Overview of the Balanced Scorecard Concept

IDM 404 Spring 2014

Dr. Joan BurtnerAssociate Professor, Department of Industrial Engineering and Industrial Management

Spring 2014 IDM 404 Dr. Burtner ~ Balanced Scorecard Slide 2

Balanced Scorecard (BSC)

Developed by Robert Kaplan and David Norton in the early 1990s

Definition: A tool that translates an organization’s mission and strategy into a comprehensive set of performance measures that provides the framework for a strategic measurement and management system

Source: Kaplan, R. and Norton, D. The Balanced Scorecard. (1996) Boston: Harvard Business School Press.

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Balanced Scorecard Benefits

Concept: An organization’s strategies and their execution are important factors in performance improvement

Potential benefits Increased financial returns A more market-oriented, customer-focused strategy Greater alignment between employees and company goals Improved collaboration Strong focus on strategy Accountability for performance at all levels of the

organization

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Links Strategy and Performance in 4 Areas

Learning and Growth Perspective

Internal Process Perspective

Customer Perspective

Financial Perspective

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Basic Graphic of Original Concept

Source: http://www.institute.nhs.uk/quality_and_service_improvement_tools/quality_and_service_improvement_tools/balanced_scorecard.html

Accessed Feb. 28, 2013

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Typical Graphic of Concept

Source: http://balancedscorecard.org/portals/0/images/balancedscorecard.jpgAccessed Feb. 25, 2014

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Typical BSC Measures in Healthcare

Source: http://www.activestrategy.com/strategy_execution/example_balanced_scorecards.aspx Accessed Oct. 18, 2009

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Value Stream Management for Lean Healthcare

Original areas Learning and Growth Perspective Internal Process Perspective Customer Perspective Financial Perspective

Oakview Hospital (Tapping, et al) Learning and Growth Perspective = Satisfaction Internal Process Perspective = Service Customer Perspective = Quality Financial Perspective = Finance

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Implementation of the Balanced Scorecard

Value Stream Management for Lean Healthcare (2009) Authors: Don Tapping, Sue Kozlowski (CSSBB), Laura Archbold (RN, BSN,MBA), and Todd Sperl (MBB)

Seven step implementation process Identify team Understand organizational strategy Determine levels for measurement Identify goals (targets) for each measure Create Balanced Scorecard Build Goal Card Monitor the Balanced Scorecard

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Value Stream Management (VSM) Perspective

“The Balanced Scorecard is the starting point for Value Stream Management for the Assess phase. It is an evaluation of the current “state of facility health” and will be the driver for all Lean projects.” page 74

Value Stream Management for Lean Healthcare (2009) Authors: Don Tapping, Sue Kozlowski, Laura Archbold, and Todd Sperl