The Balanced Scorecard

Presented To

Finance and Administrative Services Division

Presented By
John Sanders

The California State University

Quality Improvement Programs
Seminar Outline
Introduction to the Balanced Scorecard
What is it?
Why do it?

Balanced Scorecard Fundamentals

The Four Perspectives
Measures, Targets and Initiatives
Roles and Responsibilities

The CSUSM Finance & Administrative Services Strategy Map

Using the BSC as a Management System

 The Balanced Scorecard
What is it?
Definition:
The Balanced Scorecard is a management
tool that provides stakeholders with a
comprehensive measure of how the
organization is progressing towards the
achievement of its strategic goals.
 The Balanced Scorecard
What is it?
The Balanced Scorecard:

 Balances financial and non-financial measures

 Balances short and long-term measures

 Balances performance drivers (leading indicators) with outcome

measures (lagging indicators)

 Should contain just enough data to give a complete picture of

organizational performance… and no more!

 Leads to strategic focus and organizational alignment.

 The Balanced Scorecard
Why do it?
• To achieve strategic objectives.
• To provide quality with fewer resources.
• To eliminate non-value added efforts.
• To align customer priorities and
expectations with the customer.
• To track progress.
• To evaluate process changes.
• To continually improve.
• To increase accountability.
 The Balanced Scorecard
Why do it?
It works!

In just 90 days, Sandia Labs was able to redirect $190,000 in

savings by dropping initiatives that didn’t fit their overall
strategy.

“The BSC has forced our management team to focus beyond

financial measures… too often in the past we would get sucked
into short-term thinking.”

“The BSC dramatically improved our data analysis… we don’t

overreact nearly as much as we used to.”
The Balanced Scorecard and
The CSU
Campuses currently working on the BSC
 San Luis Obispo
 Pomona
 San Jose
 San Marcos
 Sonoma
 Fullerton
 Long Beach
 Chico
 Northridge
 San Bernardino
 Chancellor's Office
 The Strategy Focused
Organization
Mission – What we do

Vision – What we aspire to be

Strategies – How we accomplish

our goals

Measures – Indicators of our progress

 Environmental Scan

Strengths Weaknesses

Opportunities Threats

A Model for
Values
Strategic
Planning
Mission &
Vision

Strategic Issues

Strategic Priorities

Objectives, Initiatives, and Evaluation

 The Strategy Focused
Organization
The Five Principles

1. Translate the strategy to operational

terms.

2. Align the organization to the

strategy.

Source: The Strategy Focused Organization, Norton & Kaplan

 The Strategy Focused
Organization
The Five Principles (cont.)

3. Make strategy everyone’s job.

4. Make strategy a continual process.

5. Mobilize change through executive

leadership
Source: The Strategy Focused Organization, Norton & Kaplan
The Balanced Scorecard and
The Big Picture
•Activity Based Costing
•Economic Value Added
•Forecasting
Strategic •Benchmarking
Planning •Market Research
•Best Practices
Mission
•Six Sigma
and
Vision •Statistical Process Control
•Reengineering
Balanced •ISO 9000
Scorecard •Total Quality Management
•Empowerment
•Learning Organization
•Self-Directed Work Teams
•Change Management
 Strategic Direction
Create Environment Strategic Performance Management System
For Change

Communicate Strategies
Define Objectives
Implement BSC

Balanced Scorecard
Measure Performance
Improve Processes

Evaluate and Adjust

Linking it all together…. Continuous Improvement
Redefine Initiatives
 THE BALANCED SCORECARD

FINANCIAL/REGULATORY
CUSTOMER
To satisfy our constituents,
To achieve our vision,
what financial & regulatory
what customer needs must
objectives must
we serve?
we accomplish?

INTERNAL
To satisfy our customers and
stakeholders, in which business
processes must we excel?

LEARNING & GROWTH

To achieve our goals, how
must we learn, communicate
and grow?
 Customer Perspective

To achieve our vision, what customer needs

must we serve?

Possible Performance Measures

o Customer Satisfaction (Average)
o Satisfaction Gap Analysis (Satisfaction vs.
Level of Importance)
o Satisfaction Distribution (% of each area scored)
 Financial / Regulatory Perspective

To satisfy our constituents, what financial and

regulatory objectives must we accomplish?

Possible Performance Measures

o Cost / Unit
o Unfunded Requirements or Projects
o Cost of Service
o Budget Projections and Targets
 Internal Perspective

To satisfy our customers, in which business

processes must we excel?
Possible Performance Measures
o Cycle Time
o Completion Rate
o Workload and Employee Utilization
o Transactions per employee
o Errors or Rework
 Learning and Growth

To achieve our goals and accomplish core activities,

how must we learn, communicate and work together?
Possible Performance Measures
o Employee Satisfaction
o Retention and Turnover
o Training Hours and Resources
o Technology Investment
Why Measure?
• To determine how effectively and efficiently
the process or service satisfies the
customer.

• To identify improvement opportunities.

• To make decisions based on FACT and

DATA
Measurements Should:
• Translate customer expectations into goals.

• Evaluate the quality of processes.

• Track our improvement.

• Focus our efforts on our customers.

• Support our strategies.

Targets

“If you don’t know where you’re going,

you’re probably not gonna get there.”
Forrest Gump
Targets
• Targets need to be set for all measures

• Should have a “solid basis”

• Give personnel something for which to aim

• If achieved will transform the organization

• Careful not to develop measures/targets in

a fragmented approach:

i.e. Asking people to increase customer satisfaction has to be

backed up with the knowledge, tools, and means to achieve
that target.
Initiatives
Once measures and targets are
established, it is the responsibility of
management to determine HOW the
organization will achieve its goals.

Measures are used to determine the

effectiveness of strategic initiatives.
The Leadership Team
 Develops the division’s vision, strategy
and goals
 Develops organizational objectives and
targets
 Provides leadership, endorsement and
vision for the project
 Clears barriers to scorecard progress
The Core Team
 Drafts the strategy map and scorecard

 Works with employees to develop measures

supporting strategic objectives

 Works with the Leadership Team to plan and

implement the Balanced Scorecard in the FAS
Division
Finance and Administrative Services

Strategy Map
 Link it together….
DIVISION

CUSTOMER INTERNAL LEARNING &

FINANCIAL
PROCESS GROWTH
DEPT.

Hum. Rscrs. Univ. Police Facilities

FUNCTION

Police Parking

Measure: Satisfaction Index

Current: 3.0 Target: 4.0
The Balanced Scorecard as a
Management System
BSC reviewed regularly to enhance
operational decision-making
 Success of initiatives assessed based on

DATA… not opinions

 Leading indicators evaluated to confirm

accuracy of assumptions
The Balanced Scorecard as a
Management System
The BSC is a “Living Document” that
requires regular revision of objectives,
measures and initiatives:
 How are we doing?

 Are we measuring the right things?

 What initiatives do we need to get us

where we want to go?
 Have our organizational goals changed?
 Advantages to this Approach

 Simple to Use and Understand

 Based on Vision and Strategy
 Multidimensional
•Quantitative and Qualitative Measures
•Current and Future
 Provides Measurement of and Method for
Improving our Services
 Ties QI initiatives together
 Serves as a Communication Tool
 Suggested Readings

Kaplan, Robert and Norton, Edward. The Balanced Scorecard.

Harvard Business Publishing, 1998

Kaplan, Robert and Norton, Edward. The Strategy-Focused Organization.

Harvard Business Publishing, 2001

Buckingham, Marcus and Coffman, Curt. First, Break All the Rules
The Gallup Organization, 1999

Brown, Mark. Keeping Score. Mark Graham Brown, 1996

http://www.afd.calpoly.edu/afd/Strategic_plan/

http://cqi.csusb.edu/
Thank You

John Sanders
The California State University
(562) 951-4556
jsanders@calstate.edu
www.calstate.edu/qi