STAGE 3 - Balanced Scorecard for Skills

APPLICATION - My Balanced Scorecard

Guide to Designing a Balanced Scorecard Strategy

Step 2: Establish Measures (Metrics) and Targets

Once clear Balanced Scorecard objectives are established, it then must be determined how you will measure these. This is a key step, because deciding what to measure creates a focus for the future as it communicates to all in the organization that which is important to the business. The measuring process also reinforces the organization's commitment to the Balanced Scorecard and encourages follow-up.

Just as was the case in establishing Balanced Scorecard objectives, it is vital that key stakeholders in the organization have input in determining what measurements will be used, how these will be gathered, and what targets will be established. This will ensure that 1) the targets are realistic, and 2) those responsible for meeting these targets will have ownership of, and accountability for, these targets.

Things to Remember in Step 2

• Measures must be specific and quantifiable. Be absolutely clear from the outset with respect to what will be measured, how it will be measured, who will do the measuring, when the measuring will take place, and how the results will be reported and acted upon. It means nothing to say that "we will increase the quality of our product." You must have definite ways of measuring quality (e.g. defect rates, customer surveys, reliability indices, product return stats, etc.) and of reporting on progress in this area.

• When setting targets for your various objectives, make these "stretch targets," but not impossible to achieve. If the targets are not realistic, they will only help breed frustration and cynicism. For example, decreasing the average processing time for a dental plan claims check from five days to three days may be a "stretch target" for an insurance organization, but a target of a 24-hour turn-around may be unrealistic in the first year.

• You may wish to consult occupational standards set at the State level when setting your own targets for improvement

• Be aware of the reality of organizational culture, politics, and power relationships. New initiatives - especially ones involving targets, measures and accountability - can be met with fear, anxiety and resistance. However, these things can be minimized if the organization is clear on its vision and inclusive in establishing objectives, measures and targets.