4. A Measurement
System?
A Management
System?
A communication
Tool?
5. The Balanced Scorecard is a management
tool that provides stakeholders with a
comprehensive measure of how the
organization is progressing towards the
achievement of its strategic goals.
6. Traditional financial reports look backward
Reflect only the past: spending incurred and revenues earned
Do not measure creation or destruction of future economic value
The Balanced Scorecard identifies the factors that create long-term
economic value in an organization, for example:
Customer Focus: satisfy, retain and acquire customers in targeted
segments
Business Processes: deliver the value proposition to targeted
customers
Customers
innovative products and services
high-quality, flexible, and responsive operating processes
excellent post-sales support
Processes People
Organizational Learning & Growth:
develop skilled, motivated employees;
provide access to strategic information
align individuals and teams to business unit objectives
7. Translate mission, vision, strategy
Provide the framework
Measure four perspective
Customer relation
Financial
Internal services process
Learning innovation and growth
8. Long-Term
Shareholder Value
Improve Increase Expand Revenue Enhance
Finance Cost Structure Asset Utilization Opportunities Customer Value
Customer Price Quality Availability Selection Functionality Service Partnership Brand
Operation management Customer Management Innovation Management Social & Regulatory
Internal - Supply - Selection - Opportunities Identification - Environment
Process - Production - Acquisition - R&D Portfolio - Safety and Health
- Distribution - Retention - Design & Develop - Employment
- Risk Management - Growth - Launch - Community
Human Capital
Information Capital Organization Capital
- Skills - Systems
Learning - Culture
- Training - Databases
& Growth - Leadership
- Knowledge - Networks - Alignment
- Teamwork
11. • Change The Revenue Growth Strategy The Productivity Strategy
“Improve stability by broadeni ng the sources of rev enue fro m “Improve operating efficiency by s hifting c ustomers to more cost-
current customers” effective channels of distribution”
Formulate and communicate a
Improve
Returns Financial
Perspective
Improve
Broaden Operating
Revenue Efficiency
Mix
Increase Increase
Customer Customer Customer
Confidenc e in Satisfaction Perspective
Our Financi al Through Superi or
Advice Execution
new strategy for a more
Internal
Perspective
Understand Develop Cross-Sel l Shift to Provide
Mini mize
Customer New the Product Appropriate Rapid
Problems
Segments Products Line Channel Response
Increase
Employee
Productivity Learning
Perspective
competitive environment
Develop Access to Align
Strategic Strategic Personal
Skills Information Goals
• 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
16. At the highest level, the Balanced Scorecard is a framework
that helps organizations to translate strategy into operational
objectives that drive both behavior and performance.
The BSC is a structured approach to performance
measurement and performance management that links the
organization’s strategic thinking to the activities necessary to
achieve desired results
The BSC is a vehicle for communicating an organization’s
strategic direction and for measuring achievements towards
these predetermined objectives
The BSC clearly establishes linkage between strategic
objectives, the measures for determining progress, the
stretch targets established, and the focused initiatives needed
to move the organization forward to meet those
organizational goals
17. Three layers of management
Top management
Middle management
First line management
18. Advantages of Communicating and linking
Easy information flow
Better understanding of company long term
strategic goal
Build a stronger commitment to achieve those
goals
19. STRATEGIC IMPLEMENTATION: BALANCED SCORECARD
Score card users generally engage in three activities
Communicating and educating
Setting goals
Three levels of information
Corporate objectives , measures and targets
Leaves room for translating The corporate targets into
targets for each business unit
The company asks both individual and teams to articulate
which of their own objectives would be consistent with
the business unit and corporate objectives
Linking rewards to performance measures
E.g An oil company uses the scorecard as the basis of
calculating incentive compensation.
Source: “Using the Balanced Scorecard as a Strategic Management System”, Kaplan and Norton, HBR, Jan-Feb 1996.
20. Lets managers communicate their strategy up and down
the organisation and links it to departmental and
individual objectives
Traditionally departments are evaluated by their financial
performance and individual incentives are tied to short
term financial goals
The scorecard gives managers a way of ensuring that all
levels of the organisation understand the long term
strategy.
21. Attractive and powerful linkages carries risk
Assigning weights to each objective
26. Every organization have
separate procedures and
organizational unit for
strategic planning and for
resource allocation and
budgeting
27. Resource allocation and
budgeting process run by the
finance staff set financial target
for revenues , expenses , profit
and investment for next fiscal
year
28. Financially & Non Financially
measurement of the
organization is called balanced
scorecard
29. Creating a balanced scorecard forces
companies to integrate there strategic
planning and budgeting processes that helps
to ensure that there budget support there
strategies
Scorecard user select measure of progress
from all set targets
The organizations determine which action
will drive them toward their targets
32. Give capacity about strategic learning
Existing
feedback and review process focus
on companies budgeted financial goal
Withbalance scorecard company can monitor
short –term results
Enable companies to modified strategies
33. single loop learning process
Double loop learning process
34. 1. Articulate the company shared vision
2. Supply essential strategic feedback system
3. Scorecard facilitates strategy review that
essential to strategic learning
35. Company found significant correlation
between
employ morals ,a measure in learning and
growth perspectives, and customer
satisfaction
Correlated with payment of invoices
Correlation between employ moral and
employ suggestions
36. Balanced score card can be used to:
- clarify and update strategy
- communicate strategy throughout the company
- align unit and individual goals with the strategy
- link strategic objectives to long term targets & annual budgets
- identify and align strategic initiatives
- conduct periodic performance reviews to learn about and
improve strategy
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