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Balanced scorecard tool drives peformance. (Strategic Management).

The nonprofit sector is beginning to use balanced scorecards--one of the most highly touted management tools of the past decade. During the past year, SOC Enterprises, Arlington, Virginia, has worked to develop its own scorecard as a way to achieve its goals. SOC ( provides rehabilitation and work opportunities for about 235 mentally disabled individuals in Northern Virginia.

Balanced scorecards first appeared on the management scene in a 1992 Harvard Business Review article "The Balanced Scorecard--Measures That Drive Performance." Authors Robert Kaplan and David Norton argued that business executives needed a new management tool better suited for a fast-paced, global environment where information is power. The balanced scorecard tool combines financial results with measurements of tasks that an organization must perform well to succeed in its mission. The balanced scorecard establishes a cause-and-effect relationship between day-to-day business processes (e.g., quality control, training, order fulfillment, customer service) and strategic goals to determine if an organization is on track to achieve its most important goals. The baseball-like scorecard can be easily communicated throughout an organization.

To launch the project, a task force composed of five SOC board members and six SOC executives answered a series of questions designed to test how SOC could fulfill its mission from four perspectives: customers, employees, financial, and management. The task force identified objectives, critical tasks, and ways to assess progress for each.

In a four-day working session facilitated by a balanced scorecard consultant, the task force approved a scorecard with 17 core objectives and 22 tracking measures. For example, it was determined that SOC's primary objective for people with disabilities and their families--one of three "consumer" groups--is to "provide self-improvement, advancement, acceptance, and monetary reward in a safe environment." Six tasks need to be cone well to accomplish this task, including providing training, employment, and career development opportunities. SOC relies on the results of satisfaction surveys of people with disabilities and their families and the increase in the average hourly wage paid to disabled workers as measures to determine whether SOC is achieving its self-improvement objective.

To prevent culture shock in an organization that's not familiar with strategically driven management systems, the SOC task force initially decided to focus on only 10 measures, such as consumer satisfaction surveys and financial statistics with which SOC was familiar. A gradual approach also made sense, since some of the data necessary to track SO progress was simply not available This discovery led to the first real benefit of SOC's balanced scorecard project--the long overdue modernization of SOC's information technology systems. SOC will now be able to collect all the data necessary for measuring progress on its 17 core objectives in 2002 and beyond.

For more information

* visit the Web sites for Harvard Business Review ( and the Balanced Scorecard Collaborative (; and

* read the latest book by these authors, The Strategy-Focused Organization (2001, Harvard Business School Press).
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Publication:Association Management
Geographic Code:1USA
Date:Feb 1, 2002
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