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explain balance scorecard and its characteristics
explain balance scorecard and its characteristics
explain balance scorecard and its characteristics
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Key Performance Indicators (KPI)
According to Parmenter (2011, p. 13), Key Performance Indicators (KPI) are a set of measures that assess the organisation performance on how effective the organisation achieve its objectives which are crucial for current and future success of the organisation. Key Performance Indicators (KPI) has been widely used by many organisations and for organisations to identify the right KPIs; it has to have a clear objectives and strategic directions that align with KPIs set.
For Key Performance Indicators (KPI) to be successful, it needs to have the following characteristics:
• Specific and concise - This emphasized that KPIs has to be clear and focused in order to avoid any misinterpretation occurring.
• Ambitious
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The relevant perspective of balance scorecard (BSC) that affected in this case would be internal business practice.
• In addition, the late flights will have a negative impact on supplier relationships and servicing schedules which will result a poor service quality. Moreover, with the increase number of customer dissatisfaction will increase staff dissatisfaction due the staff receiving constant customer complained. The increase of staff dissatisfaction will impact the innovation and learning perspective and internal business practice perspective of balance scorecard (BSC).
Key Performance Drivers (KPD)
Cole (2010, p. 362) stated that Key Performance Drivers (KPD) is an action taken by any business organisation to improve or decrease its key performance indicators. Key Performance Drivers (KPD) serves the following purpose:
• It helps management to identify the specific area that needs to be highlighted by the organisation.
• Provide the foundation for the metrics setup that measure and evaluate the completion of its highest impact and most critical sales activities.
Example of Key Performance Drivers (KPD) in an
Metrics are very important in Operations Management within an organization because it provides functions such as control, reporting, communication, opportunities for improvement and expectations. It is a certifiable measure stated in either quantitative or qualitative terms types of measurements. In addition, metrics has different types of categories in the organizations. One of which is “Organizational Focus”, that have four different types of level within the organization or firm. 1. Organizational Metrics – this type of measure, capture and describe the performance of an organization (i.e.…market share and rate of return). 2. Product Metric – it measures cost per unit, contribution margin per unit, or growth in sales.
Common types of Key Success Factors include Technology related KSF’s, Manufacturing related KSFs, and Marketing related KSFs. (62-63)
All operations have in common three main characteristics: inputs, actions (process) and outputs. When measuring performance, we need to consider these component parts having always in mind the five performance indicators.
Critics of the Baldrige process say that criteria are too focused on business results and not focused enough on quality. As it stands, the customer and market focus category counts for 450 of the criteria’s possible 1,000 points. (Schonberger, 2001) Richard Schonberger, president of Schonberger and Associates, a performance management consulting firm, argues that “the category of business results shouldn’t be in the criteria at all” (Schonberger, 2001).
Choosing a KPI as the desired organizational improvement for a capstone project is not a good idea. KPIs are used to measure how well an organization is performing; subsequently, they do not address strategic goals and objectives of an organization. KPIs present an overall picture of long ranged improvements based on a multi-cycle action project; consequently, they do not provide a plan of improvement that can be utilized immediately to solve a problem that can address the performance level of the organization.
In addition, only three to four key performance indicators that define success for the entire business should be reported by the analyst. Action dashboards are an effective template for utilizing the trinity strategy in executive dashboards. The purpose of the action dashboard is to influence understanding, and action from the highest possible decision makers in the organization (Kaushik, 2010). By reporting the most essential metrics in an action dashboard, executives receive a detailed, and concise view of the overall health of the
These benefits are best discovered and maximized if used in conjunction with KPIs. A KPI is a key performance indicator and they allow a company to measure and manage ...
The fact that so many businesses vary on what they examine the most crucial KPIs, makes it that much more problematic to characterize what they are. In short, a KPI is a part charged on important financial and non-financial business clue that gives an expression of profit or loss for the business.
The purpose of performance measurement are communication, motivation, control and improvement. The performance drivers should include this few parts, personnel development, employee attitudes, public responsibility, balance between short-range objective and long-term goals and product leadership. And these parts should affect the customers’ satisfaction of our company.
Before the introduction of the balanced scorecard tool, only financial measures were used to determine the organi...
Performance management is a useful and powerful tool that can be used by managers to identify what areas of their organisation they need to improve to increase the organisation’s overall performance. The idea of a balanced scorecard enforces a sensible distribution of resources and effort across all aspect of performance an organisation is, or should be, concerned with.
Airports can use certain tools to measure their own performance to check whether their operations are in-line with the airport objectives. Airport performance measures are designed to help airports around the world in their performance management efforts by providing a useful set of performance measures across a number of categories. The measures are divided into six categories, referred to as Key Performance Areas (KPAs). The 42 individual measures are referred to as Performance Indicators (PIs) (Wyman, 2012).
Performance management is a management tool used to value, monitor and measure a company’s strategies that ensure the efficiency and effectiveness of its product delivery. This management tool does not focus on the organisation and on its employees as well as stakeholders. It is a continuous process that entails that managers make sure that organisational and employee values are corresponding (Aguinis, 2005,p.1/2-1/5). Performance Management brings about the competencies in the employees, increases self-esteem by giving feedback to employees, there is a low number of lawsuits because it helps understand the company better (eThekwini Municipality, 2008,p.10-11). According to Pride, Hughes and Kapoor (2011, p.288) performance management creates motivation for employees; one theory of motivation is of Expectancy, which stipulates that employees satisfaction is driven by expectations of what an organisation will offer in return.
A Balanced Scorecard can be defined as a “performance management tool which began as a concept for measuring whether the smaller-scale operational activities of a company are aligned with its larger-scale objectives in terms of vision and strategy” (Wikipedia 2009, ¶ 1). Scents & Things will need to develop a balanced scorecard that will assist in meeting and help define the company’s values, mission, vision, and SWOT analysis. The balance scorecard is made up of four perspectives; financial, customer, learning and growing, and internal process. This paper will define each of the four perspectives objectives, performance measures, targets, and initiatives. The paper will also show how the perspectives relate to Scents & Things vision, mission, values, and SWOTT analysis.
By 1980s, the use of traditional performance measurement was perceived insufficient to help the managers maintain the company ...