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Balanced Scorecard: Internal Business Perspective
Increasingly companies large and small are implementing the balanced scorecard (BSC) as "a management system that enables organizations to clarify their vision and strategy and translate them into action" (Balanced Scorecard Institute. N.D.). In Kaplan and Norton's framework of the BSC they articulated four distinct perspectives: financial, customer, internal process, and learning and growth; because "financial measures alone were not sufficient to measure performance" (Gumbus, A. & Lussier, R. 2006). In the case of Duke Children's Hospital, a BSC was introduced to ameliorate deteriorating financial conditions; with expenses per case rising 42% from 1993-1996, and net margin reductions of 11 million in 1996 form two million in 1993. "In addition, staff productivity had fallen, and patient and staff satisfaction was at an all time low" (Meliones, J. Ballard, R. Liekweg, R. & Burton, W. 2001).
Introduction
The balanced scorecard implemented...
The numerous accomplishments of Duke Children's Hospital include cost reductions of 30 million in 2000, a net margin increase of 15 million from 1996 to 2000, and staff satisfaction levels at an all time high (Meliones et al., 2001). "Consistently ranked among the top pediatric specialty programs nationwide by U.S. News & World Report" (Duke Children's Hospital. N.D.), the organization has become a benchmark example of how transformational a BSC can be for business.
The internal process function of the BSC "the how of value creation" (Niven.P.N.D. Internal Process) connects with the customer perspective of the BSC, and ultimately determines the financial, and learning and growth perspectives. In developing their scorecard, management focused on the integration of their multiple data sources…
Analysis
A well implemented internal process approach depends on use of one or some combination of four clusters: operations management, customer management, innovation, and regulatory/social. In the case of Duke, operations management was the primary driver with considerable assist from innovation in the form of technology. Operations management "the basic, day-to-day routine activities necessary first to produce and ultimately deliver a product or service to the market" (Niven P.N.D. Internal Process) was the top priority for management. Drawing on the three pronged approach, the operations management focus was to get connected through the use of Key Performance Indicators (KPI), "quantifiable measurements, agreed to beforehand, that reflect the critical success factors of an organization" (Reh, J.N.D.). For Duke Children's Hospital the KPI's included: monthly productivity and cost, trends of volume, target staffing levels, and cost per patient. For Duke, the development of KPI's is a critical factor in successfully implementing the balanced scorecard" (Meliones et al., 2001).
The get results step focuses on measurement of KPI and other strategic benchmarks to "link the mission, strategy, and initiatives across the organization" (Meliones et al.,
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