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Scorecard
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 Financial Perspective
The financial perspective addresses the question of how shareholders view
the firm and which financial goals are desired from the shareholders
perspective. Besides including timely and accurate funding data, this
perspective also addresses a need to include additional financial-related data,
such as risk assessment and cost-benefit analysis.
perspective allow the managers to know how well their business is running,
and more importantly, to assess which processes are critical for satisfying
customers and shareholders so that the company has to concentrate its efforts
to excel. For instance, if the company wants to observe an increase in design
efficiency, it can look into the engineering processes of various machineries.
particular perspective.
For measures, we refer to how progress for that particular perspective
objective will be measured.
For targets, we refer to target value sought for each measure.
For initiative, we refer to what will be done to facilitate the reaching of the
target.
2.4 Case Study: Wells Fargo Bank
Since 1990s, Wells Fargo Bank has adopted Balanced Scorecard reduce
operating cost when serving each customer. We may use the three out of four
perspectives of Balanced Scorecard to see how well it is applied in practice to
evaluate ordinary business operations.
The first dimension is the financial Perspective. Since the objective is to
reduce cost per customer, Wells Fargo Bank thus focuses on measuring and
monitoring cost per transaction, cost per service call, call length, number of
service call.
The second dimension is the customer perspective. Wells Fargo Bank
believes that making traditional sales more convenient is also one of the ways
to effectively reduce cost per customer. So, the bank focuses on monitoring
efficiency. This prevents the problems that may arise when performance in one
area is improved simply by sacrificing another area, which renders the whole
company unsustainable as a result.
2. Employee Focus
measures, initiatives, and individual goals and incentives. So, the Balanced
Scorecard may fail to keep track of the execution of activities by staff within
their control and monitor the consequences arising from these actions.
Appendix
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References
1. Actionable Strategies. (2009). The Balanced Scorecard Background
Discussion. Retrieved March 23, 2009, from
http://www.actionablestrategies.com/resources/Balanced+Scorecard.pdf
2. Kaplan R.S. & Norton D.P. (2004).Strategy Maps: Converting intangible
assets into tangible outcomes. Cambridge: Harvard Business School
Press.
3. Makhijani N. (2008). Creating a balanced scorecard for financial services.
The OTI thought Leadership Series, 1(4), 1-12
4. Niven, Paul R. (2006) "Balanced Scorecard. Step-by-step. Maximizing
Performance and Maintaining Results".
5. Norreklit H. (2000), The balance on the balanced scorecard - a critical
analysis ofsome of its assumptions, Management Accounting Research, 11,
pp. 65-88.
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