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Building Your Balanced Scorecard Template: What’s Critical & What’s Customizable?

We get it—you want a no-nonsense guide of what to include in your Balanced Scorecard and what you can customize. Here you go.

Dylan, Founder and Managing Partner at ClearPoint, has over 25 years of experience working with organizations to improve their performance management and strategy execution processes.

If you’re just getting started with the Balanced Scorecard in your organization, you probably have a lot of questions. There’s a huge amount of information online, and after parsing through dozens (or hundreds) of pages of information on Balanced Scorecard software or how to build a scorecard in Excel, your head may be spinning. If you’re tired of trying to figure out what is absolutely critical to include and what you’re able to customize to your company and industry, we understand. This article is just what you’ve been looking for.

We’ve outlined five aspects of a typical Balanced Scorecard template and described, in detail, what is critical and what is customizable.

1. Perspectives

A Balanced Scorecard typically has perspectives in it, which are different ways of viewing your strategic information. It is critical to have perspectives and to understand the cause and effect relationship between them. They are as follows:

  • Financial Perspective
  • Customer Perspective
  • Process Perspective
  • Learning & Growth Perspective

Depending on the organization, you may have different perspectives. For example, if you’re a triple bottom line organization, you may not have finances at the top of your scorecard—you may have some combination of finances, environment, and employees. Or if you’re an organization with a regulatory environment, you may have a regulatory perspective. You can also think about customizing the names of your perspectives to better suit your company. Some people call the “Customer” perspective Clients, Recipients, or Consumers. Learning & Growth is sometimes called People, Innovation, or Competencies.

The idea behind perspectives is to describe your strategy. If Finance doesn’t do a good job of describing your strategy, put something else at the top. Figure out the order (and the verbiage) of your perspectives that best tells the story of your strategy, and stick with them.

2. Strategy Map

A true Norton and Kaplan Balanced Scorecard would likely have a strategy map. But, strategy mapping wasn’t in their first book, so some organizations may not have one. In my opinion, it is very important to have your strategy on one page, but I would not say that it is critical. Your strategy map is highly customizable and can look however you choose. Some organizations choose very simple maps, while others are more creative. If you’re in the municipal space, your map may look like a city, with linkages from one area to the next that look like roads. A manufacturer may show raw ingredients on one side and an end product on the other. Or if you’re a pharmaceutical or healthcare organization, you could shape your objectives and goals like pills or medical instruments. A strategy map should be highly visible throughout your organization, so don’t be afraid to make it your own.

3. Objectives

Objectives—sometimes referred to as goals—are statements of what you’re trying to achieve, and they make up the key components of your strategy at the highest level. It is critical to have objectives in your scorecard, as you cannot justify your measures without them.

There is some customization in terms of the number of objectives you want to examine. Some Balanced Scorecards have 25-40 objectives, while others have 5-10. This boils down to whether you want to be highly detailed and include many steps or you want to look at the bigger picture and higher level. Whatever you decide should tie into your communication message and strategy. If you have a lot of objectives, you may want to bunch them into groups, called themes.

4. Measures

Like objectives, it is critical to have measures in your scorecard. Your measures should be tracking your objectives, which are critical to a BSC. What you’ll need to determine is how many measures you need to have and how they’ll be spread across the different perspectives. Ideally, you should have one or two—but no more than three—measures per objective.

Don’t forget to appropriately balance the measures across each of the perspectives. (This is what puts the balance in the Balanced Scorecard!) If you have too few, you may miss some of the nuances of your strategy—but if you have too many, you’re not doing a very good job of focusing. Your sweet spot is likely less than 40, but ideally closer to 18-25. If you’re looking for some great example KPIs and measures for your industry, here’s what we’ve built so far:

5. Initiatives

Initiatives are also known as projects, and they ask whether you’re doing the right things that are linked to your strategy. As you may have guessed, initiatives are also critical for your BSC. You don’t want to capture everything you are doing—just the things you have budgeted for that have a specific timeframe for completion. As for tracking these initiatives, some organizations simply perform a high level review in their BSC, while others will track down every milestone with budget, percent complete, effectiveness, and timeliness. Be flexible, but don’t let the tracking part take up more time than the strategy discussion.

Final Thought

There’s enough that’s been written about the Balanced Scorecard today that you can get very detailed, nuanced, and technical about it based on academic readings. But, if you can’t see your strategy in your BSC and people in your organization cannot quickly understand it, then you’re not doing it right. It needs to be easy to understand, it needs to reflect your organizational strategy, and it should not require much explanation to your employees. If you are grumbling and complaining about your scorecard, rather than marveling at how it is helping your organization be successful, then it is time to take a more detailed look and figure out where you need to make adjustments to your BSC framework.

Be sure to also check out these free Balanced Scorecard resources:

 

Building Your Balanced Scorecard Template: What’s Critical & What’s Customizable?