Scribd
Upload
60 views14 pages

The Balanced Scorecard Approach

The Balanced Scorecard is a strategic planning and management system that monitors organizational performance against strategic goals. It was developed in the 1990s as an alternative to solely using financial metrics to measure performance. The Balanced Scorecard approach provides a balanced perspective across financial, customer, internal process, and learning/growth objectives. Organizations use Balanced Scorecards to align activities with vision/strategy, focus on key drivers of future performance, and improve communication of strategy throughout the organization.

Uploaded by

Janki Dhankhola
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
60 views14 pages

The Balanced Scorecard Approach

The Balanced Scorecard is a strategic planning and management system that monitors organizational performance against strategic goals. It was developed in the 1990s as an alternative to solely using financial metrics to measure performance. The Balanced Scorecard approach provides a balanced perspective across financial, customer, internal process, and learning/growth objectives. Organizations use Balanced Scorecards to align activities with vision/strategy, focus on key drivers of future performance, and improve communication of strategy throughout the organization.

Uploaded by

Janki Dhankhola
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 14

The Balanced Scorecard Approach

What is a Balanced Scorecard?

The Balanced Scorecard is a strategic planning


and management system used to align business
activities to the vision and strategy of the
organization by monitoring performance against
strategic goals.
Balanced Scorecard Concept

 Was first published in 1992 by Kaplan and


Norton, a book followed in 1996.
 Traditional performance measurement that only
focus on external accounting data are obsolete.
 The approach is to provide 'balance' to the
financial perspective.
Why Use a Balanced Scorecard?
 Improve organizational performance by
measuring what matters
 Increase focus on strategy and results
 Align organization strategy with workers on a
day-to-day basis
 Focus on the drivers key to future performance
 Improve communication of the organization’s
Vision and Strategy
 Prioritize Projects / Initiatives
4 Original Business Perspectives
 The Balanced
Scorecard model
suggests that we
view the
organization from
4 perspectives.

 Then Develop
metrics, collect
data and analyze it
relative to each of
these perspectives

Adapted from The Balanced Scorecard by Kaplan & Norton


4 Business Perspectives Questions
 Financial
 What must we do to create sustainable economic value?
 Internal Business Process
 To satisfy our stakeholders, what must be our levels of
productivity, efficiency, and quality?
 Learning and Growth
 How does our employee performance management
system, including feedback to employees, support high
performance?
 Customer
 What do our customers require from us and how are we
doing according to those requirements?
Balanced Scorecard Measurements
Key Implementation Success Factors
 Obtaining executive sponsorship and
commitment
 Involving a broad base of leaders, managers
and employees in scorecard development
 Choose the right Scorecard Champion
 Beginning interactive (two-way) communication
first
 Viewing the scorecard as a long-term journey
rather than a short-term project
 Getting outside help if needed
Balanced Scorecard Example
STRATEGY MAP BALANCED SCORECARD ACTION PLAN
PROCESS: MANUFACTURING EXCELLENCE
OBJECTIVES MEASUREMENT TARGET INITIATIVE BUDGET
THEME: ROCE > xx%, VOLUME = xx,xxx units

FINANCIAL
PERSPECTIVE •Operating Cost & Efficiency • Cost/Unit, Efficiency • Monthly Monitoring
Long-Term Shareholder
• Weekly/Monthly
Value ROCE > xx% •Capacity Utilization •% Utilization
Monitoring
• Trial Prod.
•Capability Utilization • Monthly Monitoring
Improve Grow • Spare Parts Prod
Productivity Revenue • Weekly/Monthly
•Brand / Image •Warranty Cost t
Monitoring

CUSTOMER
PERSPECTIVE •Low Cost Manufacturing • Man-hour per Unit • Weekly Monitoring
OFFER PRODUCTS & SERVCIES •World-Class Quality
• Defect per Unit • Daily Monitoring
THAT ARE CONSISTENT, TIMELY Standards
and LOW-COST •World-Class Delivery Timing • Sales Delivery • Daily Monitoring
Low World •Knowledgeable & Skilled
• Direct Pass Rate • Daily Monitoring
Cost Class Partner
Customer Enhance •High Customer Satisfaction • Market Feedback • Weekly Monitoring
OPEX
Satisfaction Brand
•Reinforce Brand Image • Sales Volume
• Monthly Monitoring RM XX M
Prod. & Sales Mtg.

INTERNAL
PERSPECTIVE •Productivity • Cycle Time • Hourly Monitoring CAPEX
ENSURE OPERATIONAL EXCELLENCE WITH
INNOVATION AS WELL BEING SOCIALLY
•Delivery
• Meet Daily Plan
• WIP
• Daily Monitoring
• Daily Monitoring RM xx M
RESPONSIBLE • KAIZEN • Monthly follow-up
•Continuous Improvement
• ICC • Specific Programmed
Operational Process
•NPI • Timely Introduction • Weekly Follow-up
Excellence Innovation
• Industrial Accident • Cross Audits
Alliances with Socially •Safety & Health
• Commuting Accident • Defensive Driving
SBUs Responsible • Toxic Waste Disposal • Facility Readiness
•Environment
• ISO 9002 • Certification

LEARNING & GROWTH


PERSPECTIVE • Training and Skill
•Develop the Necessary Skills • R&D & Development
Build-up
STRATEGIC JOB & SYSTEMS
•Information Systems • ALC, Procurement, • Set-up, Test and
Availability Financial Validation
Skills Info. System • Communication
•Strategic Awareness • Alignment
Programmed
Balanced Scorecard Strategy Map
Department Level Scorecard Example
Scorecard Potential Pitfalls & Criticisms
Scorecard Potential Pitfalls & Criticisms

 Lack of a well Defined Strategy


 The balanced scorecard relies on a well defined strategy and

understanding of linkages between strategic objections and


metrics. Without this foundation the implementation could fail.
 Too much focus on the lagging measures
 Focusing on only the lagging measures may cause a lack of

priority or opportunity for the leading measures.


 Use of Generic Metrics
 Don’t just copy metrics from another firm. Identify the measures

that apply to your strategy and competitive position .


 Self-serving managers
 Managers whose goal is to achieve a desired result in order to

obtain a bonus or other self reward.


Balanced Scorecard Benefit Re-Cap
 Helps align key performance measures with strategy at all levels of
an organization
 The methodology facilitates communication and understanding of
business goals and strategies at all levels of an organization
 Strategic initiatives that follow "best practices" methodologies that
cascade through the entire organization
 Transforms an organization’s mission statement and strategic plan
from a passive document into the "marching orders" for the
organization on a daily basis.
 It enables executives to truly execute their strategies by identifying
what should be done and measured.

To date, some form of a Balanced Scorecard is used by nearly 60% of


Fortune 500 companies

You might also like

pFad - Phonifier reborn

Pfad - The Proxy pFad of © 2024 Garber Painting. All rights reserved.

Note: This service is not intended for secure transactions such as banking, social media, email, or purchasing. Use at your own risk. We assume no liability whatsoever for broken pages.


Alternative Proxies:

Alternative Proxy

pFad Proxy

pFad v3 Proxy

pFad v4 Proxy