How to Construct a Balanced Scorecard

Measure Expectations

Companies that construct a balanced scorecard may use specific criteria regarding the company's goals, products and services provided, employees' needs and financial situation. Some companies may consider a balanced scorecard as another management tool to ensure optimum performance for success. Balanced scorecards are constructed to measure certain core business functions that provide feedback to determine an alignment to the ultimate goals and mission of the company. This information may be used to determine a focus for attention and resources.

Things You'll Need

• Copy of company goals and mission
• Copy of company core competencies
• Team of supervisors and managers from each department
• Written measures and evaluations

Instructions

1. Review the company's goals (what the company wants to achieve) and mission (what the company stands for). The core competencies or main strengths of the company may be used for the balanced scorecard as the major indicators of success and areas for improvement. Some core competencies are financial situation, customer service, employee satisfaction and internal processes.

2. Form a balanced scorecard team with members of each department. Each department representative may provide detailed information on the core competency of that department, areas of strength and areas for improvement. This team member may also be in charge of a measurement or metric for a particular process for the department.

3. Develop written measures and evaluations. For example, a company may have a core competency of financial performance. Some measurements may be profitability, cash flow and operating cost management. Evaluations of financial measures may be how much revenue the company generated or operating costs compared to revenue.

4. Follow up with the balanced scorecard metrics on a quarterly basis. This is critical in determining if the right measurements are being used and evaluated properly. Also, continuous improvement may be a company goal so constant analysis of present processes could be a part of the balanced scorecard management.

References

• Balanced Scorecard Institute: What is the Balanced Scorecard
• Schneiderman.com: Juggling Balanced Scorecard Metrics