balanced scorcard

BALANCED SCORCARD( BSC)

• IT IS A STRATEGIC PERFORMANCE MANAGEMENT TOOL

• IT CAN BE USED BY MANAGEMENT TO KEEP TRACK ON THE OGANIGATIONAL PERFORMANCE

CHARACTERISTICS

• BSC IS THE PRESENTATION OF A MIXTURE OF FINANCIAL AND NON-FINANCIAL MEASURES COMPARED TO A “TARGET”

• THESE NON-FINANCIAL ARE “CUSTOMER”, “INTERNAL BUSINESS PROCESSES” AND “LEARNING & GROWTH”

HISTORY•THE FIRST BSC WAS CREATED BY ART SCHNEIDERMAN AN INDEPENDENT CONSULTANT IN 1987

•IN 1996 DR.ROBERT S KAPLAN AND DR.DAVID P NORTON PUBLISHED THEIR BOOK “BALANCED SCORECARD : TRANSLATING STRATEGY INTO ACTION”

ORIGINAL DESIGNE METHOD

  Objectives Measures Targets Initiatives

Financial        

Customer        

Process        

Learning        

DIAGRAM OF THE BALANCED SCORECARD

Financial

StrategyCustomer Business Processes

Learning & Growth

DESIGN

Adapted from Robert s. Kaplan & David P. Norton,” using the BSC as a strategic management system”

BSC -FACTORS

 Department Areas

 Finance Return On Investment Cash Flow Return on Capital Employed Financial Results (Quarterly/Yearly)

Internal Business Processes 

Number of activities per function Duplicate activities across functions Process alignment (is the right process in the right department?) Process bottlenecks Process automation

Learning & Growth Is there the correct level of expertise for the job? Employee turnover Job satisfaction Training/Learning opportunities

Customer Delivery performance to customer Quality performance for customer Customer satisfaction rate Customer percentage of market Customer retention rate 

 Department Areas

BSC –FACTORS (Continued..)

IMPROVED DESIGNE METHODS

• IN THE MID 1990,AN IMPROVED DESIGNED EMERGED.

• MEASURES ARE SELECTED BASED ON A SET OF “STRATEGIC LINKAGED MODEL” OR STRATEGY MAP

• THIS STYLE OF BSC WAS KNOWN AS 2ND GENERATION

• STRATEGY MAP WITH A LONG-TERM OUT COME KNOWN AS 3RD GENERATION BSC.

BSC AS STRATEGIC MANAGEMENT SYSTEM

• CLARIFYING STRATEGY • COMMUNICATING STRAGIC OBJECTIVES• PLANNING, SETTING TERGATES AND ALIGNING

STRATEGIC INITIATIVES• STRATEGIC FEEDBACK AND LEARNING

BUILDING & IMPLEMENTING A BSC :Nine steps to success

CRITICISM• BSC HAS ALWAYS ATTRACTED CRITICISM FROM

MANY SOURCES• ACADEMIC COMMUNITY DISLIKE EMPIRICAL

NATURE OF FRAMEWORK• KAPLAN & NORTON FAILED TO INCLUDE ANY

CITATION OF PRIOR ART• BSC DOES NOT PROVIDE A BOTTOM LINE

SCORE OR RECOMMENDATIONS • IT IS SIMPLY A LIST OF MERTRICS .

POPULARITY

• IN SPITE OF CRITICISM BSC HAS BEEN IMPLEMENTED BY GOVT. AGENCIES, MILITARY, BUSINESS UNITS AND CORPORATIONS.

• BSC WERE OFTEN DESIGNED REMOTELY BY CONSULTANTS. MANAGERS DID NOT TRUST THEM.

SOFTWARE TOOLS

• BSC IS NOT A COMPLEX THING. IT IS ONLY SPREAD IN 20 MEASURES

• THE PROCESS OF COLLECTING REPORTING AND DISTRIBUTING BSC INFORMATION CAN BE LABOR INTENSIVE AND PROCEDURAL PROBLEM.

• SOFTWARE PACKAGES ARE ALREADY AVAILABLE TO AUTOMATE THE COLLECTION OF INFORMATION

THANK YOU