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Balanced Scorecard

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Definition

Group of high-level Metrics used to gauge organizational performance along multiple dimensions. These dimensions should flow from the organization's strategic imperatives. Sometimes these objectives may seem to be at odds, which is where the "balancing" comes in (see Example below).

When performance is compared to the imperatives, there may be gaps, in which case Six Sigma projects (either DMAIC of DFSS) can be identified to close the gaps. Thus, the balanced scorecard provides a ‘master plan’ which keeps track of all the company’s initiatives and aligns them to the overall goals of the company.

Examples

It would be typical to have measures of Quality (Customer Satisfaction, Warranty), Financial Performance (Revenue, Cost, Profitability, ROI), Employees (Satisfaction, Turnover, or Safety), and Product Development (% of sales from new products, # of new products in pipeline) regularly reported within the organizational structure, but initiatives targeting one measure might very well be at odds with those of another.

For instance, better financial performance might be achieved at the cost of quality, or vice versa. The balanced scorecard puts in place a system of feedback loops that allow these processes to ‘talk’ to one another across the different perspectives, essentially aligning them toward a common goal – the corporate strategic plan.

External Links

How to Use the Balanced Scorecard by Eric Berkman from CIO.com - http://www.cio.com/archive/051502/scorecard.html Establishing Balanced Scorecards from the American Productivity and Quality Center (APQC), 2001. - http://www.apqc.org/portal/apqc/ksn/Establishing%20BalSco.pdf?paf_gear_id=contentgearhome&paf_dm=full&pageselect=contentitem&docid=106886 Basics of the Balanced Scorecard - http://www.balancedscorecard.org/basics/bsc1.html A Performance Management Framework - from the MoreSteam November 2008 MoreNews newsletter - http://www.moresteam.com/morenews/story.cfm?user_id=1&article_id=24&newsletter_id=6#break One-hour recorded Webcast: "Could Your Balanced Scorecard Use Some Lean Six Sigma?" - http://www.moresteam.com/presentations/webcast-balanced-scorecard.cfm