Balanced Scorecard implementation at Cattaraugus County Rehabilitation Center

¶ … Balanced Scorecard Approach by Cattaraugus County ReHabilitation Center

Unlike many so-called "management fads" that emerged over the past 20 years, the balanced scorecard approach has been shown time and again as an effective way for companies of all sizes and types of better manage their resources in ways that provide them with a competitive advantage. This paper provides a review of the relevant literature to demonstrate that Cattaraugus County Rehabilitation Center did an effective job of implementing a Balanced Scorecard approach in a fashion that reflects their organizational mission and vision. A summary of the research and important findings concerning the Center's implementation of a balanced scorecard approach are presented in the conclusion.

Review and Discussion

Balanced Scorecard Overview

The Balanced Scorecard approach was developed and refined during the 1990s by Kaplan and Norton with the goal of identifying those factors that are most responsible for driving organizational performance (Martello, 2008). In sum, the Balanced Scorecard measurement system relies on conventional financial performance metrics as well as the other factors responsible for organizational performance (Martello, 2008). According to Martello (2008), "The Balanced Scorecard is based upon the cause-and-effect relationships of the financial and non-financial measures derived from the organization's strategy" (p. 68). The Balanced Scorecard approach has been successfully implemented and administered in numerous nonprofit and for-profit organizations, including healthcare facilities (Qudrat-Ullah, Chow & Goh, 2007).

The Balanced Scorecard concept provides a framework that can be used by decision-makers to organize strategic objectives into four basic perspectives with quantifiable measures for performance as follows:

1. Financial -- the strategy for growth, comparability, and risk viewed from the perspective of the shareholder;

2. Customer -- the strategy for creating value and differentiation from the perspective of the customer;

3. Internal Business Processes -- the strategic priorities for various business processes that create customer and shareholder satisfaction; and,

4. Learning and Growth -- the priorities to create a climate that supports organizational change, innovation, and growth (Martello, 2008, p. 68).

The Balanced Scorecard's four perspectives are then used to define a corporate strategy's cause -- and effect relationship (Martello, 2008).

Evaluation of the ReHabilitation Center's Implementation of the Balanced Scorecard

It is possible to successfully implement the Balanced Scorecard approach but still not realize any substantive benefits from the process. For instance, according to Mackay (2004), "The term, Balanced Scorecard . . . is in fact a process comprising of a number of carefully interlinked steps. The real power of a properly developed Balanced Scorecard is that it links the performance measures to the organization's strategy" (p. 4). Therefore, the Balanced Scorecard approach also requires ongoing administration and oversight to achieve the approach's goals of aligning performance measures with an overall corporate strategic plan (Mackay, 2004). In this regard, a newly assigned director at the ReHabilitation Center implemented the Balanced Scorecard in an effort to "have each area within the Center aligning itself with the overall strategic plan. Each area would then develop outcome measures that were aligned with the overall strategic objectives of the Center" (Martello, 2008). Despite the natural resistance to change that is usually encountered, this initiative was burdened with the notion on the part of stakeholders that this was just another "management fad" that would soon pass by (Martello, 2008). The implementation of the Balanced Scorecard required overcoming this initial resistance, but the new director was required to attain buy-in from all managers for successful implementation of the initiative (Martello, 2008).

Some indications of the success of the initiative at the ReHabilitation Center include the fact that, "Individuals throughout the Center have become involved in focusing on the linkages between each segment of the Center and the strategic plan" and "The Center has begun to focus on the importance of stressing the interrelationship among the four perspectives in the Balanced Scorecard model which has enabled the individuals working in the Center to stress things they had not previously even thought about" (Martello, 2008, p. 79).

Conclusion

The Balanced Scorecard approach recognizes that companies are more than just their bottom lines. There are number of factors that do not appear on the balance sheet that also contribute to a company's performance. By taking these factors into account, the Balanced Scorecard approach can provide decision-makers with a better overall picture of the company. The research showed that Cattaraugus County Rehabilitation Center did an effective job of implementing a balanced scorecard approach in ways that contributed to improved organizational performance.