Kaplan and Norton’s article “The Balanced Scorecard: Measures that Drive Performance” reinforced strategies currently underway at my organization. Having designed a strategic plan within the last year, a balance scorecard was created to pair with our organization’s strategic plan and goals so that we can measure our long-term success on the overall plan. The goals of my organization, the finance and business division at a university, fit well into this scorecard as we aim to serve our “customers” by creating value, providing excellent service, and ultimately, supporting the goals of the university. The goals are all intertwined and impact one another, so instead of setting up very quantitative metrics for every single goal and project that came out of the plan to measure our success, we can use this scorecard as a snapshot of success to if our ultimate goals are successful.
As Kaplan and Norton suggest, “managers should not have to choose between financial and operational measures.” This is another reason I feel that the balanced scorecard is well suited for our organization. We have many outputs – technical, financial, property-related, people-related, and more. We serve a range of “customers” – students, faculty, staff, and external visitors – and a financial measurement would simply not show the success of our strategic plan. In addition, as a non-profit, our ultimate goal isn’t exactly to make money, but rather to ensure the financial well-being of the university through things like cost savings and efficiencies, so the scorecard is a valuable tool in allowing us to prove our worth in a defined way.
The four parameters of our balanced scorecard were well-developed, but it will be the management and monitoring of these goals that will prove the balance scorecards worth to our organization. Kaplan and Norton share that, “the balanced scorecard can only translate a company’s strategy into specific measurable objectives.” If managers and leaders do not see success in the scorecard, they should take this seriously and adjust as necessary. While I feel that everyone in our organization could agree with the balanced scorecard now, if and when the time comes that we are not meeting our own expectations, I have doubts as to whether or not we would cite the scorecard as a support for necessary actions. Another reason the scorecard might be a failure for us is that it has not been well-communicated. Kaplan and Norton don’t dive into this issue, but I suspect it is critical, as any strategy measure might be, to communicate the balanced scorecard, its goals, and its implications throughout an organization so that everyone is well-versed on the subject and therefore not surprised when outcomes of the scorecard impact changes in the organization.
The balanced scorecard is a strategy-focused tool that I feel has been a good way to establish the outcomes my organization would like to see out of our strategic planning process, but in order for it to have a true impact, it must be embraced, adhered to, and shared by the leadership at the organization.