A recent forum posting asked “What is the correct balanced of measures across the four perspectives of a balanced scorecard?” They wanted to see if any academics had researched whether it should be 25% each or some other ratio.
This is a massively mistaken question which goes straight to the heart of why many balanced scorecards fail and it is easy to end up with many measures that are not relevant to driving performance.
The purpose of balanced scorecards is not balance.
I’ll say that again. The purpose of a balanced scorecard is not “balance”. Rather, “balance” is a consequence of getting the thinking right.
The purpose of the thinking underpinning a balanced scorecard is to define causality and drive performance (and resulting balance of measures across the perspectives is a consequence).
So for example you would say that improving this skills and knowledge improves the process which gets better results for our customers and therefore better money for us. If you only measures the consequences, and not the drivers, you won’t be balanced.
Therefore an academic would look at an organisation that was measuring those drivers of change (in the learning and growth perspective) and be asking
a) Are they drivers of performance
b) Are they the right ones
c) Did they help bring about change.
The fact that you end up with a balanced set of measures is a side effect. So a sensible academic would not investigate this issue. Yes having 25% in the L&G perspective is more balanced but are they the right 25%? That is the real question. And do they drive performance so that there are changes to the higher perspectives?
Don’t confuse “the balance of a scorecard” with the causality it contains and the purpose of the measures . You are trying to get better at identifying (and measuring) what drives good performance and then influencing it. It is not about having a balance. Its about cause and effect which shows up as balance.
It is this sort of mistaken thinking that causes people to rush around trying to “Balance” the lower perspective by finding a few more learning and growth (usually people) measures to fill it up. Of course when the criteria is, “Are they in the perspective” rather than, “Are they useful in influencing performance” you end up in a mess and don’t actually improve performance.
So please don’t fall into this trap.
If you need it, have a look at this article for an explanation of how cause and effect works on a balanced scorecard or watch this video (Strategy Mapping 101)