Historical Background Of Balanced Scorecard Approach Essay

Historical Background Of Balanced Scorecard Approach Essay

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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 from the Boston area. It was firstly developed as a performance measurement tool whereas now is associated with strategy implementation. BSC offers a quickest way to check where the organization has been and to determine where it is going. Accordingly the BSC measures the organizational performance from more than one view. Using Balanced Scorecard, strategy reaches everyone in a language that everyone can understand and makes sense for them. Thus, if a strategy is expressed in terms of targets and measurements, would be much easier for employees to know what must happen which leads to much better execution of strategy.





Keywords: Balanced Scorecard, performance measurement, strategy.























Introduction and Overview

As a primary motivation in developing Balanced Scorecard (BSC) was that managers were spending too much time analysing data rather than making decisions, also, according to Atkinson, some significant weaknesses in performance management systems were identified at that time which were dominated by “lag” financi...


... middle of paper ...


...rder to change the overall performance. Furthermore, using BSC organisations can have clearer set of goals coordinated to the vision and strategy which allows management to communi¬cate objective expectations for performance, on the other hand, also allowing a greater understanding of those objec¬tives from employees. This empowers both management and staff in making agreements upon improvements which would be beneficial for costumers and the company. Companies which use BSC are able to track financial results by monitoring the process of building effectiveness and improving where there is needed to in order to grow more in the future. Despite, there are some challenges that a company may face while using BSC, the benefits that they get by using it are much higher which means that that Balanced Scorecard become fundamental for managing information of organisation.



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