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A brrief detail on Balance Score Card
Human Resources » Recruitment & Staffing

Chrm Message From: abhi16march Total Posts: 27 Join Date: 23/09/2008
Rank: Executive Post Date: 27/09/2008 23:44:49 Points: 135 Location: India
The Balanced Scorecard is an implementation framework for any organisation. It helps in formulating the strategy and to chart the course of action to operationalise the strategy
And how it is done ..........
• The Scorecard defines the prioritized 20-25 objectives that can be achieved across financial, customer, internal process and organisational learning & growth from among the overall long term objectives identified.
• The Scorecard builds linkages across these 20-25 objectives so that all key SBUs / functions / departments understand their involvement in delivering the identified objectives for the defined timeframe.
• The Scorecard creates performance measures for each objective, a measure template for each such measure and hence the enterprise performance measurement framework.
The Balanced Scorecard is an implementation Framework for any organisation. It helps in Formulating the Strategy and to Chart the Course of Action to operationalise the strategy
And how it is done ..................
• The Scorecard allocates ownership / responsibilities of each strategic objective to various executives on the management team. These can be further cascaded to individual performance measures alongwith other job responsibilities. In addition, the KRAs can then be cascaded to further levels of management down the line.
• The Scorecard identifies and aligns the key projects that need to be executed for delivery of the objectives. These could be current projects and additional new ones. Only when the objectives are finalised can the organisation identify which current projects are necessary and which are not.
• The Scorecard also defines the business review formats for regular monthly review of the business objectives.
At the management committee level, it is necessary to prioritize activities year-on-year and track progress to be able to deliver the aggressive business plan.
• Multiple objectives and initiatives need to be tracked regularly so that the business direction is correct every year.
• This calls for not only a prioritisation but also a measurement framework - Revenue, profit, market share and costs. Non-financial measures e.g. No. of new successful product introductions, key activity turnaround times, no. of new skill sets needed etc. - need to articulated in order to create a balanced measurement framework.
• Linkages between various objectives need to be built so that the cause and effect relationship is understood in execution terms.
At the management committee level, it is necessary to prioritise activities year-on-year and track progress to be able to deliver the aggressive business plan
• Overall the management committee and the operating committees / department heads should have a consensus on which 15-20 objectives are critical for the next 12-24 months from among the entire set of objectives outlined.
• Once the objectives are prioritised, initiatives then need to be mapped against these objectives and hence addressed in terms of need / funding / milestones / outputs.
• There needs to be a business review framework which allows the management committee to track measurement month-on-month-both at the enterprise level and the individual level.

Chrm Message From: priyanka Total Posts: 86 Join Date: 23/09/2008  
Rank: Manager Post Date: 28/09/2008 01:23:15 Points: 430 Location: India

Hi Abhishek,

Thanks for raising this brief details about BSC. The balanced scorecard is nothing but a strategic planning and management system that is used extensively in business and industry, government, and nonprofit organizations worldwide to align business activities to the vision and strategy of the organization, improve internal and external communications, and monitor organization performance against strategic goals. It was originated by Drs. Robert Kaplan (Harvard Business School) and David Norton as a performance measurement framework that added strategic non-financial performance measures to traditional financial metrics to give managers and executives a more 'balanced' view of organizational performance. While the phrase balanced scorecard was coined in the early 1990s, the roots of the this type of approach are deep, and include the pioneering work of General Electric on performance measurement reporting in the 1950’s and the work of French process engineers (who created the Tableau de Bord – literally, a "dashboard" of performance measures) in the early part of the 20th century.

The balanced scorecard has evolved from its early use as a simple performance measurement framework to a full strategic planning and management system. The “new” balanced scorecard transforms an organization’s strategic plan from an attractive but passive document into the "marching orders" for the organization on a daily basis. It provides a framework that not only provides performance measurements, but helps planners identify what should be done and measured. It enables executives to truly execute their strategies.

This new approach to strategic management was first detailed in a series of articles and books by Drs. Kaplan and Norton. Recognizing some of the weaknesses and vagueness of previous management approaches, the balanced scorecard approach provides a clear prescription as to what companies should measure in order to 'balance' the financial perspective. The balanced scorecard is a management system (not only a measurement system) that enables organizations to clarify their vision and strategy and translate them into action. It provides feedback around both the internal business processes and external outcomes in order to continuously improve strategic performance and results. When fully deployed, the balanced scorecard transforms strategic planning from an academic exercise into the nerve center of an enterprise.

Kaplan and Norton describe the innovation of the balanced scorecard as follows:

"The balanced scorecard retains traditional financial measures. But financial measures tell the story of past events, an adequate story for industrial age companies for which investments in long-term capabilities and customer relationships were not critical for success. These financial measures are inadequate, however, for guiding and evaluating the journey that information age companies must make to create future value through investment in customers, suppliers, employees, processes, technology, and innovation."
The balanced scorecard suggests that we view the organization from four perspectives, and to develop metrics, collect data and analyze it relative to each of these perspectives:

The Learning & Growth Perspective
This perspective includes employee training and corporate cultural attitudes related to both individual and corporate self-improvement. In a knowledge-worker organization, people -- the only repository of knowledge -- are the main resource. In the current climate of rapid technological change, it is becoming necessary for knowledge workers to be in a continuous learning mode. Government agencies often find themselves unable to hire new technical workers, and at the same time there is a decline in training of existing employees. This is a leading indicator of 'brain drain' that must be reversed. Metrics can be put into place to guide managers in focusing training funds where they can help the most. In any case, learning and growth constitute the essential foundation for success of any knowledge-worker organization.

Kaplan and Norton emphasize that 'learning' is more than 'training'; it also includes things like mentors and tutors within the organization, as well as that ease of communication among workers that allows them to readily get help on a problem when it is needed. It also includes technological tools; what the Baldrige criteria call "high performance work systems."

The Business Process Perspective
This perspective refers to internal business processes. Metrics based on this perspective allow the managers to know how well their business is running, and whether its products and services conform to customer requirements (the mission). These metrics have to be carefully designed by those who know these processes most intimately; with our unique missions these are not something that can be developed by outside consultants.

In addition to the strategic management process, two kinds of business processes may be identified: a) mission-oriented processes, and b) support processes. Mission-oriented processes are the special functions of government offices, and many unique problems are encountered in these processes. The support processes are more repetitive in nature, and hence easier to measure and benchmark using generic metrics.

The Customer Perspective
Recent management philosophy has shown an increasing realization of the importance of customer focus and customer satisfaction in any business. These are leading indicators: if customers are not satisfied, they will eventually find other suppliers that will meet their needs. Poor performance from this perspective is thus a leading indicator of future decline, even though the current financial picture may look good.

In developing metrics for satisfaction, customers should be analyzed in terms of kinds of customers and the kinds of processes for which we are providing a product or service to those customer groups.

The Financial Perspective
Kaplan and Norton do not disregard the traditional need for financial data. Timely and accurate funding data will always be a priority, and managers will do whatever necessary to provide it. In fact, often there is more than enough handling and processing of financial data. With the implementation of a corporate database, it is hoped that more of the processing can be centralized and automated. But the point is that the current emphasis on financials leads to the "unbalanced" situation with regard to other perspectives.

There is perhaps a need to include additional financial-related data, such as risk assessment and cost-benefit data, in this category.

Inputs from more members about BSC would help : )