Balanced Scorecard: Internal Business Perspective Increasingly Companies

Balanced Scorecard: Internal Business Perspective

Increasingly companies large and small are implementing the balanced scorecard (BSC) as "a management system that enables organizations to clarify their vision and strategy and translate them into action" (Balanced Scorecard Institute. N.D.). In Kaplan and Norton's framework of the BSC they articulated four distinct perspectives: financial, customer, internal process, and learning and growth; because "financial measures alone were not sufficient to measure performance" (Gumbus, A. & Lussier, R. 2006). In the case of Duke Children's Hospital, a BSC was introduced to ameliorate deteriorating financial conditions; with expenses per case rising 42% from 1993-1996, and net margin reductions of 11 million in 1996 form two million in 1993. "In addition, staff productivity had fallen, and patient and staff satisfaction was at an all time low" (Meliones, J. Ballard, R. Liekweg, R. & Burton, W. 2001).

Introduction

The balanced scorecard implemented by Duke Children's Hospital focused on the internal processes which "aligned administrators and clinicians… to a strategic vision and strategic control of the organization" (Meliones et al., 2001). The numerous accomplishments of Duke Children's Hospital include cost reductions of 30 million in 2000, a net margin increase of 15 million from 1996 to 2000, and staff satisfaction levels at an all time high (Meliones et al., 2001). "Consistently ranked among the top pediatric specialty programs nationwide by U.S. News & World Report" (Duke Children's Hospital. N.D.), the organization has become a benchmark example of how transformational a BSC can be for business.

The internal process function of the BSC "the how of value creation" (Niven.P.N.D. Internal Process) connects with the customer perspective of the BSC, and ultimately determines the financial, and learning and growth perspectives. In developing their scorecard, management focused on the integration of their multiple data sources in order to more effectively disseminate information to "key stakeholders so that they can learn and make intelligent decisions" (Meliones et al., 2001). Prior to the implementation of the BSC; stakeholders including physicians, nurses, administration, and customers often had disparate performance goals. As an example, administrators are financial bottom line results oriented, while physicians and nurses are driven by quality care. The BSC allowed for an alliance between parties to ensure that one concatenate strategy was developed for organic growth. Staff reaction could be considered positive given Management's "BSC rapid-fire approach" to implementation: get connected, get results, and get smarter (Meliones et al., 2001).

Analysis