Balanced Score Card

Submitted by :
(128)-YOGITA GUPTA
(129)-NIKHIL BARARIA (130)-AMANDEEP (131)-MANNU BOBAL (133)-SAHIL KHATTAR

The Balanced Scorecard

History

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..

What is Balanced Score Card ?

Definition: 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.

Features of Balanced score card

The key features of the Balanced Scorecard approach are that it:
It has a limited number of measurements.. It focuses on the important factors for strategic success.. It is not overly complex.. It does not confuse, or diffuse focus, by containing too many objectives or too much information.. It is broad-ranging (including strategy, customers, financial management, business processes and learning/development).. It relates the diverse areas together in a dynamic relationship.

Why Implement a Balanced Scorecard?

Increase focus on strategy and results Improve organizational performance by measuring what matters Align organization strategy with the work people do on a day-to-day basis Focus on the drivers of future performance Improve communication of the organizations Vision and Strategy Prioritize Projects / Initiatives

Balanced Score Card

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

The Balanced Scorecard measures organizational performance across different perspectives

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

Building a Balanced Scorecard

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

Financial Customer Internal Learning & Growth

Connecting the Four Perspectives

A strategy map provides a visual representation of the linkages in the four perspectives of the BSC
Return on Investment
Customer Loyalty

On-Time Delivery

Process Quality

Cycle Time

Employees Process Improvement Skills

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

Why are Companies Adopting a Balanced Scorecard?

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..

The Ingredients of Highly Successful Balanced Scorecard Programs

1. Leadership From the Top

4. Make Strategy a Continuous

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

2. Make Strategy Everyones Job

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

Balanced score card and organizational team work

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

Strategy and the BSC

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

BSC in Non-profits and Government Organizations

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