Balanced scorecard

A guide to real change

The Balanced Scorecard was developed in the early 1990s by Robert Kaplan and David Norton, to provide a new form of strategic management. The key features of the Balanced Scorecard approach are that it:

• has a limited number of measurements
• focuses on the important factors for strategic success
• is not overly complex
• does not confuse, or diffuse focus, by containing too many objectives or too much information
• is broad-ranging (including strategy, customers, financial management, business processes and learning/development)
• relates the diverse areas together in a dynamic relationship

The balanced scorecard provides a simple but effective answer to the questions "what does the organisation need to do to succeed?" and "how can we get every employee working in the same direction?"

Balanced scorecard and organisational teamwork

The Balanced Scorecard can play a key role in achieving real change in organisational teamwork. Although team/organisational performance is dependent on many things, a major part is played by:

• the degree of collective focus on the overall goal
• simplicity of that goal
• clarity of visible measurement of that goal
• speed of communication of measurement results

These principles makes it easier, for example, for sports teams to build a performance culture than many businesses, because:

• the goals of sports teams are very clear (eg: to win the league)
• measurement is simple, both in the short term (by goals scored) or long term (by position in the table)
• communication of progress to organisational members, and their supporters, is clear and instant (everyone sees when a goal is scored, or the team wins a match, and the updated tables are reported within minutes of each match finishing)

The difficulties faced by business

It is often difficult to improve overall organisational performance in a business because the collective goals are unclear. Employees are often only aware of the aims of their own "team island", and regard other team islands as having a different job. Individuals are often motivated to "do their bit", but they lack the overall understanding of where the organisation is going or how the various team islands are supposed to work together for collective good. Whereas a sports team is often characterised by a focus on goals, results and league tables, businesses are often characterised by an absence of such a unifying force.

The role of Balanced Scorecard

The Balanced Scorecard can help overcome such difficulties by providing a focus that unifies all parts of the business. It provides a methodology that turns the eyes of all employees to a single direction. The Balanced Scorecard can therefore be a very effective tool for changing the organisational culture, breaking down the barriers between team islands, creating an overall team culture and thereby improving organisational performance.

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