Balanced scorecard


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Balanced scorecard

  1. 1. Introduction to balanced scorecard The balanced scorecard is a strategic planning and management system that is used extensively in business and industry to align business activities to the vision and strategy of the organization, improve internal and external communications, and monitor organization performance against strategic goals. What is a strategic plan you may ask...Strategic planning is an organization's process of defining its strategy, or direction, and making decisions on allocating its resources to pursue this strategy. The key is allocation of resources and monitoring the outcome of that decision and direction. Dr. Robert Kaplan (Harvard Business School) and David Norton were the proponents of the idea of 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. 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.
  2. 2. Perspectives 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: Lets look at HR department and the way Balanced score card can be a useful tool Financial Component The financial component of the balanced scorecard includes how well the company is doing financially with revenue and expenses. Financial considerations include salaries, cost of benefits, training, travel expenses, equipment, supplies, rent and taxes. This information can assist HR in determining ways to cut costs in certain areas. For example, HR may decide that benefits are a major portion of revenue and research more economical alternatives. Also, a change in travel policy may result in less air travel expense.
  3. 3. Customer Component The customer component of the balanced scorecard includes such areas as customer satisfaction, delivery of product and quick response to customer issues.HR can send out surveys to customers to determine their levels of satisfaction and concerns that related to staff training and staff behavioral issues. Processes Component The processes component of the balanced scorecard relates to the internal processes the company uses to get the work done. HR can identify if the processes, including recruiting, staffing, orientation and maintaining employees, are providing the desired business results. Learning and Growth Component The learning and growth component of the balanced scorecard refers to how much the company has learned and improved during the years of operation. In reviewing this area, employee satisfaction and morale are two critical factors. Other areas include continuous improvement and change. HR can work to improve weaker areas by developing strong performance improvement and training programs.Job Description and Key performance indicators (KPI) are essential part of BS implementation.Establishing award and recognition programs may be another HR strategy practice identified by the scorecard.
  4. 4. Comparison between Balanced Scorecard (BS) and Quality Management System (QMS) Both systems BS and QMS underline the customer perspective and employees satisfaction. Also, learning and growth have certain role in two systems. Of course, both systems improve significantly firm performance, but using the different approaches. BS can be, without any doubt, tool that include QMS. As how BS basically presents strategically oriented system with clearly define measurement objectives, this always can for all activities give the answer Why and in which direction. While QMS defines approach of improvements in all business segments and like this answer the question HOW. Measure of effectiveness is essential element of QMS process approach and the core for long term improvement. It is realized through process analysis and quality noting relating cost analysis. In the practice, quality cost is rarely or almost never analyzed, so like this BS can be very good tool for noting process of effectiveness of the firm because strategic map this system can check all element of firm's development relating to the strategic and financial results. Moreover, not only that BS makes possible systematic monitoring of firm's success, but more it presents a well establish base for value system creation, which represents at the same time the motivation system for all employees.
  5. 5. Reference July 29, 2014 strategic-hr-67048.html- July 29, 2014 - July 29, 2014
  6. 6. Reference July 29, 2014 strategic-hr-67048.html- July 29, 2014 - July 29, 2014