Continued from page 1
•Communicates priorities and direction •Focuses on improving processes, not functions •Aligns operational activity with strategic goals •Provides necessary leverage for change
The benefits of such an approach can be financially dramatic. It has been estimated that impact of adopting a balanced approach to measurement (in legal department alone) is a profitability increase of between 15% and 25% for a typical Fortune 500 company.
The balanced Scorecard (R. Kaplan and D. Norton, Harvard Business Review 1992) is one such a framework.
About The Balanced Scorecard Methodology
The Balanced Scorecard methodology, developed by Robert Kaplan and David Norton, translates an organization’s business strategy into an understandable action plan. Using Balanced Scorecard technique, an organization can clearly define strategic concepts like value, quality and satisfaction. The Balanced Scorecard then becomes a framework for implementing strategies related to those concepts. This range of uses makes Balanced Scorecard an integration hub for strategic management.
With balanced scorecard, corporate legal managers can measure how outside entities and individuals create value for department and organization as a whole. They can determine what department must invest in or take away from to improve that performance. While maintaining an interest in financial returns, Balanced Scorecard reveals non-financial drivers of superior, long-term value creation.
In addition, The Balanced Scorecard enables legal managers to view well being of organization from four important perspectives or quadrants. Each quadrant of scorecard reports performance measures in form of key performance measures or indicators (KPI). The Balanced Scorecard is a mechanism for translating an organization’s vision and strategy into a coherent set of objectives and performance measures. It uses measurement to communicate drivers of current and future success.
Read about Balanced Scorecard Perspectives in Part 2 of “Balancing Your Legal Scorecard”
Richard Hall is founder/CEO of Hall’s Benchmarks & LexTech, legal information companies that help public & private entities Manage the Business of Law©. Rich’s meld of technology & statistics produced a techno-analytical model of law practice. In 1994, he invented linguistic SW which automatically budget codes, reports GAAP accrual financials & conducts compliance analysis. t 530.820.4070, f 530.820.4071, firstname.lastname@example.org