Balanced Scorecard

Balanced Scorecard

Balance Scorecard Meaning and Definition

Meaning- It is a connecting bridge between the strategy and operation elements of the organization

Purpose of Balanced Scorecard  Ensure clear communication about goals  Align daily work with strategy of the company  Prioritize on product, project and services level  Monitor and measure organizational progress

Definition- It is a performance based metric which companies used for strategic management

Kaplan and Norton balanced scorecard

 The balanced scorecard was developed in early 1990  It measures firms performance using both financial and non-financial data  Aim- 1. To align the work activities of organization to its vision 2 To improve communication 3.To monitor business performance with respect to strategic goals

Background to the Balanced Scorecard

 A broad picture of status of organization can be created using different perspectives  Composite scorecard is always preferable than single measure to determine the performance progress of organization  Four important perspective of analysis of organization- customer, finance, internal, learning and growth.  Critical measures should be selected for these perspectives

Four Perspectives of balance scorecard

1.Financial Perspective 2. Customer Perspective 3. Internal Process Perspective 4. Learning and Growth Perspective

Balanced Scorecard Approach  Preparation  First round of interviews  First executive workshop  Second round of interviews  Second executive workshop  Third executive workshop  Implementation  Periodic Reviews

Preparation

Advantage of Balanced Scorecard

 Builds up the necessary focus which is needed to improve performance  Integrates the organization as one entity  Helps in reflecting organizational strategy through performance  Connects the corporate team with the operational team of organization  Improves clarity and communication among employees  Improves organizational efficiency

Disadvantages of Balanced Scorecard

 Can be confusing for employees due to large number of performance indicators  It is hard to manage balance between all four perspectives of balanced scorecard  The operational team might get busy in execution but the leadership team will still look for quick financial results.  Need to be updated regularly to maintain its relevance for the organization.

Purpose and Objective of Balanced Scorecard Objective Purpose

 To integrate the organization on one platform  To empower the employees who can now contribute in the organizational system  To measure both tangible and non-tangible aspects of performance  Overall performance improvement of organization

 To ensure that at operational level the vision, mission and value of the organization is properly reflected  To make sure that the set financial goal is achieved through a planned workout  To uplift the organization at the skill and talent level  To understand the wants and needs of customer and to set a internal processes to satisfy the customers

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