Six Sigma Tutorials -> Balancing Your Legal Scorecard - Part 2   by Richard Hall

The Balanced Scorecard Perspectives - Financial Perspective

The Balanced Scorecard encourages legal departments to identify their specific financial objectives as relates to the financial objectives of the entire organization. Thus, the legal department embraces the organizations financial strategy. As such, the financial objectives serve as the focus for the legal department's objectives and measures of the other three perspectives.

Every measure should be part of a cause-and-effect relationship that culminates in improving long-term sustainable financial performance. The Balanced Scorecard is an illustration of the strategy, starting with the long-term financial objectives of the organization and then linking them to other initiatives such as the operational processes of the legal department and its investment in employees, systems and outside resources that combine to produce the desired economic performance.

Clearly it is important to get the 'right' measures. Although it is people, decisions and actions that change performance, measures set the goal, and the old adage "what gets measured gets managed" is still true today.

Leading organizations are now finding new financial measures, as well as the non-financial measures. Rather than simply considering the obvious financial measures of revenue, profit, share value or dividend cover, consideration is being given to a recently developed measure: Economic Value Added. This expresses the amount of value added by the efforts of each department (the legal department for our purposes) in the organization and how those efforts help the overall financial objectives of the organization.