The Balanced Scorecard (BSC)
The Balanced Scorecard (BSC) is a strategic performance management tool - a semi-standard structured report, supported by proven design methods and automation tools, that can be used by managers to keep track of the execution of activities by the staff within their control and to monitor the consequences arising from these actions. It is perhaps the best known of several such frameworks.
The characteristic of the Balanced Scorecard and its derivatives is the presentation of a mixture of financial and non-financial measures each compared to a 'target' value within a single concise report. The report is not meant to be a replacement for traditional financial or operational reports but a succinct summary that captures the information most relevant to those reading it. It is the method by which this 'most relevant' information is determined (i.e. the design processes used to select the content) that most differentiates the various versions of the tool in circulation.
As a model of performance, the Balanced Scorecard is effective in that "it articulates the links between leading inputs (human and physical), processes, and lagging outcomes and focuses on the importance of managing these components to achieve the organization's strategic priorities.
The first versions of Balanced Scorecard asserted that relevance should derive from the corporate strategy, and proposed design methods that focused on choosing measures and targets associated with the main activities required to implement the strategy. As the initial audience for this were the readers of the Harvard Business Review, the proposal was translated into a form that made sense to a typical reader of that journal - one relevant to a mid-sized US business. Accordingly, initial designs were encouraged to measure three categories of non-financial measure in addition to financial outputs - those of "Customer," "Internal Business Processes" and "Learning and Growth." Clearly these categories were not so relevant to non-profits or units within complex organizations (which might have high degrees of internal specialization), and much of the early literature on Balanced Scorecard focused on suggestions of alternative 'perspectives' that might have more relevance to these groups.
Modern Balanced Scorecard thinking has evolved considerably since the initial ideas proposed in the late 1980s and early 1990s, and the modern performance management tools including Balanced Scorecard are significantly improved - being more flexible (to suit a wider range of organisational types) and more effective (as design methods have evolved to make them easier to design, and use).
Example of a Hospital's Balanced Scorecard
The Health System Performance Research Network (HSPRN) is a university-based collaborative of investigators engaged in projects that aim to: Establish scientifically sound methods of measuring health system performance from a policy and provider perspective. Promote the sharing of best practices among health service providers for improvement and ultimately, enhance the quality of patient care. Increase accountability through communication of performance. Improve the quality of the underlying data sources by promoting accessibility and decision-making based on measures drawn from data.
Providing care in a hospital emergency department is fast-paced and physically demanding and draws upon a multitude of technologies and interpersonal skills. Here is a sampling from the balanced scorecard of the Ontario hospital system that measures success in the delivery of health care by their emergency departments. The scorecards compare patient outcomes in the various hospitals to discover best practices that can be used to improve patient outcomes and experiences.
1. Financial Performance and Condition - Human resource productivity indicators
• % of management and operational support hours
• % of registered nurse hours
• % total worked hours
2. Patient Satisfaction - Service and relationships indicators
• Overall Impressions - How was the hospital stay viewed
• Communication - How well was information communicated with the patient and the family
• Consideration - Whether the patient and family were treated with respect by doctors, nurses, and other staff
• Responsiveness - The amount of time they waited to see doctors or nurses and receive test results
3. Clinical Utilization and Outcomes - Clinical performance indicators
• Return visit rate for ankle or foot injury patients <=7 days
• Return visit rate for asthma <=24 hours (adults)
• Return visit rate for asthma 24-72 hours (adults)
• Return visit rate for asthma 0-72 hours pediatrics
4. System Integration and Change - Management of change indicators
• Clinical data collection and dissemination
• Internal coordination of care
• Use of clinical information technology
• Use of standardized protocols
• Healthy work environment
The characteristic of the Balanced Scorecard and its derivatives is the presentation of a mixture of financial and non-financial measures each compared to a 'target' value within a single concise report. The report is not meant to be a replacement for traditional financial or operational reports but a succinct summary that captures the information most relevant to those reading it. It is the method by which this 'most relevant' information is determined (i.e. the design processes used to select the content) that most differentiates the various versions of the tool in circulation.
As a model of performance, the Balanced Scorecard is effective in that "it articulates the links between leading inputs (human and physical), processes, and lagging outcomes and focuses on the importance of managing these components to achieve the organization's strategic priorities.
The first versions of Balanced Scorecard asserted that relevance should derive from the corporate strategy, and proposed design methods that focused on choosing measures and targets associated with the main activities required to implement the strategy. As the initial audience for this were the readers of the Harvard Business Review, the proposal was translated into a form that made sense to a typical reader of that journal - one relevant to a mid-sized US business. Accordingly, initial designs were encouraged to measure three categories of non-financial measure in addition to financial outputs - those of "Customer," "Internal Business Processes" and "Learning and Growth." Clearly these categories were not so relevant to non-profits or units within complex organizations (which might have high degrees of internal specialization), and much of the early literature on Balanced Scorecard focused on suggestions of alternative 'perspectives' that might have more relevance to these groups.
Modern Balanced Scorecard thinking has evolved considerably since the initial ideas proposed in the late 1980s and early 1990s, and the modern performance management tools including Balanced Scorecard are significantly improved - being more flexible (to suit a wider range of organisational types) and more effective (as design methods have evolved to make them easier to design, and use).
Example of a Hospital's Balanced Scorecard
The Health System Performance Research Network (HSPRN) is a university-based collaborative of investigators engaged in projects that aim to: Establish scientifically sound methods of measuring health system performance from a policy and provider perspective. Promote the sharing of best practices among health service providers for improvement and ultimately, enhance the quality of patient care. Increase accountability through communication of performance. Improve the quality of the underlying data sources by promoting accessibility and decision-making based on measures drawn from data.
Providing care in a hospital emergency department is fast-paced and physically demanding and draws upon a multitude of technologies and interpersonal skills. Here is a sampling from the balanced scorecard of the Ontario hospital system that measures success in the delivery of health care by their emergency departments. The scorecards compare patient outcomes in the various hospitals to discover best practices that can be used to improve patient outcomes and experiences.
1. Financial Performance and Condition - Human resource productivity indicators
• % of management and operational support hours
• % of registered nurse hours
• % total worked hours
2. Patient Satisfaction - Service and relationships indicators
• Overall Impressions - How was the hospital stay viewed
• Communication - How well was information communicated with the patient and the family
• Consideration - Whether the patient and family were treated with respect by doctors, nurses, and other staff
• Responsiveness - The amount of time they waited to see doctors or nurses and receive test results
3. Clinical Utilization and Outcomes - Clinical performance indicators
• Return visit rate for ankle or foot injury patients <=7 days
• Return visit rate for asthma <=24 hours (adults)
• Return visit rate for asthma 24-72 hours (adults)
• Return visit rate for asthma 0-72 hours pediatrics
4. System Integration and Change - Management of change indicators
• Clinical data collection and dissemination
• Internal coordination of care
• Use of clinical information technology
• Use of standardized protocols
• Healthy work environment
