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.
|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.
|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|
|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|
|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|
|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.