1.5 - About University

2.8M EASURING S UCCESS: THE B ALANCED S CORECARDInspired by Robert S. Kaplan, David Norton, Joseph and Jimmie Boyett,David Ulrich, Jack Zenger, and Norman Smallwood.Until recently, most organizational hard performance scorecard numbers were traditional financials,like sales, return on capital, profitability, and so on. These numbers were aggregated tohelp senior executives make corporatewide decisions. More recently, many organizations areexpanding these financial measures in two ways:1. balancing harder financial and production measures with softer measures like customersatisfaction and environmental protection; [☛ 1.7 Results-Based Leaders]2. generating and sharing significant measures with leaders at all levels. [☛ 4.6 Open-BookLeadership]Measures and scorecards are necessary, encapsulated in the sayings “What gets measured,gets done” and “Hard drives out soft.” The most common traditional business measure ismoney, for the individual as well as for the organization: salary, stock options, bonuses, assets.Recently, however, demand has arisen for other, more balanced measures and for more balancedlifestyles, as a result of the impact of such phenomena as the quality movement, theinformation age, knowledge workers, virtual e-commerce, and environmental awareness.Besides finding balanced measures for the success of your organization, business unit, project,or yourself, this tool speaks for more balanced measures of success for individual and teamperformance. It is a challenge to find the right balance of success measures for performancemanagement. For instance, some organizations have set up bonus systems to reward individualswho excelled—only to see them excel at the expense of others! People are smart aboutworking the system.This tool presents a number of measures in a number of categories to help you choose, foryourself personally and for your organization, a more balanced set of success measures. The difficultyis to select a small set of numbers that are significant and representative of the successof the organization, as well as being significant to the individual using them. Some suggestionsare provided here for selecting the best measures. As you look at these measures, considerwhich would be appropriate for each level of your organization: executives, business unit leaders,and project leaders.Scorecard measurement areasFinancial Success Measures(Traditional measures extended tomany more leaders.)Strategic Measures(The measures of success supportingthe direction of the organization.)Stakeholder Measures(Customers, clients, suppliers,regulators, unions, and other businesspartners.)Some potential measuresOperating income, return on capital, sales, sales growth, profit margin, profitability,revenue per unit, unit costs, and the like.Look to your strategic direction statements for measures. Some measures mayinclude innovation, growth, new markets, new product development, organizationalcapabilities, and the like.Customer or client satisfaction, retention, growth, service, returns and warrantyclaims, on-time delivery, value-added measures, and the like.Supplier satisfaction, quality, on-time delivery, rejects.Regulatory disputes, legislation influence, and the like.SECTION 2 TOOLS FOR BIG-PICTURE THINKING 65