Scorecard Best Practices

What Is an Organizing Framework and Why do We Need One?

Historically, most organizations used primarily financial indicators to understand where they stood with respect to the overall success of their business. Financial indicators certainly provide useful information about an organization's financial position and past performance; however, they provide little indication about the performance of nonfinancial strategic objectives and initiatives (which tend to help predict future performance). Consequently, organizations have introduced other categories of indicators to provide a more balanced view of the results for the long and short term. These categories of indicators, frequently referred to as perspectives, may include those related to customers, stakeholders, employees, safety, efficiency, waste, learning, growth, processes, and operations. Each organization must determine which perspectives best define how it wishes to represent its business model, and to provide the best view for current and future performance. This group of perspectives forms the foundation of the organizing framework.

The framework highlights the fundamentally important aspects of the business model. Strategic objectives, goals, initiatives, and measures are defined according to the framework's perspectives. Reporting on results and targets of the objectives, goals, initiatives, and measures can be organized according to the framework's perspectives. This type of categorization makes it easy to see, at ...