Balance Scorecards Best Practices

A Methodology to Implement Balanced Scorecards in Public Sector Organizations

Balanced Scorecards perspectives

What is Balanced Scorecards?

Balanced Scorecards is a comprehensive system to measure
performance from a strategic perspective whereby the
government organizations strategy is translated into clear
strategic objectives, targeted standards and values and
procedural steps. Balanced scorecards are also used to
introduce the organizations strategy to the various
administrative units and levels, and measure their
implementation.

Financial
What are the expected
financial results?

Internal business processes

Customers
Which customers the
organization should satisfy?

Why Balanced Scorecards?

What are the internal

business processes in which
the organization must excel?

Learning and Growth

A. Enhance the organizations performance.

B.

Increase customers satisfaction.

C.

Bridge the gap that exists in many departments between

their strategic aspirations and their executive programs,
as shown in Figure 1.

To what extent should the

employees be developed and
motivated?
Figure 2: The four perspectives of Balanced Scorecards

How to implement Balanced Scorecards

Vision

Scorecards?
Mission
Values

1. Determine the
project's
objectives

2. Develop a
strategic plan

3. Identify
performance
indicators

4. Prepare the
strategic map

5. Identify the
targeted values
and initiatives

6. Prepare the
performance
indicator manual

7. Prepare
balanced
scorecards

8. Implement the
balanced
scorecards system

Strategic plans
Strategic map
Performance measurement
indicators

Balanced
Scorecards
system

Initiatives
Corrective actions

Figure 1: The role of Balanced Scorecards in bridging the gap

between strategy and executive programs

The projects objectives are determined. They may include

one or more of the following:
-

Balanced scorecards perspectives are divided into four equal

parts as shown in Figure2.

Determine the projects objectives

Clarifying performance indicators by developing the

performance indicator manual and linking each indicator
with its strategic objective.

Increasing customers satisfaction by monitoring the

implementation of the strategy.

2
A.

Strategic objective
businesses

Develop a strategic plan

Operational
objectives
20%.

Develop the vision and mission

Developing the vision and mission is one of the most

important steps that any government organization should
take, and also the starting point of the balanced scorecards
project.
B.

Perspective

Learning
and Growth

Develop employees
capacities and
increase their
efficiency

- Engage 70% of the

organizations
employees in the
training
courses
available to the
sector employees.

Financial

Maintain the
organizations
financial stability

- Reduce
budget
deficit by 5%.

SWOT analysis

SWOT analysis involves identifying the strengths, weaknesses,

opportunities and threats as shown in Figure3.
Internal environment

Strenghts

Negativ
e

Positive

Weaknesses

Identify performance indicators

When identifying performance indicators, It is recommended

that performance indicators should be (SMART), as shown in
Figure 4.
Specific

Threats

Opportunities

Measurable
Achievable

External environment

Figure 3: SWOT Analysis

C.

Closely linked to strategy

Determine the departments final strategy

The final strategy includes strategic and operational

objectives that are determined based on the vision, mission
and SWOT analysis. The following table shows an example of
the strategic goals of a hypothetical organization specialized
in issuing ID cards for each perspective of the balanced
scorecards system.
Perspective

Strategic objective

Operational
objectives

Customers

Increase customers
satisfaction

- Reduce customers
complaints.
- Increase
customers
satisfaction by 4%.

Internal
Processes

Improve the
organizations
procedures and
organize its

- Reduce the time

taken to process
transactions
by

Time-bound
Figure 4: SMART objectives

The following table shows an example of the performance

indicators of one perspective of the balanced scorecards
system:
Perspective

Objective

Learning and
Growth

Develop
employees
capacities
and increase
their
efficiency

Indicators
- Number
of
annual
training
courses
available to employees.
- Number of employees
participating in training
courses per year.
- Employee performance
evaluation rates.

Perspective

Objective

Indicators
- Number of training
hours received by the
employee per year.

Types of performance indicators

The current and expected values.

The opinions of executive directors.

Internal and external evaluation.

Customers reactions.

Benchmarking.

Identify initiatives

Types of performance indicators are shown in Figure 5.

The project work team will identify a set of initiatives that will
support implementing the strategy and achieving or
exceeding the targeted values.
Cause indicators
Focus on the
operations that should
be done to achieve the
desired results

Focus on measuring
the achievement made

Steps of initiatives identification:

A. Prepare a summary of the initiatives currently in place in
the organization.

Effect indicators

Figure 5: Types of performance indicators

B.

Link these initiatives with the strategy of balanced

scorecards which has been determined or developed in
the beginning of the project.

C.

Eliminate the non-strategic initiatives and add a set of

needed initiatives.

D. Arrange initiatives by order of implementation priority.

The balanced scorecard system should contain a mixture of

cause indicators and effect indicators.
Link to strategy

Prepare the strategic map

The strategic map describes the relationship between the

objectives, from the customers perspective to the financial
perspective, based on the relations of cause and effect
indicators, which enables the work team to look at the
strategic standards as a series of cause and effect links
between the four perspectives rather than performance
indicators for four independent perspectives. This perception
can be facilitated through the strategic map, which reflects a
visual representation of cause and effect relations between
the components of the organizations strategic plan.

Identify the targeted values and initiatives

Identify targeted values

The factors that help the work team to identify the targeted
values are:
-

Asking help from the organizations employees.

Expected value of the revenues resulting

from implementing the initiatives
Total costs
Required resources
Time required fro implementation
Link to other initiatives

Figure 6: Adopted standards for arranging initiatives by order of

priority

Prepare performance indicator manual

The performance indicator manual contains detailed

information on indicator characteristics and offers brief
information on those responsible for evaluating the
indicators.

General
description
of the
indicator

Perspective
Performance
indicators

Unit of
measurement

Objective

Contents of
performance
indicator manual

Type (effect/
cause)

Current value

Measuremen
t method

Targeted
value

Person
responsible
for data
collection

Initiatives
Source of
data

Figure 7: Components of performance indicator manual

Prepare Balanced Scorecards

The process of preparing balanced scorecards involves filling

out the data that has been collected and allocated
throughout the project in order to demonstrate the
interdependence of all that has been prepared throughout
the project. These four scorecards are submitted to the
departments senior management at specified times of the
year to show the current situation.

The following is the performance card form for the

perspective of customers.

Objective

Customer card
Targeted
Indictor
value

Initiatives

Implement Balanced Scorecards system

For the purposes of implementing the system, the

department shall:
A. Collect data and measure the performance based on the
indicators that have been identified within a specified
period of time after implementing the initiatives.
B.

Analyze data and measure performance level based on

the indicators.

C.

Prepare performance measurement reports.

D. Honor and reward excellent managements.