| The
Balanced Scorecard
In essence, the balanced scorecard is about information
delivery. The idea is that (being deliberately simplistic)
the organization identifies Key
Performance Indicators (KPI) and groups them into business
perspectives or or sectors that are designed to describe
or relate to an important aspect of organisational activity.
The definition of perspectives and indicators should be
drawn from corporate Vision, Mission and Objectives.
The scorecard is the tool by which perspectives and their
KPI's can be presented as a unified whole to those who are
responsible for decision taking. It is often the case that
reporting on KPI's is kept
deliberately simple using analogies such as traffic lights
(red for off track, amber for needing attention and green
for on track) to prompt investigation into the detail data
supporting the KPI's. The ability
to identify best and worst practice and subsequently to
adopt or improve providing the means by which "action"
can be more closely aligned with "strategy".
Business Perspectives
In the seminal work on Balanced Scorecards (The Balanced
Scorecard, Translating Strategy Into Action, Kaplan and
Norton), the authors describe a typical scorecard as having
for perspectives, Economic, Effective, Efficient and Evolution.
While those four are the most common ways of grouping KPI's,
there are other perspectives an organization might like
to consider, for example, in the modern world an Environmental
perspective may be appropriate.
Cascading Information Architecture
Though it is possible to develop a single global scorecard,
it is likely that an organization will develop a series
of scorecards that cascade, top down, through the organization
from the boardroom to the shop floor. At various points
through the cascade, measurable transaction points in key
operational processes will provide a data feed into the
scorecard system. The effect of the cascade being that a
business driven information architecture will inevitably
emerge.
Cross Perspective Relationships
It will eventually be recognized that there are relationships
between KPI's and the data. Relationships will be top down
through the scorecard system, and cross business perspective.
For example, assuming devolved budgets, the top level financial
performance indicator may well consist of the sum of all
lower level budget monitoring indicators. Equally, links
from spend to effectiveness and efficiency should be capable
of being established.
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