IMA Addendum Sheet

C5.3 The Balanced Scorecard

This system, although American and developed in the business sector, provides a useful framework to consult when you are trying to draw up performance measures for the library. The system is based on the understanding that no single measure (in business, usually financial in libraries usually loans/visits) can focus attention on critical areas of the service. However, it can be difficult to design a balanced set of measures that gives a comprehensive overview on your own. The Balanced Scorecard sets out to provide help in this area. "It allows managers to look at the business from four important perspectives and yet minimises information overload by limiting the number of measures used...

The Balanced Scorecard forces managers to focus on the handful of measures that are most critical."

The scorecard approach is based on answering four basic questions:

• How do customers see us?
• What must we excel at? (internal perspective)
• Can we continue to improve and create value? (innovation and learning perspective)
• How do we look to shareholders (financial perspective)

Answering these questions together lets you see "whether improvements in one area may have been achieved at the expense of another". Even the best objectives can be achieved badly. Using this approach means that you can consider disparate elements of the competitive agenda like becoming more customer orientated, shortening response times, improving stock quality, emphasising teamwork, and developing new services, together. Viewing performance and management become more rounded. You do not just pursue loans, or customer satisfaction or expenditure on fiction in isolation.

The idea behind the scorecard is to formulate targets in each of the four areas below (3-5 in each) and to design a measure(s) for each "goal".

Customer perspective (users)
"Customer concerns tend to fall into four categories: time, quality, performance and service, and cost."

You need to articulate goals for each of these areas and then translate the goals into specific measures.

It is important to remember that cost does not only refer to the money charged. "An excellent supplier may charge a higher unit price for products than other vendors but none the less be a lower cost supplier because it can deliver defect-free products in exactly the right quantities at exactly the right time ... and can minimise ... the administrative hassles of ordering, invoicing and paying for materials."

This is a vital part in relation to Best Value, compete; VFM and for SLS demonstrating value to schools.

Internal perspective
"Managers need to focus on these critical internal operations that enable them to meet satisfy customer needs."

This part of the scorecard looks at the processes and competencies you must excel at e.g. technological capability; introduction of new ideas; skills, monitoring/evaluation/consultation mechanisms.

Innovation and learning perspective
This looks a the company's ability to grow, learn, develop and introduce new services.

It focuses on measures such as take-up of new services; and time taken to develop and introduce new approaches.

Financial perspective
One company "stated its financial goals simply 'to survive', to succeed, to prosper". For delegated SLS measures like cash flow, growth in customer base, and income by services provided or by school, are critical.