Determining and communicating the value of the special library

Information Outlook, March, 2003 by Joseph R. Matthews

One approach to communicating value and performance that has taken on an increasingly important role in profit, nonprofit, and government agencies is the use of the balanced scorecard.

What Is the Balanced Scorecard?

The scorecard approach is based on answering four questions:

* How do customers see the library? (customer perspective)

* At what must the library excel? (internal perspective)

* Can the library continue to improve and create value? (innovation and learning perspective)

* How does the library look to stakeholders? (financial perspective)

Answering all four questions lets you see "whether improvements in one area may have been achieved at the expense of another." Using this approach means that you can consider disparate elements of the competitive agenda, such as becoming more customer focused, shortening response times, improving collection quality, emphasizing teamwork, and developing new services together.

Viewing a variety of performance indicators that are focused on the four perspectives allows management to take a broader perspective. The library does not just pursue circulation or customer satisfaction or other services in isolation. Rather, the scorecard allows the management team and library staff members to see how their actions are reflected in the performance indicators (Birch, 2000; Brown, 2000; Kaplan and Norton, 1996a; both Kaplan and Norton, 1996b; Kaplan and Norton, 1994; Kaplan and Norton, 1993; Kaplan and Norton, 1992).

The Original Balanced Scorecard

The idea behind the scorecard is to formulate targets in each of the four areas (three to five measures in each) and design measures for each broad strategy.

Customer Perspective (users)

Customer concerns tend to fall into four categories: time, quality, performance and service, and cost. A variety of customer-focused measures can be employed, including customer satisfaction (although customer satisfaction surveys must be used cautiously in a library setting because of their positively skewed results).

Internal Perspective

Managers need to focus on the critical internal operations that enable them to meet customer needs. This part of the scorecard looks at the processes and competencies at which a special library must excel. For example, time and cost of processing new materials or cost and quality of document delivery might be addressed.

Innovation and Learning Perspective

This perspective looks at the library's ability to grow, learn, develop, and introduce new services. It focuses on measures such as introduction of new services, technological infrastructure, and the skills of library staff members.

Financial Perspective

In the nonprofit and government arenas, financial measures such as profitability are not relevant. But the library can, and must, demonstrate that it makes effective use of the funding that is provided. For libraries in the for-profit sector, there should be a clear reporting of the financial impact of the library.

The assumption is that the innovative perspective (dealing with infrastructure and the quality of staff) will create a more efficient operation (internal perspective). The combination of staff, infrastructure, and internal operations will lead to products and services that will be more appealing to customers. The customers are then going to purchase more products and services, leading to better financial results (financial perspective).