Guide for Balanced scorecard

balanced scorecard

Robert S Kaplan and David P Norton introduced the balanced scorecard concept in 1992.  This concept involves identifying the organization’s vision and mission, identifying strategies for achieving this mission, and analyzing the organization’s performance from certain perspectives to gain an idea of how the organization is successful or not.

Significance of balanced scorecard

The balanced scorecard can perfectly be balanced and Holistic approach to access and control the performance of an organization by setting goals and performance measures in four key areas such as customer’s business, internal learning, growth process, and financial perspective.

It also facilitates understanding and continuous communication of organizations’ goals to all the managerial levels.

It brings the vision and strategy of an organization to the main focus. This is done to ensure that the managers never diverge from these central goals.

It integrates the non-financial goals the financial goals. The performance is measured on the basis of this single integrated system, which is an improvement to the conventional control system.

Perspectives of Balanced scorecard

A balanced scorecard is an approach that a person used to deliver a balanced and comprehensive framework for assessing the overall performance of an organization from a different perspective.  This can be a learning and growth perspective, internal, customer, and financial perspective.  It assists the management in controlling the organization in a modern and unique way.

The performance measures from different perspectives are depicted below:

1.Financial perspective

The financial goals comprise of achieving profitability and prosperity. Hence, the measures of performance are cash flows and return on investment. The employee must be an effective steward of economic and financial resources. Their performance can be measured by measuring the number of months function within the limited budget for calculating the percentage of projects which have been completed within the given budget.  It also deals with calculating the difference between companies’ previous salary paid and the salary in industrial standards.

2.Customer perspective

The ultimate aim of the business is to have a high customer satisfaction ratio with internals and externals. The performance can be measured by measuring the successful relationship with customers’ superiors’ subordinates and co-workers.

How many positive responses have been achieved on the employee satisfaction survey?

It also measures the relationship with external customers like lines, consumers, and businesses.  This is measured by the customer’s feedback forms about the employee.

3.Internal process perspective

The goal of the organization is to innovate and make the manufacturing process efficient.  The internal process comprises manufacturing and another production-related process. The evaluation is done on the basis of research and development activities conducted by the employee,  calculating the percentage of tasks or projects that have been completed by the given deadline calculating the performance of the job within time and without any injury, mistake or failure.  This also measures how efficiently resources were used during the process.

4.Learning and growth perspective

The goal of the form is to enhance the capabilities of the employees and enhance their satisfaction.  It also aims at retaining competent employees. Here, the performance is calculated by measuring the rate of labor turnover that is how many people have left their job in a year.  Also, continuous efforts to improve the knowledge and skills of its employees.  This is measured by counting the number of training opportunities offered and participate. An employee who has participated in training programs will be definitely valued more.  Other messages also indicate whether the employee looks for ways to promote growth for the company.  This is measured by seeing how many suggestions are given by the subordinates to his superior.

Once, the manager obtains data for these 4 perspectives, He can then analyze the weakness and strength of the employee.

Limitations of Balanced scorecard

  • Balance scorecard centers its approach to studying around only for perspective.  However, there can be other perspectives that are more crucial.  This can be corporate social responsibility, development of the management perspective, etc.  Thus, the current balanced scorecard model is a somewhat imperfect and balanced scorecard.
  • A balanced scorecard is a round clear concept of monitoring and establishments success.  But there is no set of standard performance measures.



Leave a Reply

Your email address will not be published. Required fields are marked *