| Balanced Score Card |
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The Balanced Score Card was developed by Drs Robert Kaplan (Harvard Business Schoool) and David Norton in the 1990's as a new approach to strategic management. In recognizing some of the weaknesses of previous management approaches the concept of the Balanced Score Card enables organisations to achieve and maintain an integrated balanced focus across the four key components.
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Customer Perspective
The customer perspective relates to the elements that a company wishes to monitor and measure in order to satisfy its customers. The following examples provide some insight into the range of measures that may be included in a company's KPM programme.
To achieve our vision, how should we appear to our customers ?
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Customer satisfaction index (weighted) |
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Market share |
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Response time |
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Delivery time |
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Product quality |
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Service attitude |
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Selling price index |
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Enquiries (qty) |
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Enquiries:Quotations (%) |
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Quotations:Acceptance (%) |
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Call ratios |
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Orders (qty, value) |
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Quotations issued (qty,value) |
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Repeat business |
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Average discount |
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Specification compliance |
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Complaints (qty, value) |
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Financial Perspective
To succeed financially, how should we appear to our shareholders ?
In many organisations there is a tendency to be reliant on financial data and it cannot be disregarded. However, it is critical that a balanced view be maintained so that the specified indicators are aligned with the main vision and strategy.
Typically we will include the key drivers of revenue growth in this category but we must not forget that businesses usually have a profit motive so the need for containing operational and control costs must not be ignored. The voluntary sector may question this but the reality is that they have a greater need to address financial issues as they must rely on relationships with funding bodies as well as generating revenue from the provision of their services. The following examples provide an insight into typical measures that form part of a company's KPM prgramme.
Profitability
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Gross Profit Margin % |
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Net Profit Margin % |
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Return on Assets |
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Return on Equity. |
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Inventory turnover |
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Fixed Asset turnover |
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Debtor days outstanding |
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Creditor days outstanding. |
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Liquidity
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Current Ratio |
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Quick Ratio |
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Inventory to Net Working Capital. |
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Leverage
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Debt to Assets |
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Debt to Equity |
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Long term debt to equity. |
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Internal Process Perspective
To satisfy our shareholders and customers, what business processes must we excel at ?
The Internal Process perspective relates to the elements that a company wishes to monitor and measure in order to satisfy its operational requirements. The following examples provide some insight into the range of measures that may be included in a company's KPM programme...
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Production lead time |
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Success rates (new products) |
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R & D spend (% sales) |
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Suppliers on-time delivery |
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Advance order (qty, value) |
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Make or buy decisions (new or refurbished) |
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Material efficiencies (waste, yield, scrap) |
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Purchase price Index |
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Value adding time |
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Value adding process |
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Equipment efficiency (customer demand, set-up costs, uptime, downtime) |
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Wastage (%, volume) |
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Recycled materials. |
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Learning & Growth Perspective
To achieve our vision, how will we sustain our ability to learn and improve ?
The Learning & Growth perspective relates to the elements that a company wishes to monitor and measure in order to satisfy its employees and their continued development. The following examples provide some insight into the range of measures that may be included in a company's KPM programme...
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Training days |
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Absentee days |
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Courses developed |
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Employee motivation index |
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Employee satisfaction index |
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Staff turnover |
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Project Success Rates |
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Perfomance index. |
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View the Model
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