BSC in Defense

 

In a performance oriented era, organizational efficiency and effectiveness plays a central role no matter the industry or sector involved. Accordingly, the performance aspects in the defense sector started to be viewed and considered with primary interest in the last decade. As an institution, that is considered “the last shield of defense in wartime, and the care keeper of national security for socio political stability and economic growth during peacetime” (Lee, 2006), the military is a major servant of the public interest.

 

Hence, one of the most important challenges for the defense institutions and the sector overall is to try to achieve organizational efficiency and effectiveness by building the right performance management architecture.

 

One of the management concepts with increased adoption in the defense sector is the Balanced Scorecard. United States Army, British Defense Ministry or Canadian Department of National Defence, are amongst the recognized implementers of performance architectures based on Balanced Scorecard.

 

BSC - United States Army

According with the Harvard Business Review website (2010), summarizing the report article: U.S. Army, a Balanced Scorecard Hall of Fame Profile: the Balanced Scorecard (BSC) enabled the U.S. Army to become leaner, more nimble, and technically advanced to achieve its mission of serving the American people, protecting national interests, and fulfilling military responsibilities. Using an aggressive BSC rollout through automation and education, the U.S. Army managed to transform its organization of military personnel stationed around the globe”.

 

BSC – Canadian Department of National Defense

According with Gillis (2004), one of the key characteristics of the Canadian Department of National Defense (DND) Performance Management framework is the Balanced Scorecard.  As the main purpose of the defense forces is not financially driven, but is primarily directed towards delivering improved national security services for citizens, the DND Balanced Scorecard perspectives correspond to the four major key areas listed below:

  • Shape future defense security outcomes
  • Deliver defense outputs
  • Manage program resources, and
  • Professional, effective and sustainable defense team.

 

For each perspective, key strategic objectives are established and the cause and effect linkages are established between them in the Strategy Map. Key performance Indicators are identified under each perspective, linking the strategic goals with the Defense Task and Change initiatives (Gills, 2004)

 

BSC in Defense - Strategy Map - BSC20.com

Resource: adapted after Gill, 2004

 

Ministry of Defense, United Kingdom

Another major defense institution that is adopter and user of the Balanced Scorecard is the United Kingdom Ministry of Defense. The Ministry of Defense (2009) bases its annual performance reporting entirely on the institutional Balanced Scorecard framework. The performance results of the institution are described and analyzed in detail from the four Defense Balanced Scorecard perspectives:

  • Purpose
  • Resources
  • Enabling process
  • Future

 

The Defence Balanced Scorecard is based on the United Kingdom Defense Plan and outlines the main strategic objectives for the period 2008-2012.

 

The aim of the Defense strategy is “to deliver security for people of the United Kingdom and the Overseas Territories by defending them, including against terrorism; and to act as a force for good by strengthening international peace and stability”.


United Kingdom – Defense Balanced Scorecard


BSC in Defense - Balanced Scorecard - BSC20.com

Source: Ministry of Defense, United Kingdom, 2009

 

References

  • Gillis, L., G., (Colonel) (2004), Performance Measurement, a critical element in transformation of the Canadian Forces, Canadian Forces College.
  • Lee, D. (2006), Towards a way to enhance organizational effectiveness in the defense sector, The Korean Journal of Defense Analysis, Vol. 18, No. 1, pp. 135-159.
  • Ministry of Defense, United Kingdom (2009), Annual Report and Accounts, Vol. 1, 2008-2009, including Annual Performance Report, available at: http://www.mod.uk/NR/rdonlyres/0981769C-D30A-469B-B61D-C6DC270BC5C5/0/mod_arac0809_vol1.pdf.

BSC in practice : By industry

 

Certified KPI Professional training

smartKPIs Premium

Performance Management Books