Balanced Scorecard  Kaplan and Norton: We went to work, did our job well or otherwise and went home - day in and day out. We did not have to worry about targets, annual assessments, metric-driven incentives, etc. Aahh… life was simple back then.
Balanced Scorecard Theory This topic contains an overview of balanced scorecard theory. While the Scorecard application was based on this theory, its design is flexible enough not to be limited by it. For a detailed discussion of the balanced scorecard theory, including examples and case studies, please refer to the book The Balanced Scorecard by Robert S.
Kaplan and David P. The balanced scorecard concept arose out of a recognized need to measure success on more than just financial statements.
Focusing strictly on financial results doesn't provide an organization with the information that it needs to prosper in today's environment. Financial results provide an indication of past performance, but don't provide you with insight into your current status or where you'll likely be in the future.
In addition, the balanced scorecard provides a framework and language that enable you to describe your strategy in a consistent, reliable manner. The ultimate goal behind balanced scorecard theory is to measure the factors that create value for an organization and directly influence its ability to prosper.
To do that, you must determine the answer to these questions: Where is the organization going?
What is our strategy? What do we need to do well to achieve our strategy? Measuring Across a Range of Indicators With a true balanced scorecard, strategy and corresponding measurements are balanced across four areas: Financial The goals in the financial perspective should serve as the focus for the goals in all the other perspectives.
They indicate the ultimate financial performance to expect for a given balanced scorecard. Some examples are return on investment, profitability, sales growth, revenue, and cash flow.
Financial goals typically differ depending on the maturity of the organization, because younger organizations are usually focused on growth while mature ones are more likely to be interested in maintaining existing market share and increasing it over time. Customer In the customer perspective, you identify the customer and market segments within which the organization chooses to compete.
Typical measurements within this perspective focus on market share, customer retention, customer acquisition, customer satisfaction, and customer profitability.
Internal This perspective focuses on the processes within the organization that are most critical for attaining customer and shareholder goals.
In most cases, the objectives and measures of this perspective are developed after the financial and customer perspectives are defined. Typical measurements within this perspective focus on innovation, operations, and post-sale service.
Learning This perspective focuses on developing objectives and measures to drive learning within an organization. Typically, this perspective considers employee capabilities, information systems, motivation, empowerment, and alignment.
The objectives in this perspective drive the success of those in the first three perspectives. The Scorecard application enables you to define your own perspectives. See Optional Establishing Additional Perspectives. Each business determines its own performance indicators. A bank might look at customer-to-account ratios, for instance, while a hospital might consider numbers of doctor referrals and patient satisfaction surveys.
The data can come from back-office applications such as enterprise resource planning ERP systems, datamining and customer analytics software, or competitive reports and industry averages.
Balancing Measures In addition to balancing your strategy, the objects that you use to measure your success should be balanced, and you should take into consideration: Performance drivers leading indicators and outcomes lagging indicators.The customer perspective within the Balanced Scorecard – BSC for short, enables organizations to target the market segments in which they have chosen to succeed.
Correctly pinpointing the right market segment an organization wants to address helps the same organization develop strategies that maximize outcomes, and, ultimately, financial rewards.
The Balanced Scorecard (BSC) helps companies determine specific measurements to balance their financial perspective. BCS enables organizations to clarify . By combining the financial, customer, internal process and innovation, and organizational learning perspectives, the balanced scorecard helps managers understand, at least implicitly, many.
To be successful in a financial point of view, how we see our shareholders?, The financial perspective shown in the balanced scorecard allows us to define and analyze in our financial objectives, as well as breaking down the possible strategies and action plans necessary to achieve our financial targets.
Four Perspectives of a Balance Scorecard! The Balanced Scorecard is a set of performance targets and results relating to four dimensions of performance—financial, .
Importance of financial perspective indicators in Balanced Scorecard in a leasing company 61 61 for value creation; internal processes – it analyzes the strategic priorities in different.