There are no magic measures. They will be different for each organization, depending on
the organization and its direction. They will be very different for profit-making and not-for-
profit organizations.
HOW TO USE THIS LEADERSHIP TOOL
Innovating companies today are using their Balanced Scorecards to
(1) gain consensus and clarity about their strategic objectives,
(2) communicate strategic objectives to business units, departments, teams, and individuals,
(3) align strategic planning, resource allocation, and budgeting processes, and,
(4) obtain feedback and learn about the effectiveness of their strategic plan and its implementation.
—Robert S. Kaplan, THE BALANCED SCORECARDNow that you have seen the range of measures that may be used to produce a balanced score-
card, the question is which measures to use. Here are some guidelines:
➠ Keep the number of measures relatively small, so they are easy to keep in mind.
➠ To be balanced, measures should come from most of the categories in the table.
➠ The measures should be tightly connected to your organizational direction, strategy,
and goals.
➠ The cause–effect relationships should be relatively tight. “If we do X, we should
increase the measure of Y on the balanced scorecard, which is a measure of organiza-
tional success.”
➠ The measures should measure what you want to be really good at.
➠ The measures should not conflict with the values of the organization.
➠ The measures should not act at cross-purposes with one another. Pursuing one measure
should not beggar another. One group pursuing its measures should not be able to do
that at the expense of others. There is a saying in leadership: “Expecting A but reward-
ing B.” Avoid it.
➠ The measures need to be intelligible for the level of person expected to use them. Teach
people business literacy skills. Jack Stack suggests that, for many people, the measures
need to be told in the form of stories.
➠ You need to be able to publicize the data for these measures on a regular basis. The
numbers need to be current and published regularly to have meaning. The measures
need to be prominently publicized and discussed at regular intervals.
➠ The measures should balance short-term payoffs with long-term growth.66 SECTION 2 TOOLS FORBIG-PICTURETHINKING
Internal Process MeasuresEmployee and Community
MeasuresKey business process success indicators, production numbers, quality measures,
reject rates, reduced cycle times, cost reductions, new products, inventory
turnover, process redesign and optimization, and the like.
Employee satisfaction, commitment measures, work climate, productivity mea-
sures, turnover, return per employee, capability development, grievance rate,
suggestion rate, diversity, life balance measures.
Community may include environmental and community relations measures.