Essay PreviewMore ↓
To provide a management system that was better at dealing with today's business pace and to provide business managers with the information they need to make better decisions, Kaplan and Norton developed the Balanced Scorecard—a management system that is a way to settle and achieve the goals and objectives for an organization. (Balanced Scorecard Institute, 2008.) The concept has quickly become recognized as an important managerial tool with the potential to increasingly improve organizational performance and has been adopted in some form by a wide variety of businesses and corporations worldwide. In an article for Ivey Business Journal, Hendricks, Menor and Wiedman state that over the past decade, the Balanced Scorecard has become a widely advocated management tool and has become largely synonymous with “best practices.” (2004.)
In simple terms, the Balanced Scorecard method is a management system that allows an organization to set, track and achieve its entire key strategies and objectives. After its business strategies are developed, they are tracked utilizing a framework to manage and create value from four different perspectives:
1. The Financial Perspective supports the strategy for growth, profitability and risk for the owner or shareholder. This is an organization’s financial requirements and performance. Some of the concerns encompassed in this perspective are:
Corporate Goals and strategy: What do we want to accomplish and how can we make that happen?
Market Share: What is our percentage?
Revenue Growth and Profit Ratio: Can we do better than we’ve done in previous quarters?
Return On Capital Employed (ROCE): What is our profit, based on our initial investment?
How to Cite this Page
"Balanced Scorecardfour Perspectives To Implementing Success." 123HelpMe.com. 24 Jan 2020
Need Writing Help?
Get feedback on grammar, clarity, concision and logic instantly.Check your paper »
- Introduction The balanced score card (BSC) is tool that is widely implemented by the various strategic levels of management of organizations with the aim of aligning business activities with the vision, mission, and values of the organization (Averson, 1998). BSC is used to provide a frame work that enables the strategic management to measure the performance of the organization involved. It also helps the management to identify the necessary courses of action needed to implement its strategies.... [tags: Strategic management, Balanced scorecard]
828 words (2.4 pages)
- Implementing Balanced Scorecards in XXXXX Council This report examines how the Balanced Scorecard could be implemented in XXXXX Council, and what the benefits and problems of implementing it would be. The report also outlines what complimentary processes could be implemented to support the Balanced Scorecard. Explicit use is made of the lessons learned from the Implementation of the Balanced Scorecard at Halifax PLC. Recommendations The Balanced Scorecard has the potential to provide numerous benefits to XXXXX Council although the Implementation of the Balanced Scorecard would be complex and would face several difficulties.... [tags: Proposal Call to Action Balanced Scorecard]
1490 words (4.3 pages)
- While more e-commerce companies are focusing on refining their sustainability practices, it can be very costly and hard to justify in today’s economy. The Balanced Scorecard is a comprehensive approach used to help businesses understand how sustainability practices can have an effect on their productivity and business strategies. This report focuses on different options that Gogotech can use to integrate sustainability measures into their Balanced Scorecard, in conjunction with issues to consider when creating quantifiable metrics.... [tags: Strategic management, Balanced scorecard, Customer]
1280 words (3.7 pages)
- Abstract Businesses use many indicators in order to measure what is going on in their markets. Good leaders of organizations every time check if they are achieving their business strategies, if they are meeting their customer needs and also the most important thing if they are making any profit. Therefore, an easy way of getting those answers is by using Balance Scorecards (BSC) which focuses on the factors that are critical for the success of the business. The historical background of Balanced Scorecard approach started at 1990s as a system developed through some innovation and changes by Robert Kaplan, an accounting professor at Harvard Business School and David Norton, a consultant also... [tags: Strategic management, Balanced scorecard]
1652 words (4.7 pages)
How Balanced Scorecards Have Been Around Since The 1990 's And Was Developed By Robert Kaplan And David Norton
- Balanced scorecards have been around since the 1990’s and was developed by Robert Kaplan and David Norton (cite http://www.brighthub.com/office/finance/articles/73400.aspx) and is used by organizations of all types all over the world, non-profit, for-profit, governmental agencies, ect., too develop a strategic planning and improve strategies within their organizational structures. A balanced scorecard will indicate weaknesses and strengths of all aspects within an organization such as financials, the business prospective, short and long term goals, customer satisfaction, knowledgeable concepts, as well as the organizations mission and vision statements.... [tags: Balanced scorecard, Strategic management]
732 words (2.1 pages)
- This part of the assignment will discuss balanced scorecard that has been implemented by UK National Health Service (NHS), how it has influenced and impacted upon the performance measures of this organisation. ‘Since its launch in 1948, the NHS has grown to become the world’s largest publicly funded health service. NHS employs more than 1.7m people and deals on average with 1m patients every 36 hours. It is also one of the most efficient, most egalitarian and most comprehensive. Even though NHS services in England, Wales, Scotland and Northern Ireland are managed separately and each might have some system differences, they remain similar in most respects and belong to a single, unified syst... [tags: British Health Care, Politics]
890 words (2.5 pages)
- Analysis of M&R’s Implementation of the Balanced Scorecard In 1990, Global Oil Corporation’s Marketing and Refining (M&R) Division was ranked last in the oil industry compared to other companies in the same industry. In 1993, M&R began transforming from a centralized functional organization to geographic business units and service companies. To improve corporate strategies and organization’s operational structure, M&R implemented a balanced scorecard using mapping strategies to achieve the organizational objectives and goals.... [tags: Strategic management, Management]
772 words (2.2 pages)
- Introduction After a year-long research with many companies, the biggest proponents of the Balance Scorecard, Robert S. Kaplan and David P. Norton, formulated the Balance Scorecard (BSC) measure which revolutionized the traditional thinking about performance measures. By looking beyond the traditional financial performance measures, the managers were able to better understand the strategy, positioning and performance of their company. The fundamental reason behind getting this broad assessment of the business was the BSC approach focused on predicting future performance of the company rather than just looking at the past performance and results.... [tags: Management, Balanced scorecard]
1179 words (3.4 pages)
Investigating the Relevance of Adopting Balanced Scorecard as a Strategic Tool for Measuring Financial Performance
- Investigating the relevance of adopting Balanced Scorecard as a strategic tool for measuring financial performance. This paper aims to debate, based on a literature review how relevant it is for companies to adopt the use of balanced scorecard as tool for measuring financial performance. The findings in literature shows that balanced scored restore the linkage between financial and non-financial measures in the operational and management control systems of most companies and helps them to achieve long-term strategic objectives.... [tags: Business Management ]
2267 words (6.5 pages)
- Robert Kaplan and David Norton developed the balanced scorecard concept in the 1990s. There was a need to measure non-tangible information. Non-tangible information can be correlated to the office environment. The processes in the office were more difficult to monitor the overall impact of the company (Jones, 2012). It was easy to monitor the performance of blue collar workers, because they produce tangible products. With tangible products comes financial data. There are a number of ways a company can measure their success.... [tags: Strategic management, Balanced scorecard]
1190 words (3.4 pages)
2. The Customer Perspective tracks a customer’s satisfaction with that organization and its performance in what it delivers—whether it be products or services. Some issues here include:
Customer Satisfaction: Do our customers like what we do?
Customer Retention and Loyalty: How can we keep or existing customer-base? How can we ensure they stay with us?
New Customer Acquisition: What can we do to reach a greater number of people?
3. The Internal Perspective charts the necessary operation required to maintain a deliver those products or services to the customers. Some key elements of consideration are:
Motivated Workforce: Are our employees ready to give their all to bring the best possible product to our customers?
Streamline Processes and Efficiency: Are we as good as we think we are? How can we be more effective?
Improvements in Technology: How can we grow with the times? Is our equipment and/or software up to date—are we as current as possible?
4. The Innovation and Learning Perspective focuses on how well an organization trains its employees, and how it gains knowledge—as well as how it, in turn uses that knowledge to maintain a competitive edge. Questions here include:
New product development: Can we continue to improve and create value?
Continuous Improvement and Technological Advancement: In which areas must the organization improve? What should it be doing to make this happen?
Human Resources Development: Is our staff what it should be? Are there ways we can tweak it to make everyone more efficient and effective?
The four perspectives have to ideally be measured, analyzed and improved upon together continuously—in order for a business to thrive. To ignore any of them would result in an imbalance, rather like sitting in a chair with a broken leg: Sooner or later, the entire thing will collapse. (Hendricks et al, 2004.)
The Balanced Scorecard clearly does not force a business to choose between financial and operational measures: By employing all four perspectives equally, it provides not only a snapshot of overall performance that focuses attention to the things that are critical for success, but also aligns all levels of work in day-to-day tasks and success factors—as well as effectively organizing and communicating its strategies to employees and shareholders. (University of Missouri, 2001.)
An organization that adopts the Balanced Scorecard method not only has to measure these critical perspectives, but also set strategies, goals and tactics to ensure that they happen. To do this, a business must make sure that its strategies and tactics exist on a single thread that ties together in a way that makes sense. This is essential in the success of the implementation of the Balanced Scorecard.
The Balanced Scorecard method must be tailored to a specific organization’s needs—and the ability to customize can be thought of as both an advantage and a hindrance—yet, there is no one template for the implementation of the method. (Balanced Scorecard Institute, 2008.) Applying another successful firm's Balanced Scorecard development process as a guideline may be helpful, but it also increases the risk of overlooking the company's own competitive position. Therefore, it is key that each firm put forth the effort to identify the measures that are appropriate for its own strategy and competitive position. (Hendricks et al., 2004.)
The process of implementing this method is not difficult and can usually be done in three meetings: Session one usually aids the client in mapping out the company’s individual needs. Session two identifies specific measurement categories. The third and final session serves to help the client determine which specific measures are most critical to the business. A fourth meeting is sometimes scheduled to check a client’s progress because—although not a difficult process—an organization will have more than a bit of work to do getting used to a new way of doing things.
Implementation of a Balanced Scorecard will also entail some associated cost: This varies from one organization to another and is based on the amount of data that a company is already collecting. Companies that capture little or no data may have added costs developing the new infrastructure and executing new software, but these costs pale in comparison to the ultimate power that the new measurements and information that the Balanced Scorecard will provide. (University of Missouri, 2001.)
One of the things that drew me to the Balanced Scorecard method as a topic for this paper was its ability to organize and communicate strategy in a clear and concise manner. It is true that there have been some initial reports of error and lag time in the recording of data and there are those who say that the heads of an organization spend too much time in the collection and analysis of data and too little time making actual decisions. Sometimes the costs of such a procedure may well outweigh improvements in organizational performance. Hence, it is quite necessary to plan to substantially cut down the number of measures existing in organizations that are outside the scope of the Balanced Scorecard.
But there is still the inherent adaptability of the Balanced Scorecard itself. It is, in fact, always evolving to meet the needs of both major corporations and start-ups alike. It is that adaptability that allows for this method to have been adopted in some form throughout Fortune 500 companies and worldwide. The potential for more and more companies to utilize a Balanced Scorecard method is likely to increase in the years to come, as managers look for tools that will facilitate improvement in both internal and external organizational performance. To this end, it remains an effective and powerful strategic management tool. Yes, it is important to be aware of the possibility of issues and problems that may occur, but all in all, the benefits rely on successful implementation and proper usage for long-term success.
1. Author Unknown. “Balanced Scorecard: The Four Perspectives.” http://tutor2u.net/business/strategy/balanced-scorecard-perspectives.html
2. Author Unknown. “What is The Balanced Scorecard?” The Balanced Scorecard University. www.balancedscorecard.org/BSCResources/AbouttheBalancedScorecard/tabid/55/Default.aspx
3. Author Unknown. “The Balanced Scorecard: An Introduction” The University of Missouri, December 2004.
4. Hendricks, K., Menor, L., Wiedman, C. “The Balanced Scorecard: to adopt or not to adopt? Ivey Business School Management Series, 2004. http://www.iveybusinessjournal.com/view_article.asp?intArticle_ID=527