Procedure

First the overall strategy is divided into substrategies that consist of objectives. Very often there is also a further division into four perspectives: Financials, Customers, Internal Processes, and Innovation and Learning (see figure 3.7). However, you can also make divisions that suit your individual needs. For example, you can add a supplier or product perspective, if procurement or product development are critical success factors for the company (see section 7.1).

The use of various perspectives ensures that, along with the financial objectives and key figures, other areas are also included. At the same time this means that both long and short term aspects are considered.

At regular intervals, the responsible persons analyze the development of their objectives, initiatives, and key figures in the BSC. Statuses can either be set automatically using threshold values for key figures and aggregation rules, or they can be set manually. In many cases, the company links the attainment of given statuses of key figures, objectives, strategies, perspectives, or entire scorecards with variable, performance-based compensation of employees.

All persons and departments involved are connected to each other by a status reporting system, which allows them to exchange comments on the status and assessments. These may be called directly in the BSC. Experiences of BSC users substantiate the advantages of this openness. In contrast to traditional reporting systems, they find the benefit lies in an interpreted view of the strategy, with figures, facts, judgments and comments entered by the directly responsible persons. Kaplan and Norton also refer to this as "strategic learning by management" (Kaplan/Norton 1996b).