Balanced Scorecard, introduction, definitions, features, purpose, perspectives and importance

1. Presented by-
Payal
Pratibha Verma
Rajan Chhangani
MBA 2nd Sem. JIET-SOM

2. CONTENTS
 Introduction
 Definition
 Balanced Scorecard as Performance Measure
 Features
 Purpose
 Perspectives
 Importance

3. INTRODUCTION
Balanced Scorecard is a comprehensive
performance measurement framework that
translates an organization’s strategy into clear
objectives, measures, targets and initiative. It
represents a management system that can
motivate breakthrough improvement in
critical areas of product, process, customer and
market development. It integrates the
measures used across the organization and
helps it to grapple with the intangible or
intellectual assets.

4. DEFINITION
 According to Kaplan and Norton, the innovation of the balanced scorecard as,
“The balanced scorecard retains traditional financial measures. But financial
measures tell the story of past events, and adequate story for industrial age
companies for which investments in long-term capabilities and customer
relationship were not critical for success.
 According to David Chaudron, “Using the balanced scorecard to combine
viewpoints of Company success” defines Balanced Scorecard as follows:
 A way of measuring organizational, business unit or department success.
 A way of balancing long-term and short-term actions.
 A way of balancing different measures of success such as – Financial,
Customer, Internal Operations and HR system and Development.
 A way of tying strategy to measures to action.

5. AS PERFORMANCE MEASURE
Armstrong and Baron have laid down many criteria regarding performance measures
that are of the opinion that performance measures should:
 Be related to the strategic goals.
 Be relevant to the objectives and accountabilities of the teams and individual
concerned.
 Focus on measurable outputs, accomplishments and behaviours that can
distinctly be defined.
 Highlight the data that will be available on the basis of measurement.
 Be verifiable by providing information that will confirm the extent to which
expectations have been met.
 Be as precise.
 Provide a perfect basis for feedback and action.
 Be elaborated, covering all the important aspects of performance, so that a
number of measures are available.

6. FEATURES
 It is a management tool which focuses on both financial and non-
financial goals of an organisation.
 It includes performance measures of four perspectives – financial,
customer, internal business processes and learning and
growth(innovation).
 Balanced scorecard focuses on the link between business processes,
decisions and results.
 Balanced Scorecard is considered as a device to guide strategy,
formulation, implementation and communication.
 Balanced Scorecard helps in tracking the performance and
providing quick feedback for control and evaluation.

7. PURPOSE
 Clarify and update strategy.
 Communicate strategy throughout the company.
 Align unit and individual goals with strategy.
 Link strategic objectives to long-term and annual budgets.
 Identify and align strategic initiatives.
 Conduct periodic performance reviews to learn about and improve
strategy.

8. PERSPECTIVES
Four Perspectives of Balanced Scorecard:
 The Financial perspective
 The customer perspective
 The process perspective
 The infrastructure (learning and growth) perspective.

9. IMPORTANCE
 Consensus on the strategy at executive level
 Communicates strategy to the organization
 Translates strategy into meaningful goals
 Employees identify themselves with goals
 Personal targets linked to strategy
 Processes focus to achieve strategic goals
 Periodic reporting of status of strategic goals
 Drives investment/budget decisions

10. Thank You