The balanced scorecard acts as a measurement system, strategic management system, and communication tool. The balanced scorecard is a widely adopted performance management framework first described in the early 1990s. Designmethodologyapproach the paper contributes to the bsc debate by collecting insights from empirical. The aim of this paper is to debate various critical issues in the implementation and use of the balanced scorecard bsc as a management control tool. The balanced scorecard can be cascaded in this manner to align the strategy thoughout the organization. Developed by robert kaplan and david norton, the balanced scorecard is an extremely influential management tool that remains enduringly popular with companies around the world. The perspectives included in this balanced scorecard were operational, staff, citizen and resources. Balancing dilemmas of the balanced scorecard because there is no selfevident solution to these critical issues, they are termed dilemmas. The effect of balanced scorecard on strategy participation. The balanced scorecard is a workshop technique for establishing the most useful high level measures by which to monitor your companys units progress and performance against its strategic goals. It is dedicated to the issue of potential implementation of balanced scorecard as a strategic management. They realize that no single measure can protives understand that their organizations measure vide a. Transforming the balanced scorecard from performance measurement to strategic management. First, there is a lot of evidence supporting an argument that a balanced scorecard translates a strategy into operational terms kaplan and norton, 1996.
The balanced scorecardmeasures that drive performance. The balanced scorecard measures that drive performance. Balanced scorecard step by step guides readers through the processes required for a successful balanced scorecard project. Using the balanced scorecard as a strategic management. The balanced scorecard is defined, the evolution of the balanced scorecard was observed and the preference for the uses of the balanced scorecard was examined in detail.
A balanced scorecardoften abbreviated as bsc is a strategy management framework that includes four perspectives of your strategy. Niven is a management consultant and noted speaker on the sub jects of performance management and the balanced scorecard. Effectiveness of the introduction balanced scorecard. Next, we move on to the key lessons that the balanced scorecard offers. The development of the balanced scorecard as a strategic. Balancing dilemmas of the balanced scorecard, accounting. Research has shown that organisations that use a balanced scorecard approach tend to outperform organisations without a formal approach to strategic performance management. To learn more about what the balanced scorecard is and how it can aid your. Because there is no selfevident solution to these critical issues, they are termed dilemmas. The benefits of using balanced scorecard as a strategic management system are linked to the structure of a balanced scorecard process. Kaplan is a professor at harvard university and david p. The balanced scorecard focuses on factors that create longterm value traditional financial reports look backward reflect only the past. Keywords balanced scorecard, bsc, performance management, performance measurement 1.
An integrated framework for describing and translating strategy through the use of linked performance measures in four balanced perspectives. Its a great team building activity, process management tool and, when you do it properly, you end up with an action plan thats fully. As both a practitioner and consultant he has developed successful performance management systems for organizations large and small around the globe. The balanced scorecard perspectives are insisting on examining different strategies and choosing the most appropriate one. Before presenting balanced scorecard examples, it is important to understand the context and the concepts behind the management and monitoring tool created by professors robert s. Robert kaplan and david norton created the balanced scorecard approach in the. Using balance scorecard in educational institutions. The book provides an excellent complement to the two kaplan. It is interesting to note that scorecard is actually a bit of a misnomer. Comparative significance of the four perspectives of.
It is a hangover from the early kaplan and norton days when the balanced scorecard was first introduced. It provides a framework for measuring company strategy and performance, which translates your strategy into a setof tangible objectives. The present paper tries to examine the applicability of bsc as a performance measurementcummanagement system in academic institutions. Balanced scorecard basics communicat business systems. Generally speaking, a bsc is a standardized report that details performance management measures. When designed properly it can provide an excellent management tool to help keep businesses and organisations on track. Once an organisation has committed to the balanced scorecard model, a thirdparty facilitator can be brought in to manage a strategy workshop and bring an unbiased view to the scorecard development process.
With a bsc, you have the ability to describe and measure your company strategy and then track how you achieve results. The four perspectives of the current version of the balanced scorecard can still be applied in government organizations as long as they are rearranged according to governmental priorities. In addition, it can help provide information on the chosen strategy more. Commentary transforming the balanced scorecard from. Like a laser beam, strategy now has a clear path to everyone in the organization. But financial measures tell the story of past events, an. The process of building a balanced scorecard while there are many ways to develop a balanced scorecard, kaplan and norton defined a fourstep process that has been used across a wide range of organizations. The paper contributes to the bsc debate by collecting insights from empirical findings, as well as.
Customer, internal processes, learning and growth, and financial. The balanced scorecard was developed in the early 1990s by two guys at the harvard business school. What is balanced scorecard balanced scorecard is a strategy management system that helps managers to translate organisation strategy into operational objectives and implement it. A new challenge article pdf available in journal of management development 285. The balanced scorecard requires specific measures of what customers getin terms of time, quality, performance and service, and cost. The information included is fictional and is provided to simply demonstrate the process.
More recently it has been proposed as the basis for a. The balanced scorecard is a managementthe balanced scorecard is a management tool that provides stakeholders with a comprehensive measure of how theof how the organization is progressing towards the. The impact of strategy and causal links lichen yu sujatha perera susan crowe abstract many of the claimed benefits of the balanced scorecard bsc rely on the linkage of its performance measures to strategy and on causal relations among its measures. In addition, he shows how to become a strategyfocused organization by imbedding the balanced scorecard into critical organizational processes. The balanced scorecardmeasures that drive performance robert s. The key problem that kaplan and norton identified in the business of the day was that many companies tended to manage their businesses based solely on financial measures. Using a survey research method, this study examines the extent to which. Scorecard development can be very rapid a few weeks, or as long as a year, depending on the scope and complexity of the scorecard and. The balanced scorecard retains traditional financial measures. Balanced scorecard is a management system that enables organizations to translate the vision and strategy into action. Introduction the balanced scorecard is a strategic management tool that aims to clarify strategy and to translate it into action. The balanced scorecard or balance score card is a strategic performance measurement model which is developed by robert kaplan and david norton. Well dive deeper into examples of each perspective below. Stawar t 2002 studied kaplans famous book balanced scorecard.
The balanced scorecard can be effective in the public, if and only if, the current perspectives are rearranged see figure 3. Ulf johanson, matti skoog, andreas backlund and roland almqvist. Bsc framework looks at the strategy from four different perspectives i. Anytown hospital has just finished a twoday retreat where they revised and updated their mission and vision statements and drafted a strategic plan. Measures that drive performance at that time there was a perception. What follows, provides guidance and advice on the development and implementation of a balanced scorecard for those organisations considering the introduction of a. Definition and concept an approach to the provision of information to the management to assist with. The strategy must be covered by a welldefined and clear longterm vision that would represent one common organizational goal. Balanced scorecard example the following is an example of how one might develop a balanced scorecard. A balanced scorecard bsc is a management tool used for strategic planning. This system provides feedback on internal business processes and external outcomes to continually improve organizational performance and results. Financial, customer, internal process, and learning and growth. Purpose the aim of this paper is to debate various critical issues in the implementation and use of the balanced scorecard bsc as a management control tool. My experiences as a balanced scorecard practitioner with a large canadian company taught me that tremendous results are possible with the tool, but to attain.
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