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Balanced Scorecard Design Toolkit
Balanced Scorecard is a well-known concept and it's easy to find helpful articles about what this concept is. Balanced Scorecard projections and perspectives are also talked about much.
Balanced Scorecard Design
Toolkit contains "how-to"
Business professionals lack essential information about real-life metrics and ideas for Balanced Scorecard information on how to build actual scorecard scores, which allows calculating the performance values, which supports weights and methodology. This whitepaper is a Balanced Scorecard design toolkit, which contains some "how-to" ideas.
Measuring business performance with Balanced Scorecard
Balanced Scorecard concept is about measure and control.
Balanced Scorecard Toolkit: Weights and Scores
Any scorecard support system should represent perspectives and metrics, providing them with adequate importance estimations and scores. The Balanced Scorecard may be represented as follows below: [P1] (Weight-1) ...
The Balanced Scorecard should [P2] (Weight-2) be represented as a set of Metric-2.1 (Weight-2.1; Score-2.1) metrics, weights and scores. Metric-2.2 (Weight-2.2; Score.2-2)
Metric-2.3 (Weight-2.3; Score.2-3) ... [P3] (Weight-3) ... [P4] (Weight-4) ...
Can there be a sub-metric for Metirc-2.1? It's up to Balanced Scorecard developer, but Balanced Scorecard is as effective as it is simple and easy to overview.
Balanced Scorecard Toolkit: Calculations
How to calculate the performance value using a given values of metrics' importance and user assigned scores.
The Balanced Scorecard showed above may be represented as:
[P 1] (W0,1)
Steps to calculate performance ... using a given values of metric
[P 2] (W0,2)
importance and user's scores.
M 2,j (W2,j; S2,j), where j=1..number_of_metrics
[P 3] (W0,3)
...
[P 4] (W0,4)
...
The total performance value will be calculated in three steps: 1. Normalization of the score to absolute score values; 2. Normalization of the weight to absolute weight values; 3. Calculation the total performance values;
Normalization and performance calculation
Normalization is necessary for further calculations. Assume, the initial weight
and score values were given on scale [0..10], where 0 is for the "minimal
importance" and 10 is for the "maximum importance". The same scale is used
for score values ? 0 might be for 0% progress and 1 might be for 100% progress.
In this case the value Wi,j might be normalized to [0..1] scale by dividing Wi,j by
10:
NWi,j = Wi,j / 10, where NWi,j is a normalized weight value;
NSi,j = Si,j / 10, where NSi,j is a normalized score value;
Calculating the performance value using normalized score
The total performance value for the certain perspective Pi will be calculated
and weight values. as:
Ni
Performance(Pi)=NW0,I * NWi, j * NSi, j j =1
Where Ni is the number of metrics on i-level; NWi,j ? is a normalized weight of j-
metric on i-level; NSi,j ? is a normalized score given by user of scorecard to j-
metric on i-level. To calculate the total performance within all perspectives,
it's necessary to summarize performance values for all levels:
M
Total Performance = Performance(Pi)
i =1
Where M is the number of perspectives, in our case M=4. The resulted
performance value will be represented on [0..1] scale.
Remember to carefully Conclusion evaluate Balanced Scorecard Building a Scorecard that works involve two main processes: metrics 1. Suggesting a proper metrics;
2. Calculating the total performance;
Metrics should be designed by key managers; suggested metrics should be carefully evaluated in action. As for calculating performance, start with some simpler tools, such as spreadsheet processor to describe the Balanced Scorecard of the business unit and calculate the performance.
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