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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