The Balanced Scorecard
In the early 1990s, Robert Kaplan and David Norton developed a new
approach to strategic management. Based on the premise that intangible,
or knowledge-based, assets—employees, volunteers, information
technology, image—are increasingly important to an organization's
success, the balanced scorecard not only measures financial outcomes,
but also balances the financial perspective with employee, business
process and customer perspectives.
The balanced scorecard provides a method for aligning business
activities to organizational strategy. An organization's vision and
mission statement are translated into specific and calculable goals,
and a set of performance measures is established to monitor the
organization's success in achieving those goals.
- The vision is translated into operational goals
- The vision is linked to departmental (and even to individual) performance
- A plan for business processes is outlined
- The strategy is modified based on feedback
The balanced scorecard process involves viewing the organization from
four perspectives, developing measurements to gauge performance and
analyzing data relative to each perspective:
- The stakeholder perspective – measures directly impacting customers and customer satisfaction
- The internal perspective – measures reflecting performance of key business processes
- The learning and growth perspective – measures reflecting an organization's learning curve
- The financial perspective – measures reflecting financial performance
The four perspectives of the scorecard allow for a balance between:
- Short- and long-term objectives
- Outcomes desired and the performance-drivers of those outcomes
- Objective and subjective measures
In a perfect planning cycle, the balanced scorecard is derived from the
organization's strategic plan; the strategy map is derived from the
balanced scorecard; and the operating budget stems from all three.
IFMA must focus all of its resources and efforts on achieving the
mission for the benefit of all stakeholders. The balanced scorecard is
a tool that allows IFMA to manage its intangible resources and assets
in today's knowledge-based society.
Download a printable version of IFMA's balanced scorecard. |
