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Implementing Balanced Scorecards - Nine Steps

The balanced scorecard is a strategic planning and management system that helps align an organization's vision, strategy, operations and employee behaviors. It uses strategic performance measures to inform decision making and show progress. The system has 9 steps to develop it through workshops and define objectives, measures, initiatives and cascading the scorecard through the organization.

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EngMohamedReyadHelesy
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58 views2 pages

Implementing Balanced Scorecards - Nine Steps

The balanced scorecard is a strategic planning and management system that helps align an organization's vision, strategy, operations and employee behaviors. It uses strategic performance measures to inform decision making and show progress. The system has 9 steps to develop it through workshops and define objectives, measures, initiatives and cascading the scorecard through the organization.

Uploaded by

EngMohamedReyadHelesy
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOC, PDF, TXT or read online on Scribd
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The balanced scorecard is a strategic planning and management system that helps

everyone in an organization understand and work towards a shared vision. A completed


scorecard system aligns the organization’s picture of the future (shared vision), with
business strategy, desired employee behaviors, and day-to-day operations. Strategic
performance measures are used to better inform decision-making and show progress
toward desired results. The organization can then focus on the most important things
that are needed to achieve its Vision and satisfy customers, stakeholders, and employees.
Other benefits include measuring what matters, identifying more efficient processes
focused on customer needs, improving prioritization of initiatives, improving internal and
external communications, improving alignment of strategy and day-to-day operations,
and linking budgeting and cost control processes to strategy.The components of the
management system are shown in the figure above. Starting at “high altitude”, Mission,
Vision, and Core Values are translated into desired Strategic Results. The organization’s
“Pillars of Excellence”, or Strategic Themes, are selected to focus effort on the
strategies that matter the most to success. Strategic Objectives are used to decompose
strategy into actionable components that can be monitored using Performance Measures.
Measures allow the organization to track results against targets, and to celebrate success
and identify potential problems early enough to fix them. Finally, Strategic Initiatives
translate strategy into a set of high-priority projects that need to be implemented to
ensure the success of strategy. Engaged leadership and interactive, two-way
communication are the cornerstones of a successful management system. Once the
strategic thinking and necessary actions are determined, annual program plans, projects
and service level agreements can be developed and translated into budget requests.

The balanced scorecard management system is built by the organization’s leaders,


managers, and other employees. Facilitated workshops, led by our senior consultants,
keep employees at all levels of the organization engaged, on track and on schedule. Our
award-winning balanced scorecard framework, Nine Steps to Success™ , is a disciplined,
practical approach to developing the management system. We have used this framework
to train over 5000 people and have consult with over 100 companies in 15 countries.

Step One of the scorecard building process starts with an assessment of the
organization’s Mission and Vision, challenges (pains), enablers, and values. Step One also
includes preparing a change management plan for the organization, and conducting a
focused communications workshop to identify key messages, media outlets, timing, and
messengers.

In Step Two, elements of the organization’s strategy, including Strategic Results,


Strategic Themes, and Perspectives, are developed by workshop participants to focus
attention on customer needs and the organization’s value proposition.

In Step Three, the strategic elements developed in Steps One and Two are decomposed
into Strategic Objectives, which are the basic building blocks of strategy and define the
organization's strategic intent. Objectives are first initiated and categorized on the
Strategic Theme level, categorized by Perspective, linked in cause-effect linkages
(Strategy Maps) for each Strategic Theme, and then later merged together to produce
one set of Strategic Objectives for the entire organization.

In Step Four, the cause and effect linkages between the enterprise-wide Strategic
Objectives are formalized in an enterprise-wide Strategy Map. The previously constructed
theme Strategy Maps are merged into an overall enterprise-wide Strategy Map that shows
how the organization creates value for its customers and stakeholders.

In Step Five, Performance Measures are developed for each of the enterprise-wide
Strategic Objectives. Leading and lagging measures are identified, expected targets and
thresholds are established, and baseline and benchmarking data is developed.

In Step Six, Strategic Initiatives are developed that support the Strategic Objectives. To
build accountability throughout the organization, ownership of Performance Measures and
Strategic Initiatives is assigned to the appropriate staff and documented in data
definition tables.

In Step Seven, the implementation process begins by applying performance measurement


software to get the right performance information to the right people at the right time.
Automation adds structure and discipline to implementing the Balanced Scorecard
system, helps transform disparate corporate data into information and knowledge, and
helps communicate performance information. In short, automation helps people make
better decisions because it offers quick access to actual performance data.

In Step Eight, the enterprise-level scorecard is ‘cascaded’ down into business and support
unit scorecards, meaning the organizational level scorecard (the first Tier) is translated
into business unit or support unit scorecards (the second Tier) and then later to team and
individual scorecards (the third Tier). Cascading translates high-level strategy into lower-
level objectives, measures, and operational details. Cascading is the key to organization
alignment around strategy. Team and individual scorecards link day-to-day work with
department goals and corporate vision. Cascading is the key to organization alignment
around strategy. Performance measures are developed for all objectives at all
organization levels. As the scorecard management system is cascaded down through the
organization, objectives become more operational and tactical, as do the performance
measures. Accountability follows the objectives and measures, as ownership is defined at
each level. An emphasis on results and the strategies needed to produce results is
communicated throughout the organization.

In Step Nine, an Evaluation of the completed scorecard is done. During this evaluation,
the organization tries to answer questions such as, ‘Are our strategies working?’, ‘Are we
measuring the right things?’, ‘Has our environment changed?’ and ‘Are we budgeting our
money strategically?’

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