Description
This is a presentation explains what is balanced scorecard
Balanced Score Card One of the widely used tools developed by Robert Kaplan and David Norton for measurement and management in the information age is the Balanced Score Card. The BSC provides managers with the instrumentation they need to navigate to future competitive success. The BSC translates an organization’s mission and strategy into a comprehensive set of performance measures that provide the framework of strategic measurement and management system. The score card measures performance across four balanced perspectives: financial, customer, internal business process & learning and growth. The BSC compliments financial measures of past performance with measures driven of future performance. This is called BSC as it emphasizes the financial measures as well as the non-financial measures of the information system employed at all levels of the organization. Front line employees must understand the financial impact of decision and actions. The objectives and measures are derived from the success factors of the company. This is top down process driven by V-M-V and strategy of the business. BSC translates the business unit’s strategy into tangible objectives and measures. They represent a balance between external measures of shareholder and customers, and internal measures of critical business processes, innovation and growth. These measures are balanced between the outcome measures, results from past efforts and the measures that drive future performance. BSC accomplish – 1. clarify and translate vision and strategy 2. communicate and link strategic objectives and measures 3. plan, set targets and align strategic initiatives 4. enhance feedback and learning Following are the perspectives of BSC under which various measures and objectives are classified: I. Financial perspective: objective measured by operating income • ROCE • EVA relate to profitability
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Customer perspective: this measures business units performance in market segments • Customer satisfaction • Customer retention • New customer acquisition • Customer profitability • Market share in target segments Internal business Perspective: deliver value proposition that will attract and retain consumer in targeted market segment. • Innovation process – product design, product development • Operation process – manufacturing, marketing & post sales performance Learning and Growth perspective: the outcome of employee performance is measured by this perspective. • Employee satisfaction • Employee retention • Employee productivity
Though the measures of various perspectives are indicated separately, there exists a strong linkage between them. Rockwater, an MNC noted early that during its scorecard implementation process those high scores on employee satisfaction helped achieve a high level of customer satisfaction. BSC process starts with creating the scorecard at the corporate level. Once created and performance review occurs using this next it is cascaded into the next level of leadership team, who may be the functional unit heads. Like this it is cascaded to the lower level of management. It helps to build a consistent mechanism of review & alignment of objectives.
doc_965069695.doc
This is a presentation explains what is balanced scorecard
Balanced Score Card One of the widely used tools developed by Robert Kaplan and David Norton for measurement and management in the information age is the Balanced Score Card. The BSC provides managers with the instrumentation they need to navigate to future competitive success. The BSC translates an organization’s mission and strategy into a comprehensive set of performance measures that provide the framework of strategic measurement and management system. The score card measures performance across four balanced perspectives: financial, customer, internal business process & learning and growth. The BSC compliments financial measures of past performance with measures driven of future performance. This is called BSC as it emphasizes the financial measures as well as the non-financial measures of the information system employed at all levels of the organization. Front line employees must understand the financial impact of decision and actions. The objectives and measures are derived from the success factors of the company. This is top down process driven by V-M-V and strategy of the business. BSC translates the business unit’s strategy into tangible objectives and measures. They represent a balance between external measures of shareholder and customers, and internal measures of critical business processes, innovation and growth. These measures are balanced between the outcome measures, results from past efforts and the measures that drive future performance. BSC accomplish – 1. clarify and translate vision and strategy 2. communicate and link strategic objectives and measures 3. plan, set targets and align strategic initiatives 4. enhance feedback and learning Following are the perspectives of BSC under which various measures and objectives are classified: I. Financial perspective: objective measured by operating income • ROCE • EVA relate to profitability
II.
III.
IV.
Customer perspective: this measures business units performance in market segments • Customer satisfaction • Customer retention • New customer acquisition • Customer profitability • Market share in target segments Internal business Perspective: deliver value proposition that will attract and retain consumer in targeted market segment. • Innovation process – product design, product development • Operation process – manufacturing, marketing & post sales performance Learning and Growth perspective: the outcome of employee performance is measured by this perspective. • Employee satisfaction • Employee retention • Employee productivity
Though the measures of various perspectives are indicated separately, there exists a strong linkage between them. Rockwater, an MNC noted early that during its scorecard implementation process those high scores on employee satisfaction helped achieve a high level of customer satisfaction. BSC process starts with creating the scorecard at the corporate level. Once created and performance review occurs using this next it is cascaded into the next level of leadership team, who may be the functional unit heads. Like this it is cascaded to the lower level of management. It helps to build a consistent mechanism of review & alignment of objectives.
doc_965069695.doc