STAGE 3 - Balanced Scorecard for Skills

APPLICATION - My Balanced Scorecard

Guide to Designing a Balanced Scorecard for Skills Strategy

Step 1: Define Your Vision and Set Objectives

The first step in formulating a Balanced Scorecard for Skills is the most important. Your organization must create a vision of what it wants to become, of where it wants to go. This forward-thinking approach will need to be tempered with a realistic appraisal of your organization's current position with respect to the four Balanced Scorecard categories (Financial, Customer, Internal Business Processes, and Learning and Innovation), and what it will take to realize your vision. In creating this vision, and in establishing objectives, you must concentrate on those improvements that will have the most impact. In this way, a Balanced Scorecard approach provides focus and can become your organization's roadmap to translate its vision into action. The Balanced Scorecard also provides a framework for measuring your success in realizing your vision.

Things to Remember in Step 1

• Be inclusive and consult with all key stakeholders in your organization. It is easier to build a sense of purpose around a new vision if key personnel in the organization have ownership and a stake in the process. Clear and open communication is vital to ensure that all in the organization understand the importance of the vision and the organization's commitment to realizing it.

• A team approach is vital in creating a strategically focused, performance-based workplace culture. Business units operating as functional silos will be hard-pressed to create workable organization-wide visions and strategies.

• Top management must be committed, and seen to be committed, to the Balanced Scorecard objectives so that it is not just seen as another management trend or fad that will be soon discarded for another.

• short- and long-term objectives
• financial and non-financial measures
• lagging and leading indicators*
• internal and external (e.g. customer views, industry indices, etc.) performance perspectives

*lagging indicators are measures of past performance (e.g. financial reports), while leading indicators are drivers of future performance (e.g. new value through investments in customers, employees, technology, innovation, etc.)

• The Balanced Scorecard becomes the story for your organization's strategy, the focus for organizational change. Therefore, it is important to take the time necessary to get your vision and objectives right.

• Most organizations are "budget-oriented" in their planning approach. In other words, the budget-making process for the coming year, in effect, is their de-facto strategy document (i.e. money talks). However, for the Balanced Scorecard approach to work, it is important that the organization's budget be determined after the Balanced Scorecard process takes place and that the budget be aligned to their Balanced Scorecard objectives, measures, targets, initiatives, etc.