Designing a balanced scorecard for the evaluation of a local authority organization

Abstract

Introduced in the early 90’s by Kaplan and Norton, Balanced Scorecard (BSC) composed a contemporary framework for the evaluation of a company or an institution, translating mission and strategy into goals and measures, organized into four different perspectives: Financial, Customer, Internal Process and Learning and Growth. Several variations of the initial scorecard, developed in the years to follow, was intended to be applied by non–profit and government organizations, such as Local Authority Organizations (LAOs), where traditional evaluation methods, focused mainly on the financial performance, were not the most appropriate tools for their performance measurement. The purpose of this paper is to describe and present the design of a BSC in order to be applied to the evaluation of a LAO. The main alteration of the proposed scorecard is the modification of its architecture, where the Customer Perspective, which in the case of a LAO is named Stakeholders Perspective, is placed on the top of the scorecard, instead of the Financial, and is actually identical to the organization’s mission. For each one of the four perspectives of the model, a three–level sub–system is employed which contains one strategic goal, three to four objectives and up to five performance drives for every objective. The design of the scorecard starts with the definition of the strategic goal of every perspective and the process is completed with the selection of the objectives and the performance drivers of the four scorecard’s perspectives. The whole model is presented analytically in a table.