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The Balanced Scorecard Hierarchy

With the scorecard and strategy map in hand, managers then break broad goals
down successively into vision, strategies, strategic initiatives, and metrics. As an
example, imagine that an organization has a goal of maintaining employee
satisfaction in its vision and mission statements. This would be the organization’s
vision in the domain of learning and growth, since employee satisfaction is indirectly
related to financial performance. Strategies for achieving that learning and growth
vision might include approaches such as increasing employee-management
communication. Initiatives undertaken to implement the strategy could include, for
example, regularly scheduled meetings with employees. Metrics could include
quantifications of employee suggestions or employee surveys. Finally, managers
would want to test their assumptions about the relationship between employee
satisfaction and the downstream areas such as internal, customer, and financial
performance. For example, satisfied employees may be more productive and less
likely to quit (internal), which leads to better products or services and customer
relations (customer), which leads to lower employee recruiting and training costs and
greater sales and repeat sales (financial). This sequence of causal relationships is
summarized in the following figure.
The Strategy Map: A Causal Relationship between Nonfinancial and Financial
Controls

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