What is it and how can it help me?
You can use the balanced scorecard to clarify your team’s vision and strategy for improvement, turning them into clear objectives and measures.
Organisations can use the balanced scorecard to ensure a whole system approach to preventing bottlenecks.
To avoid the risk of creating bottlenecks, for example in diagnostic services such as pathology or imaging for example ensure that you refer to these departments as you plan and carry out your service improvement work
Producing a balanced scorecard for an organisation as complex as an NHS trust is a major piece of organisational development work. It links directly to the work of the Healthcare Commission and its monitoring work at an organisation wide level.
However, it is common practice to cascade balanced scorecards down to directorate and departmental levels. This means that the scorecard can dominate the monitoring activity of managers.
The main stages in designing and implementing a balanced scorecard are:
1. Establishing a sound strategic foundation for the balanced scorecard
2. Producing a multi dimensional strategic summary
3. Setting objectives for each balanced scorecard perspective
4. Linking objectives via cause and effect
5. Determining measures for each objective
6. Setting targets for each measure in the balanced scorecard
7. Identifying strategic initiatives to deliver targets
8. Full implementation of the balanced scorecard
The original authors, Kaplan and Norton define the balanced scorecard as follows:
“The balanced scorecard translates an organisation’s mission and strategy into a comprehensive set of performance measures that provide the framework for a strategic measurement and management system. The balanced scorecard retains an emphasis on achieving financial objectives, but also includes the performance drivers of those financial objectives. The scorecard measures organisational performance across four balanced perspectives: financial, customers, internal business processes and learning and growth.”
You should aim to develop specific performance measures relating to these four areas according to your needs and circumstances, and by considering the following questions:
- Financial: to succeed financially, how should we appear to our stakeholders? In the public sector, the financial perspective tends to emphasise cost efficiency
- Customer: to achieve our vision, how should we appear to the customers/patients/departments that we work with?
- Internal business processes: to satisfy our stakeholders and customers /patients/departments which internal processes must we excel at?
- Learning and growth: to achieve our vision, how will we sustain our ability to change and improve?
You then analyse each area to identify the key processes and metrics. This is most effective when it involves a wide range of staff.
You should review the objectives and metrics in your organisation’s balanced scorecard to identify where they:
- Exist to support reducing waiting times government targets
- Are not explicit in a scorecard but support the achievement of targets
- Exist but hinder achievement of targets
- Are missing entirely from a scorecard
For example, a pathology department might measure the request to reporting time to GPs which would support the 18 week target. But its usefulness depends on the target time which triggers corrective action. If this has not been explicitly set, then the benefit is not made clear. On the other hand, the department may have a financial target to reduce costs by maintaining high vacancies to the detriment of waiting times.
You will probably find it easier to spot supportive and hindering metrics and targets than missing targets.
As with all business tools, if you are to use it successfully, you need full buy-in from staff and managers.
Some heads of department may have adopted a balanced scorecard approach for their department independently of the rest of the organisation. If you are involved in change management for service improvement, it is worth asking managers if this is the case. You can then work with them on this methodology.
Other useful tools and techniques on this website:
link your project's aims to the organisation's objectives
: approach to help to identify resource savings
Robert S. Kaplan, David P. Norton ‘The Balanced Scorecard: Translating Strategy into Action’ Harvard Business School Press, 1996
Robert S. Kaplan ‘The Balanced Scorecard for Public Sector Organisations’ Harvard Business School Press, 2000
Paul R Niven ‘Balanced Scorecard Step-by-Step for Government and Not-for-Profit Agencies’ John Wiley and Sons Inc, due for publication July 2003
Nils Goran Olve, Jan Roy, Magnus Wetter ‘Performance Drivers: a Practical Guide to Using the Balanced Scorecard’ John Wiley and Sons Inc, 1999
J Appleby and A Harrison (eds.) ‘Health Care in the UK 2000: The King’s Fund Review of Health Policy’ London: King’s Fund, Spring 2000
K Castaneda-Mendez etc. ‘The Role and Application of the Balanced Scorecard in Healthcare Quality Management’ Journal of Healthcare Quality, 20 (1), Jan/Feb 1998, pp 10-13
L Chang etc. ‘The NHS Performance Assessment Framework: a Balanced Scorecard Approach’ Journal of Management in Medicine, 16 (5), 2002, pp 345-358
Department of Health. NHS Performance Indicators. British Journal of Healthcare Computing and Information Management, 19 (5), June 2002, pp 18-20
M Goddard et al. ‘Assessing the Performance of NHS Trusts: the Use of Hard and Soft Information’ Health Policy 1999, 48, 119-34
T Freeman ‘Using Performance Indicators to Improve Health Care Quality in the Public Sector: a Review of the Literature’ Health Services Management Research, 15(2), 2002, pp 126-137
N. Inamdar etc. ‘Applying the Balanced Scorecard in Healthcare Provider Organisations’ Journal of Healthcare Management, 47 (3), May/Jun 2002, pp 179-195
J Oliveira ‘The Balanced Scorecard: an Integrative Approach to Performance Evaluation’ Healthcare Financial Management, 55 (5), May 2001, pp 42-46
The balanced scorecard was developed in the early 1990s by Robert Kaplan and David Norton as an approach to strategic performance management and measurement. Norton and Kaplan observed that traditional performance measures based on financial accounts gave an incomplete picture of an organisation’s performance. They created the balanced scorecard to provide a more rounded view.
In 1998 ‘A First Class Service’ highlighted the need for a performance framework that would support the drive for higher quality standards and would assess the things which counted most to patients and the public, reflecting commitments made in The New NHS.
‘The NHS Performance Assessment Framework’ (PAF) was published in 1999 to address this need. Based on the balanced scorecard, it introduced a new broader based approach to assessing performance in the NHS. The framework, initially aimed at health authorities, highlighted six areas of performance:
- Health improvement
- Fair access to services
- Effective delivery of appropriate health care
- Patient/carer experience
- Health outcomes of NHS care
Since then, the framework has been further developed, based on requirements set out in 'The NHS Plan'. As a result, it now applies to all NHS organisations. An NHS trust based version of the framework has been developed based on a four element model with key targets and three balanced scorecard areas, which vary depending on the type of trust. The framework is supported by a set of NHS performance indicators which, from summer 2002, were published as part of the annual NHS performance ratings.