monthly Monitoring
O
RM
CA
RM
• Weekly/Monthly
• Monthly Monitoring
• Weekly/Monthly
OFFER PRODUCTS & SERVCIES •World-Class Quality • Defect per Unit
and LOW-COST •World-Class Delivery Timing • Sales Delivery
Low World •Knowledgeable & Skilled • Direct Pass Rate
Cost Class Partner
Customer Enhance •High Customer Satisfaction • Market Feedback
Satisfaction Brand
•Reinforce Brand Image • Sales Volume
• Weekly Monitoring
• Daily Monitoring
• Daily Monitoring
• Daily Monitoring
• Weekly Monitoring
• Monthly Monitoring
TERNAL
ENSURE OPERATIONAL EXCELLENCE WITH •Delivery
• Meet Daily Plan
INNOVATION AS WELL BEING SOCIALLY • WIP
RESPONSIBLE •Continuous Improvement
• KAIZEN
• ICC
Excellence Innovation
•NPI • Timely Introduction
Alliances with Socially •Safety & Health
• Industrial Accident
• Commuting Accident
SBUs Responsible • Toxic Waste Disposal
•Environment
• ISO 9002
• Hourly Monitoring
• Daily Monitoring
• Daily Monitoring
• Monthly follow-up
• Weekly Follow-up
• Cross Audits
• Facility Readiness
NING & GROWTH
PECTIVE •Develop the Necessary Skills • R&D & Development • Training and Skill
Build-up
STRATEGIC JOB & SYSTEMS
•Information Systems
Availability
• ALC, Procurement,
Financial
• Set-up, Test and
Validation
Skills Info. System •Strategic Aw • Alignment
• Communi
Programm ed
• Cost/Unit, Efficiency
•% Utilization
• Trial Prod.
• Spare Parts Prod
•Warranty Cost t
•Operating Cost & Efficiency
•Capacity Utilization
•Capability Utilization
•Brand / Image
INITIATIVE BUDGET
MEASUREMENT TARGET
Balanced Scorecard Example
STRATEGY MAP BALANCED SCORECARD ACTION PLAN
MEASUREMENT TARGET INITIATIVE BUDG
OBJECTIVES

10. Balanced Scorecard Strategy Map

11. Department Level Scorecard Example

12. Scorecard Potential Pitfalls & Criticisms

13. Lack of a well Defined Strategy
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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
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Focusing on only the lagging measures may cause a lack of
priority or opportunity for the leading measures.
Use of Generic Metrics
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Don’t just copy metrics from another firm. Identify the measures
that apply to your strategy and competitive position .
Self-serving managers
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Managers whose goal is to achieve a desired result in order to
obtain a bonus or other self reward.
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Scorecard Potential Pitfalls & Criticisms

14. 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.
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To date, some form of a Balanced Scorecard is used by nearly 60% of
Fortune 500 companies
Balanced Scorecard Benefit Re-Cap

15. Questions?
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