Module 3B Managing Resources

Given the concern that incentivization can lead to unexpected outcomes, it is often not tried in
public sector bodies and budget-driven approaches are preferred for managing performance.
Balanced Scorecard
The Balanced Scorecard model was popularized by Kaplan and Norton in 1996. While being
developed with private sector organizations in mind, it has great applicability for the public
sector. As the title suggests, it aims to establish and maintain a suitably balanced set of metrics
for monitoring performance. It recognizes that financial metrics on their own are not enough and
can lead to a distorted perspective, which is one of the criticisms of budget-driven performance
management.
According to Kaplan and Norton, “what you measure is what you get.” In other words, the things
you decide to focus on become the things you achieve. What gets measured gets done. In a
similar vein, Lord Kelvin, a scientist notable for his work in developing a new temperature scale,
remarked “if you cannot measure it, you cannot improve it.” We need tools to define how well
we are doing currently, to set targets for improvement, and to determine whether we are being
successful. Peter Drucker, the management guru, said it like this: “If you can’t measure it, you
can’t manage it.”
The balanced scorecard examines performance from four perspectives:
• Financial perspective.
• Customer perspective.
• Internal perspective.
• Learning and growth potential (organizational capacity perspective).
The model links to value creation. Improvements in capacity drive improvements in processes
leading to greater customer satisfaction and ultimately better financial performance.
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