balanced scorecard
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BSC as strategic tool...TRANSCRIPT
Balanced Scorecard
Outline…
Introduction to the Balanced Scorecard.What is it ?Why do it ?The Four Perspectives.Conclusion.References.
Introduction…
The balanced scorecard is a strategic planning and management system that is used extensively in business and industry, government, and nonprofit organizations worldwide to align business activities to the vision and strategy of the organization, It improve internal and external communications, and monitor organization performance against strategic goals. Balances financial and non-financial measuresBalances short and long-term measures
Balanced Scorecard History
1992 1996 2000
Measurement and
Reporting
Alignment and Communication
Enterprise-wide Strategic
Management
Articles in Harvard Business Review:
“The Balanced Scorecard —Measures that Drive Performance” January - February 1992
“Putting the Balanced Scorecard to Work” September - October 1993
“Using the Balanced Scorecard asa Strategic Management System” January - February 1996
1996 2000
Acceptance and Acclaim:
“The Balanced Scorecard” is translated into 18 languages
Selected by Harvard Business Review as one of the “most important management practices of the past 75 years.“
According to Kaplan and Norton
“A set of measures that gives top managers a fast but comprehensive view of the business”
Why the Balanced Scorecard?
The Organization are becoming more “strategically focused”.
Need more balanced approach to looking at performance, both tactical and strategic.
Only 5% of a workforce tends to understand their company’s strategy.
86% of executive teams spend less than one hour per month discussing strategy.
Why do it ?
• To achieve strategic objectives. • To provide quality with fewer resources.• To eliminate non-value added efforts.• To align customer priorities and
expectations with the customer.• To track progress.• To evaluate process changes.• To continually improve.• To increase accountability.
THE BALANCED SCORECARDTHE BALANCED SCORECARD
FINANCIAL/REGULATORYTo satisfy our constituents, what financial & regulatory
objectives must we accomplish?
CUSTOMERTo achieve our vision,
what customer needs must we serve?
INTERNALTo satisfy our customers and
stakeholders, in which business processes must we excel?
LEARNING & GROWTHTo achieve our goals, how
must we learn, communicate and grow?
financial perspective
The three possible stages as described by Kaplan and Norton (1996) are-Rapid growth:
The growth stage will stem from the development and growth of the organization which will lead to increased sales volumes, acquisition of new customers, growth in revenues etc.
.
Cont…
sustain stage: measures that evaluate the effectiveness of the organization to manage its operations and costs, by calculating the return on investment, the return on capital employed, etc
Harvest stage:It will be based on cash flow analysis with measures such as, revenue growth, costs, profit margins, net operating income etc.
customer perspective
Recent management philosophy has shown an increasing realization of the importance of customer focus and customer satisfaction in any business.It includes measures such as customer satisfaction, customer retention, and market share in target segments.
Internal process perspective
It is concerned with the processes that create and deliver the customer value proposition. It focuses on all the activities and key processes required in order for the company to excel at providing the value expected by the customers both productively and efficiently.
Learning and growth
It includes employee training and corporate cultural attitudes related to both individual and self-improvement.Learning and growth lead to better business processes, which in turn lead to increased value to the customer.It includes measures such as employee satisfaction, employee retention, skill sets, etc.
Each perspective of the Balanced Scorecard includes –Objectives:
major objectives to be achieved Measures:
The observable parameters that will be used to measure progress toward reaching the objective.
Targets : The specific target values for the measures. Initiatives : Action programs to be initiated in order to meet the objective.
Conclusion…
It provides a framework that not only provides performance measurements, but helps planners identify what should be done and measured. It enables executives to truly execute their strategies.
BSC Software
pm-expresshttp://www.pm-express.com/Cognos http://www.cognos.com/strategymaphttp://www.strategymap.com.au/
For more…
http://www.balancedscorecard.orghttp://en.wikipedia.org/balancedscorecard.biz/articles.html www.bscol.com/ www.quickmba.com/
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