Get Started with the Balanced Scorecard

Learning Objectives

After completing this unit, you’ll be able to:

  • Describe why broadly measuring organizational performance is critical to success.
  • Explain how a balanced approach to performance is important for your organization.
  • Use the Balanced Scorecard.
  • Describe how deeply interrelated business performance is across the four pillars.

This module was produced in collaboration with Claremont Graduate University, Drucker School of Management.

Introduction: Balance for Health

In this module we start by exploring why high performing organizations take a balanced approached to performance measures, and examine a best practices framework management teams rely on. We then take a look at how admins and Salesforce can contribute—and have some fun along the way!

By establishing the right measures across the organization you can drive alignment and performance
Objectives are needed in every area where performance and results directly and vitally affect the survival and prosperity of the business... Peter F. Drucker

We all know that a balanced diet is good for our bodies. We can’t eat only dessert, carbs, or protein—although many of us have tried! We need to balance our diets across a range of food groups.

The same is true for an organization. Executives need to be concerned with balancing several dynamics—customers, operations, human resources—and, of course, improving the bottom line. And, as we know too well, all these things are interrelated when it comes to achieving success.

It is with this thought in mind that the Balanced Scorecard was developed by Harvard professor Robert Kaplan and his colleague David Norton. It’s widely used throughout the world today. Like the essential food groups, the main idea behind the scorecard is to provide a balanced view of the organization across four main groups or pillars (see Figure 1).

Within each pillar, organizations develop metrics to provide insights that can drive high performance. Let’s take a look at the scorecard and how to use it for our purposes. There are four pillars, each of which influences, and is influenced by, the others and ties to the organization’s vision, mission, and strategy.

Vision Mission Strategy

Figure 1. The Balanced Scorecard

Each organization chooses the metrics to use in each pillar. Some questions to think about as we move through this unit are which metrics does your organization use to gauge:

  • Perceptions of customers and external stakeholders
  • Operations and internal process efficiency
  • Financial performance and stewardship
  • Organizational capacity, knowledge, and innovation

If you are in a nonprofit organization and wondering if the Balanced Scorecard can help your organization, the answer is a resounding, yes it can! Nonprofits can achieve their mission of making a social impact by creating organizational capabilities, fundraising to support the cause, maximizing the use of its funds operationally, and delivering value to stakeholders.

Pillar 1: Perceptions of Customers and Other External Stakeholders

Pillar 1: Customers and other external stakeholders

Customer and market conditions are changing constantly, and because your business starts and ends with the customer, you need to know where they stand. Do your customers love you? Will they put their reputations on the line and recommend you to others? How can you be sure?

This pillar consists of metrics that help you determine if customers are happy and the likelihood they will continue to do business with you. There’s no one perfect metric that can answer this, so many organizations rely on several metrics for this pillar, such as customer satisfaction, Net Promoter Score (NPS), repeat purchase and loyalty, and market share.

Customer Satisfaction

For a long time, this was the main measure of customer health. The measure was simple: Customers were asked how satisfied they were with the organization’s product or service. No doubt you have answered many, many customer satisfaction surveys over the years, asking you to rate a hotel you stayed at, the meal you ate at a restaurant, or even the clothes you purchased. Customer satisfaction measures continue to be widely used.

Unfortunately, customer satisfaction measures are poor predictors of whether customers will return and buy from you again. Customers often say they’re satisfied, but switch to another brand anyway. This is why measures, such as the Net Promoter Score (NPS), and measures of customer loyalty and repeat purchases are also used.

Net Promoter Score

Many organizations and employees live and breathe the NPS and know the methodology well. For those who do not, the basic idea is that customers are asked how likely they are to recommend your product or service to friends and colleagues, typically on a 10-point scale. Your NPS score is the percentage of “promoters,” those respondents who give you a score of 9 or 10, minus your “detractors,” those who score you 6 or less (Figure 2). Scores are known to vary across industries, so be careful how you benchmark your performance!

Detractors Passives Promoters

Figure 2. NPS is a widely used customer perception metric

Repeat Purchase and Loyalty

These measures are usually determined by looking at the purchase and retention history of existing customers. If you think about it, acquiring new customers is often harder and more expensive than retaining existing customers. Customer retention is often viewed as the foundation of the organization’s financial performance and should be heavily scrutinized. Poor customer retention means your existing customers are leaving you—something to avoid!

Market Share

Companies need to keep an eye on market share numbers to see how well they’re doing with customers in comparison to the competition. Market share can be thought of as your company’s piece of the pie—the percent of market volume captured by your company. Market share is typically reported as a percentage of sales, so reporting and comparing market share requires knowledge of total market sales and the sales of competitors as well.

Market shares matters. In some industries, a slight shift in market share can translate into billions of dollars. Take the global carbonated soft drink market, estimated to be worth $341.6 billion [1]. In this market, Coca-Cola has a 48.4% share, and PepsiCo has 20.5%. Every percentage point of market share is worth $3.4 billion!

In some industries, market share can shift quickly. A good example is the swirling popularity of different social media platforms [2]. For example, Pinterest launched in 2010–11 and quickly rose to become the third-largest social media platform before plateauing, while other social media solutions, such as Twitter and Reddit, have gained popularity. Those under 25 are heavy users of Snapchat, but also bounce around on Instagram and other apps that seem to come and go. It’s hard to predict what the next hot social media platform will be.

You get the idea. Market share is interesting and can provide managers with insights into the dynamics of the market and an organization’s place in it. Thinking about the examples above, why is it that YouTube is doing so well? What can Twitter do to improve its market share? All great questions!

For each measure, Salesforce can play a role in creating information that the organization needs to be successful.

Table 1. Examples of Salesforce’s role in improving customer metrics

Salesforce Use
Customer satisfaction
Sprint is rated No. 1 for customer satisfaction and the third-largest telecommunications provider in the United States.
Sprint has integrated the use of Sales cloud,, Chatter, and apps for customer service.
Net Promoter Score
BSkyB, a subsidiary of 21st Century Fox, has implemented an NPS program that surveys about 100,000 customers a day, with over 3 million pieces of feedback a year to help capture and act on customer feedback.
Using MobileConnect with Salesforce Marketing Cloud, BSkyB is able to send personalized SMS messages, allowing customers to provide feedback via their mobile phones.
Repeat purchases and loyalty
Boutique hotel leader Kimpton Hotels developed Kimpton Karma rewards tailored to specific customer preferences.

Kimpton draws on information from Marketing Cloud and develops custom rewards apps from Salesforce AppExchange.
Market share
Black & Decker increases market share by improving B2B marketing and shortening the sales cycle.
Black & Decker uses Salesforce Pardot to segment and automate marketing messaging and increase follow-up success.

Pillar 2: Operations and Internal Business Processes Efficiency

Pillar 2: Operations and Internal Business Process

Is your sales team good, great, or off-the-charts awesome? Is your production and supply chain keeping up? How effective is your customer service department? Companies are complex systems, so understanding how all these pieces fit together and influence performance is crucial for success.

This pillar helps organizations think through their interrelated operations so that they can answer the question: Are we meeting customer and stakeholders’ expectations in a cost-effective and timely manner?

These considerations affect all organizations. Take Boeing. It needs a steady stream of sales just to cover the cost of its large engineering and manufacturing operation. With over 1,000 global suppliers, and each plane requiring up to several million high-quality parts, a problem with a few suppliers or even a few parts ripples through the business, causing serious financial consequences and creating customer service nightmares. Boeing learned long ago to monitor and manage the entire spectrum of its operations to be successful.

To prevent information overload, metrics are typically focused on the core competencies of the organization, that is, what it needs to master to meet customer and stakeholder expectations, which vary for different companies based on the nature of their business. Kaplan & Norton noted four value creation areas that organizations need to master (see Table 2). Ultimately, these metrics provide visibility into performance and help inform positive changes as long as the organization is willing to act.

Table 2: The components of the operations and business process pillar

Operations Management
Customer Management
Innovation Management
External Influences Management
  • Supply chain
  • Production
  • Distribution
  • Inventory
  • Quality control
  • Selection
  • Acquisition
  • Retention
  • Growth
  • R&D
  • New product development processes
  • New product portfolio management
  • New product launches
  • Political, environmental, social, technical, and economic forces
  • How external forces impact practices, for example, health and safety
  • Relationship with immediate community

A good example is McDonald’s, the iconic fast-food chain and home to our delicious friend, the Egg McMuffin. For years, customers told McDonald’s to serve breakfast all day, but no one acted on it. Instead, McDonald’s launched salads, chicken wraps, and a host of other foods to entice customers with limited success. When McDonald’s finally adjusted its operations to offer breakfast all day, sales went up. So much so, they’re even looking to expand their breakfast menu, striking while it’s hot! Perhaps they should listen to their customers more often!

As a Salesforce administrator, you no doubt have experience in this pillar, such as providing visibility into the customer acquisition and retention processes, including pipeline metrics and conversion rates. You might also have reports and dashboards that serve multiple departments whose activities are interrelated, such as marketing, sales, and service.

Pillar 3: Organizational Capacity, Knowledge, and Innovation

Pillar 3: Organizational Capacity, Knowledge, and Innovation

This third pillar focuses on the kinds of things that allow the organization to learn, grow, and innovate. For an organization to improve, attention is often placed on culture, leadership style, alignment, and teamwork. Organizations assess climate and employee attitudes, calculate employee Net Promoter Scores—how likely is it that an employee will recommend the organization to friends as a place to work—and measure employee retention.

Because sustainability and innovation are important for organizational success, measures can also include how many new ideas employees contribute or how many products the organization launches that are new or improved.

In 1948, 3M introduced the 15% program, which allowed all employees to spend 15% of their time (just under one day a week) on new product development. Following the introduction of this policy came the launch of famous products, such as Scotchgard and Post-it Notes. 3M has taken its approach to innovation for organizational sustainability further and now wants innovations to support sustainability goals. 3M’s efforts have made them a pioneer in this area.

Pillar 4: Financial Performance and Stewardship

Pillar 4: Financial Performance and Stewardship

As the name suggests, this pillar helps determine how organizations are performing financially, with specific attention to financial health and performance targets.

In general, executives are tasked with increasing the overall value of the organization. So most organizations have several high-level metrics, such as revenue and profit growth and free cash flow, that analysts use to calculate the organization’s overall value. These metrics can be found or derived from the three main financial statements: income statement, balance sheet, and statement of cash flows.

Based on their performance, organizations typically seek to develop or adjust strategies to improve productivity and generate growth (see Figure 3).

Examples of Strateies to improve financial peformance and Stewardship
Figure 3. Examples of strategies to improve financial performance and stewardship

Productivity strategies are often aimed at reducing costs, such as process improvement and automation or outsourcing functions like payroll or IT. Examples of decisions that make better use of assets include car dealerships staying open until 10 pm instead of 6 pm, seven days a week, or adding another shift at the warehouse to operate 16 hours a day instead of 8.

In terms of growth strategies, organizations launch new products (for example, Apple launches Apple TV or Amazon starts to make movies and TV shows), enter new markets, or find new markets for existing products (for example, Costco opens up in the United Kingdom or Harley Davidson pursues women riders). They also implement strategies to increase the average amount spent by each customer. Examples include Starbucks offering specialty drinks or cable companies bundling channels or offering services, such as phone and high-speed Internet.

There’s also a wrong way to go about this. Do you remember Enron? How about Worldcom? These two gargantuan companies allegedly engaged in suspect accounting practices to inflate their financial performance and then collapsed in epic fashion for all to see. Unfortunately, many innocent people lost their jobs and life savings as a result. These companies are examples of what not to do, especially if you’re looking to avoid a little jail time!

As an admin, you play a critical role in promoting the right way by developing financial sales forecasts, tracking sales performance, and helping with ROI calculations for marketing efforts that can support sales.


The Balanced Scorecard helps organizations establish a broad set of metrics for tracking and achieving high performance across the organization, and provides visibility and insights into what matters most. It also serves to remind us of the interconnected nature of business performance, that is, how performance in one pillar can affect performance in the other pillars.

Before jumping into how admins can help, let’s take a look at an example of these principles in action in the next unit. All aboard!

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