Balanced scorecard objectives

Any organisation needs to prepare for the future to ensure long term survival and profitability. 

The balanced scorecard provides an approach to deciding where the organization is heading (it's strategies), what is needed to get there (objectives) and what has to measured and controlled now to ensure that it stays on course to deliver the desired outcome in the future.

Balanced scorecard objectives.

Once a strategy has been decided upon it is necessary to determine what will be required from each of the different key aspects of the business to ensure success of the strategy. These key aspects are known as Perspectives and usually there are four - Financial, Customer, Process and Innovation. Balance score card objectives for a strategy are set for each perspective. 

 

Scorecard objectives example:

Assume the company wants to be the largest producer of hot air balloons in the country.  In order for that to happen one of the companies strategies is to  increase turnover.

 

1. From a Financial perspective an increase in turnover of 15% on last year is required. This is the Financial objective.

2. Who provides that turnover? - the customers, so what has to be done as far as the customers are concerned for the company to achieve the strategy: customers must receive their deliveries in full and on time. This is the Customer objective

3. Internally the company does activities or processes e.g. filling orders, purchasing, production planning & control. These processes start with receipt of a customer order and finish with the delivery of product or service to the customer.  What has to be done as far as the processes are concerned to ensure customers receive their deliveries in full and on time so the company can achieve the increased turnover strategy? Appoint a new sales person. This is the Process objective . Another process objective could be: To enter all orders into the production planning system promptly. 

4. What infrastructure changes are needed to ensure that the strategy is accomplished. To install new balloon design machinery. This is the Innovations objective 

 

Other business scorecard objectives

In balanced scorecard jargon objectives are the response to the challenge i.e what will be done to ensure the strategy is successfully accomplished.


Examples of Financial objectives for a Balanced scorecard

Ensure the project is EVA positive
Identify cost drivers
Achieve cost savings of...
Increase stock turnover from 4 to 6
Minimise re-work to reduce costs by...
All new customers must be EVA positive
Ensure that all capital investment does not reduce the EcROCE

 

"Economic Value Added" (EVA®) is a registered trademark of Stern Stewart & Co.

 

Examples of Customer objectives for a Balanced scorecard
Increase the number of high quality customers over the next 12 months
Add value to existing clients
Deliver right the first time
Deliver on time at the customers' designated location
Be the supplier the client considers first
Be the preferred organisation for delivering customer support
Identify alliance opportunities, joint ventures
Identify existing markets at risk

 

Examples of Process objectives for a Balanced scorecard
Improve availability of raw materials
Reduce turnaround time
Deliveries on time
Minimize the number of rework and reject products
Product is ready when required
Customize products to customers requirements
Maintain software at latest revision level
Review of departments IT needs
Improve system availability
Appoint a new sales consultant
Implement staff training program to improve the production process
Make staff aware of the importance of customers

 

Examples of Innovation objectives (learning and growth)
Collect information on acquisition opportunities
Identify new product opportunities
Identify new technology advantages to our process
Find suitable production planning software
Obtain benchmarking data for the industry
Develop a new technique
Find and implement new technology to reduce expenses
Maintain skill level of IT staff
Provide a caring and supportive work environment for employees
Develop and assess the implementation of an executive health program
Develop a market intelligence system
Document the vision, mission and strategic plan and communicate with staff and stakeholders
Re-engineer processes
Training on the effective use of ABC Activity based costing for all managers
Analyse customer database to find opportunities
Identify and evaluate existing research

 

 

With the balanced scorecard, objectives address the issue of what is needed for strategies to be successful. Performance metrics address the measuring and controlling of progress to ensure that everything stays on track to deliver the desired outcome in the future.