Balanced Score Card

What is a balanced scorecard?

• The Balanced Scorecard is about measuring the activities,
processes, and outputs that are most important for the success of
the organization.

– For eg: A company may be excellent in one area (sales) can cause major
problems in another (manufacturing).
– So, the balance of process and activities are important measures.

• Evolution:-
– Actually Balanced Scorecard originated in the United States in a company
called ‘Analogue Devices.’
– Since 1992, Robert Kaplan and David Norton have been developing the
balanced Scorecard in terms of four perspectives.
 Introduction
• Balanced Scorecards provide a framework
for communicating strategy in operating
terms (measurements and targets).
• You must communicate strategy in
operating terms if you expect people to
execute on your strategy.
• When people are asked about strategy,
they reach for their balanced scorecard.
 Overview
• Balanced Scorecards are constructed from
strategic maps
• Linking through strategic maps
• “Cause and effect” relationship in building
the scorecard
 Start with Strategy
• Begin with your strategic plan – what
things are critical to future success?
• Focus on customers – what values will we
add to our customers
• Define the processes – how will we deliver
these services to our customers
• Build the organization – what capabilities
must we put in place
 Strategic Mapping
• Strategic Maps are the foundation of the
Balanced Scorecard.
• Company need one strategic map for each
strategic theme.
• Maps are constructed over four
perspectives.
• Strategic objectives are mapped over the
four perspectives, linked together.
 Other Important Steps
• Scorecards are built around three teams:
Leadership Team (upper level
management), Core Team (middle level
management) and Measurement Team
(lower level functional personnel).
• Scorecards are built around at least four
group meetings: Kick Off Meeting followed
by at least one meeting for each of the
three teams.
 How do we look to our
owners?

How do we appear What process we

to our customers? must excel
at ?

How do we innovate
and learn?
 Linking
• Strategic objectives need to be placed in
the Strategic Map according to which
perspective fits with the objective.
• Objectives may cross over more than one
perspective.
• We usually start at the top with outcomes
and work our way down, looking at what
enables (drives) the outcome.
 Four Perspectives

Financial: Top layer in the map, represents

financial outcomes (profits, revenues, etc.)
Customer: Next layer down, enables financial
results (service, image, price, quality, etc.)
Internal Processes: The values added to
customers, such as delivery, production,
distribution, etc.
Learning & Growth: The people, systems, and
organization that enable processes.
 The Balanced Scorecard balances:-

Financial Perspective EXTERNAL

Customer Perspective Process Perspective

INTERNAL Innovation
and learning Perspective
 Modern approach for Balanced
Scorecard within a performance
management process
Financial Improved Profitability,
Perspective Increased sales.
Customer Improved customer satisfaction,
Perspective Delivery on time.
Process Improved quality control,
Perspective Reduced rework.
Innovation
and learning Improve employee job specific skills,
Perspective Greater employee engagement
Balanced Scorecard in Indian Companies
(Anand,Sahay,Saha,2005)
 Balanced Scorecard at TATA Hospital
Balanced Scorecard - Example
Vision
To provide patients, families and primary care physicians with the best,
most compassionate care possible and to excel at communications

Customer Financial
Patient Primary Care • Operating Margin
Physician
• Cost per Case • Revenue from
• % Satisfied • % Satisfied with
Neonatal Care
• % would Recommend Communication
• % Parents Could • % Parents Could
Articulate Care Plan Identify DCH Physician
• Discharge Timeliness

Internal Processes
Wait Time Quality Productivity
• Admissions • Infection Rates • Length of Stay
• Discharge • Blood Culture • Readmission Rate
Contaminate Rate • Daily Staffing vs.
• Use of Clinical Occupancy
Pathways (Top 10)

Learning & Growth

• Incentive Plan • Strategic Database
- Awareness - Availability
- Implementation - Use
Using the BSC as a strategic
Management system
 Some facts
• BSC is not replacement of financial
measures
• It is their complement
• Many companies are going for BSC
• Links long term strategy with short term
actions
• In many companies there is a gap
between development of strategy & its
implementation
• Communicating & linking
– Involvement of three layers of management
– Builds strong commitment to achievement of
goals
– Three Activities
• Communicating & educating
• Setting goals (personal scorecard)
• Linking rewards to performance measures
• Business planning
– Off the site meetings give no results
– They discuss about budget, nothing else

• Feedback & learning

– Double loop learning