Ever since Robert Kaplan and David Norton developed the Balanced Scorecard, business thought leaders have been spawning myriad books, articles and seminars dedicated to the concept's implementation. But few products focus on the organizational activities needed to build a successful scorecard system.
Helping businesses effect these organizational changes is the goal of Paul R. Niven's recent book "Balanced Scorecard Step-by-Step: Maximizing Performance and Main-taining Results" (John Wiley & Sons, 2002). The book is a comprehensive guide to translating business strategy into performance targets, measures and initiatives in the Balanced Scorecard'sfinancial, customer, internal process and employee perspectives. Niven draws on his experience rolling out a scorecard-based performance management system at Nova Scotia Power, a Canadian electric utility, to illustrate many of his points.
Niven's book, which is useful for organizations at any stage of balanced scorecard development, takes readers from determining their performance management objectives to testing their mission to placing the Balanced Scorecard at the center of their management system. The book provides a detailed review and description of the elements necessary to construct a scorecard -- a must for businesses starting out on the journey. With those building blocks in place, Niven then offers an in-depth view of what it takes to select the right performance indicators; he explains how to narrow a company's current stable of metrics down to a select few which weave together in a series of cause-and-effect linkages. He also offers tips for sustaining success.
If you've developed a scorecard measurement system but have yet to transform it into a successful management system, you can benefit from the techniques and advice that Niven presents. Use his ideas to audit your systems, then tweak processes to improve the effectiveness of your organization's performance management.
According to research by Kaplan and Norton, only 10 percent of organizations actually execute their strategies. The reasons for this underachievement are enlightening. Typically, only 5 percent of the work force understands corporate strategy, and only 25 percent of managers have incentives linked to strategy. Eighty-five percent of executive teams spend less than one hour per month discussing strategy, and 60 percent of organizations fail to link strategy to budget.
Clearly, businesses need to better nurture their performance measurement and management systems. And the Balanced Scorecard is no panacea if it's not implemented well. If your share price lags despite strong financial performance or your customers don't buy even when prices are competitive, it may be time to pump up a languishing Balanced Scorecard system. This book offers the resources to do that.