The term "balanced scorecard" pops up regularly in discussions about strategic planning and measurement. Created by two Harvard professors, Norton and Kaplan, the balanced scorecard is a technique used to integrate strategic planning into the day-to-day work of the organization. It employs four perspectives--financial, customer and client, internal processes, and learning and growth--in the development of objectives and the measurement of progress.

The balanced scorecard approach extends financial measurement to less obvious, or seldom quantified, business attributes. Expenses, for example, include direct payouts such as invoices, but also indirect costs like unproductive work processes, unsatisfied clients, and employees who are not getting training. Income includes revenue, but also indirect savings from client loyalty and satisfaction, smart use of technology, and committed and motivated employees.

Predictive measurement, rather than "after-the-fact" traditional financial measurement, is a key feature of the balanced scorecard. It underscores how crucial employee talent, training, and satisfaction are to success.

It changes the old equation of revenue - expenses = profit to a broader, more far-reaching equation of talent + efficient operations + satisfied clients = success.

For example, if an employee survey shows dissatisfaction because staff are not getting training to do their jobs, that dissatisfaction will show up in declining client satisfaction, which will eventually hit the bottom line. Internal processes need to be continually examined and adjusted for efficiency, before inefficiencies affect client service and, in turn, financial results.

Applied to planning
How is this applied to the planning process? Once the key organizational goals are developed using traditional planning techniques, each goal (and there should be no more than three or four) is examined from the four balanced scorecard perspectives-financial, customer and client, internal processes and learning and growth.

Organizational objectives are developed from each of these perspectives for each goal. The organization, depending on size and structure, has several choices for the next step.

• In a large organization each department takes the organizational objectives and develops department objectives and action plans, from each of the four perspectives. One department may have ownership of a corporate objective while others play a supporting role, but each department should develop a plan for each strategic objective.
• Small organizations can develop action plans directly from the objectives.
• Medium-sized organizations blend the two methods: departments take ownership of some objectives and contribute to others from the perspectives most closely aligned with their day-to-day operations.

Case study
MCC Workplace Solutions helped a small television station (a fairly large organization) use the balanced scorecard technique in an effective planning process.

The preparatory work, including the analysis of environmental scanning, revealed three strategies:
1. the company needed to focus on internal processes and stability;
2. growth was a close second priority; and
3. retrenchment was required in some areas.

The executive and management team worked with us to produce three goals reflective of the three strategies. Each goal was examined from the four balanced scorecard perspectives-financial, customer and client, internal processes, and learning and growth. Objectives were developed for each.

At an all-staff meeting, MCC Workplace Solutions introduced the balanced scorecard and the corporate strategies, goals and objectives to the entire organization. In a facilitated process, the staff used the balanced scorecard approach to rank and reduce the objectives for each goal to what could be accomplished within the three-year planning cycle.

We then held workshops in which each department developed its own mission statement; a crucial step that helped keep the staff focused on their areas of responsibility. The teams spent their energy on ideas and tasks over which they had control and where they had resources and expertise.

Clear objectives
The staff then reviewed each of the corporate objectives and developed ideas about how their departments could help the company achieve each objective. Not all departments, of course, could contribute equally to the achievement of all objectives.

The company's growth strategy goal was "to increase revenue by 10% by the end of 2002." Using the four balanced scorecard perspectives, the Administration Department developed these ideas for their part in achieving the corporate objectives (numbered below) that flowed from the goal:

Financial-
1. Increase revenue from cable companies by 10% by September 2001.