Balanced Scorecard: a Measure of the Key Elements of the Company
BALANCED SCORECARD
The Balanced Scorecard is a measure of the key elements of a company’s strategy, ranging from continuous improvement and partnerships, to team work and innovation.
Organisations design their unique balanced scorecard based upon their unique constraints. A company’s performance depends on how it measures its performance.
Managers cannot afford to rely on either financial or operational measures exclusively. No single measure provides a clear performance target focusing on the critical areas of a business. Thus there is a need for balanced representation of both financial and operational measures.
Kaplan and Norton have devised a balanced scorecard- a set of measures that give top managers a quick but comprehensive view of the business. The balanced scorecard consists of –
a)financial measures that measure the actions already taken.
b)The scorecard also contains operational measures such as customer satisfaction, internal processes and the organisation’s innovation and improvement activities.
The balanced scorecard can be compared with dials and indicators in an airline cockpit.
Pilots need detailed information of many aspects of flight ( wind speed, level of turbulence, height above the ground, temperatures, etc. )for navigating and flying an airplane.
These information is necessary to get an idea of the current and predicted environment.. Relying on an single measure can be fatal. Just like a pilot, a manager should be able to view performance in several areas at the same time.
Using a balanced scorecard, managers can look at the business in terms of four dimensions. The balanced scorecard answers four basic questions-
1. HOW DO CUSTOMERS SEE US?
GOALS
MEASURES
New products Percentage of sales from new products/proprietary products
Responsive
On-time delivery ( defined by supply customer)
Preferred
Share of key account’s supplier purchases
Customer
Number of
The Balanced Scorecard is a measure of the key elements of a company’s strategy, ranging from continuous improvement and partnerships, to team work and innovation.
Organisations design their unique balanced scorecard based upon their unique constraints. A company’s performance depends on how it measures its performance.
Managers cannot afford to rely on either financial or operational measures exclusively. No single measure provides a clear performance target focusing on the critical areas of a business. Thus there is a need for balanced representation of both financial and operational measures.
Kaplan and Norton have devised a balanced scorecard- a set of measures that give top managers a quick but comprehensive view of the business. The balanced scorecard consists of –
a)financial measures that measure the actions already taken.
b)The scorecard also contains operational measures such as customer satisfaction, internal processes and the organisation’s innovation and improvement activities.
The balanced scorecard can be compared with dials and indicators in an airline cockpit.
Pilots need detailed information of many aspects of flight ( wind speed, level of turbulence, height above the ground, temperatures, etc. )for navigating and flying an airplane.
These information is necessary to get an idea of the current and predicted environment.. Relying on an single measure can be fatal. Just like a pilot, a manager should be able to view performance in several areas at the same time.
Using a balanced scorecard, managers can look at the business in terms of four dimensions. The balanced scorecard answers four basic questions-
1. HOW DO CUSTOMERS SEE US?
GOALS
MEASURES
New products Percentage of sales from new products/proprietary products
Responsive
On-time delivery ( defined by supply customer)
Preferred
Share of key account’s supplier purchases
Customer
Number of