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Balanced Score Card
Balanced Score Card
Submitted by :
(128)-YOGITA GUPTA
(129)-NIKHIL BARARIA (130)-AMANDEEP (131)-MANNU BOBAL (133)-SAHIL KHATTAR
First developed in early 1990s by Robert Kaplan and David Norton. Bob Kaplan published HBR articles in 1992 The Balance Scorecard book published in 1996 Adopted by many companies in the 90s.. More popular in Europe.. Popular with Government organizations. Widely used in Education..
Way to link strategy and vision with objectives for business performance & strategic progress measures of each objective target values for measures specific initiatives to improve and innovate
BSC Measurements
The BSC enables companies to: Track financial results Monitor how they are building the capabilities for future growth and profitability With customers With their internal processes With their employees and systems
Process
Define the measurement architecture. Specify strategic objective.. Choose strategic measure.. Develop the implementation plan
Objectives
Objectives are precise statements of what an organization wants to achieve. An objective that meets all the criteria is considered a SMART objective:
S Specific objectives are aimed at what the business does, e.g. a hotel might have an objective of filling 60% of its beds a night during October, an objective specific to that business. M - Measurable the business can put a value to the objective, e.g. 10,000 in sales in the next half year of trading. A Achievable / Attainable / Action oriented / Aggressive R - Realistic the objective should be challenging, but it should also be able to be achieved by the resources available. T- Time specific they have a time limit of when the objective should be achieved, e.g. by the end of the year.
Perspectives
Four different but linked perspectives are derived from the organizations strategy
On-Time Delivery
Process Quality
Cycle Time
Connections
Return on investment (ROI) is a widely recognized measure of financial success Repeated and expanded sales from existing customers, the result of a high degree of loyalty among existing customers, could be one driver of this financial measure
Analysis of customer preferences may reveal that on-time delivery (OTD) of orders is highly valued by customers The company must excel at internal processes to achieve exceptional OTD
Short cycle times and high-quality production processes are two drivers of on-time delivery The company must have skilled production workers, well-trained in process improvement techniques A measure of employees skill and capabilities in process improvement is used in the Learning & Growth perspective
Change : Formulate and communicate a new strategy for a more competitive environment.. Growth : Increase revenues, not just cut costs and enhance productivity.. Implement : From the 10 to the 10,000. Every employee implements the new growth strategy in their day-to-day operations..
Create the Climate for Change Create a Common Focus for Change Activities Rationalize and Align the Organization
Communicate
Formulate
Process Strategic Feedback That Encourages Learning Executive Teams Manage Strategic Themes Testing Hypotheses, Adapting, and Learning Navigate
STRATEGY
Comprehensive Communication to Create Awareness Align Goals and Incentives Integrate Budgeting with Strategic Planning Align Resources and Initiatives
Execute
3. Unlock and Focus Hidden Assets Reengineer Work Processes Create Knowledge Sharing Networks
The Balanced Scorecard can play a key role in achieving real change in organisational teamwork. Although team/organisational performance is dependent on many things, a major part is played by: the degree of collective focus on the overall goal simplicity of that goal clarity of visible measurement of that goal speed of communication of measurement results
A BSC tells the story of the business unit's strategy A BSC identifies and makes explicit the hypotheses about the cause and effect relationships between: Outcome measures in the Financial and Customer perspectives Performance drivers of those outcomes in the Internal and Learning & Growth perspectives
The BSC is especially well-suited for nonprofit and government organizations ( NPGOs) Their success has to be measured by their effectiveness in providing benefits to constituents Since nonfinancial measures can assess performance with constituents, the BSC provides the natural performance management system for NPGOs
Conclusion
BSC integrates measures based on strategy Retains financial measures of past performance Introduces the drivers of future financial performance The drivers are derived from an explicit and rigorous translation of the organization's strategy into tangible objectives and measures