KPI – BI / DW Insider

A Balanced Scorecard is a performance management tool used by executives and managers to manage the execution of organizational activities and to monitor the results of actions. Fundamentally a balanced scorecard provides a summary level view of organizational performance at a quick glance and includes key performance indicators (KPIs) across four main areas or perspectives:

Financial Perspective: KPIs for productivity, revenue, growth, usage, and overall shareholder value.
Customer Perspective: KPIs for customer acquisition, customer satisfaction rates, market share, and overall brand strength.
Internal Process Perspective: KPIs for resource usage, inventory turnover rates, order fulfillment, and quality control.
Learning / Growth Perspective: KPIs for employee retention, employee satisfaction, and employee education, training, and development.

Balanced Scorecard – Four Perspectives

The balanced scorecard concept was originated by Drs. Robert Kaplan (Harvard Business School) and David Norton as a framework for managing and measurement organizational performance. The concept added strategic non-financial performance measures to traditional financial metrics to provide executives and managers a more ‘balanced’ and ‘holistic’ view of organizational performance. Over time the balanced scorecard has evolved from its early use as a simple performance measurement tool to a complete strategic planning and management system. The latest version of the balanced scorecard transforms an organization’s strategic plan from a passive document into the active actions the organization needs to perform on a daily basis. Additionally, it provides a framework that not only provides performance measurements, but helps planners identify what should be performed and what should be measured.

Adapted from Microsoft Technet and Balanced Scorecard Institite.

A KPI scorecard is a solution that allows organizations to manage their organizational performance by linking operations with strategy. The scorecard monitors the execution of strategic objectives at each level of the organization and ensures a consistent understanding at all levels of the organization’s priorities and expectations.

Sample KPI Scorecard

Scorecards can be utilized at all levels of an organization including executives, managers and staff. They are usually updated in periodic snapshots, use graphical symbols and icons to present summaries of organizational performance, and chart overall progress over time for the organization.

Scorecards provide value to the organization by linking key performance indicators (KPIs) within tactical and operational levels in an organization to the overall strategy of the organization. In addition, the scorecard establishes accountability to appropriate individuals and enables visibility to up and down an organization from executive management to operational levels. The scorecard can be a powerful tool to allow for assignment of goals and objectives to all individuals and focuses accountability on the relevant individuals and business units.

Typically scorecards provide internal and industry benchmarks, goals, and targets that assist an individual’s understanding of their own unique contribution to the organization. Often, the scorecard spans strategic, tactical, and operational aspects and decisions of the organization and supports the specific demands of varying levels of management.

Benefits and Advantages of KPI Scorecards to an organization include…
• Scorecards drive improved organizational performance
• Scorecards translate strategy into concrete terms and help track its execution
• Scorecards help ensure that the right measures are utilized
• Scorecards encourage the right balance of operational and strategic factors
• Scorecards encourage good management
• Scorecards present a compelling picture of performance that is not distorted an individual issue

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