Balanced Scorecards

Skill level: Intermediate


The balanced scorecard is a strategic planning and management system that frequently uses graphics or a “dashboard” to depict business activities and their relation to the vision and strategy of the organization, monitoring organization performance against strategic goals. The balanced scorecard considers elements from four key areas: customer, employee, financial, and internal operations. It is often referred to as the Kaplan and Norton Balanced Scorecard.


  • Includes non-financial measures to provide a more holistic view of the organization
  • Is structured so that one measure alone is not the overall indicator of success
  • Utilizes leading indicators rather than simply lagging financial indicators
  • Helps management balance the competing requirements of performance with financial and human resources

How to Use

  • Step 1.  Clearly delineate and identify the organization where you will deploy the balanced scorecard.
  • Step 2.  Determine the strategic objectives and goals for the organization.
  • Step 3.  Determine the organization’s performance measures and targets.
  • Step 4.  Set up the scorecard based on these categories/measures: customer, learning and education (employee), financial, and internal process.
  • Step 5.  Set up the implementation process for the data collection, updating, and responsibilities for creation, accountability, and leadership.
  • Step 6.  Ensure ongoing monitoring and reset the scorecard parameters as required.

Relevant Definitions

Lagging indicators: Metrics that are calculated after the fact. Examples include financial statement measures, customer satisfaction measures, and employee exit interviews.

Leading indicators: Primarily those items related to activities that are under the organization’s direct control.


An insurance company’s sales organization was deploying the balanced scorecard in its life insurance sales division. The team determined the key goals for the unit were:

  • Customer: Increase first-year retention rates (decrease lapse rate)
  • Financial: Increase revenue per policy
  • Internal processes: Decrease the application to policy issuance cycle time
  • Education/learning: Increase the number of hours available for agents to learn advanced selling techniques

When reviewing the balanced scorecard at the end of the year, the division determined that it had hit its customer and process targets but was lagging in the financial and learning targets.

A root cause analysis helped determine that the sales agents were not completely walking through the needs assessment during the selling process. The agents also were not aware of the new process since many had not been trained on it.

The division implemented a corrective action plan to emphasize the need for this learning process and how it would help agents sell more business. The impact of the communication strategy changes would be monitored on a quarterly basis.


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