Setting Balance Scorecard


Setting up a balanced scorecard involves a strategic approach to measuring and managing performance across multiple dimensions. Here are the steps to help you set up a balanced scorecard:

  1. Identify strategic objectives: Start by identifying the key strategic objectives of your organization. These objectives should align with your mission, vision, and long-term goals. Examples could include:
    • Financial performance
    • Customer satisfaction
    • Internal processes, and
    • Learning and growth.
  1. Determine performance measures: For each strategic objective, determine the specific performance measures that will help you track progress. These measures should be quantifiable and provide insights into the success of your objectives. For examples:
    • For the financial performance, you could use metrics like revenue growth, profitability, or return on investment.
    • For the customer satisfaction, the metrics could be improving customer satisfaction, customer retention rate, value of money, etc.
  2. Define targets: Set realistic and challenging targets for each performance measure. These targets should be based on historical data, industry benchmarks, or expert opinions. Ensure that they are aligned with your strategic objectives and provide a clear direction for improvement.
  3. Identify initiatives: Determine the initiatives or actions that will help you achieve your strategic objectives. These could include process improvements, employee training programs, customer service initiatives, or marketing campaigns. Align these initiatives with the corresponding strategic objectives and performance measures.
  4. Create a scorecard framework: Develop a scorecard framework that visually represents the strategic objectives, performance measures, targets, and initiatives. The balanced scorecard typically consists of four perspectives: financial, customer, internal processes, and learning and growth. Assign the relevant performance measures and targets to each perspective.
  5. Cascade the scorecard: Cascade the scorecard throughout the organization, ensuring that each level aligns with the overall strategic objectives. Translate the high-level objectives and measures into departmental or individual objectives and measures. This ensures that everyone understands their role in contributing to the organization’s success.
  6. Monitor and track performance: Regularly monitor and track performance against the measures and targets defined in the scorecard. Collect data, analyze trends, and generate reports to assess progress. Use this information to identify areas of strength and areas that require improvement.
  7. Review and adjust: Periodically review the effectiveness of your balanced scorecard and make adjustments as needed. Assess whether the measures and targets are still relevant and aligned with your strategic objectives. Modify or replace them if necessary to ensure the scorecard remains a valuable tool for performance management.

Remember, the balanced scorecard is a dynamic tool that requires ongoing monitoring and adjustment. Regularly communicate progress, provide feedback, and align initiatives to ensure that your strategic objectives are achieved.