The balanced scorecard offers a simple method for articulating strategy to employees and then monitoring the progress toward these goals. The scorecard defines the organization's long-term strategy in terms of specific, measureable goals in different areas of management (financial, customer, internal business, innovation and learning). Because the goals are long-term, management must be willing to change their focus from short-term, usually financial, objectives.
The author describes a system defining long-term corporate goals, setting the steps to achieve these goals, and measuring performance toward the objectives using a balanced scorecard program.
Balanced scorecards are management tools that help evaluate performance and encourage good planning. Traditional financial measures focus on past transactions and original expenditures without sufficient focus on long-term benefits.
The balanced scorecard can be used to integrate and evaluate the effectiveness of planning and financial processes.
Organizations' attempts to adapt to today's technological capabilities and globally competitive environment have been affected by out-of-date accounting systems. The author suggests management accounting systems that will give operational control, add activity-based costing, and assist capital investment decisions.
This is the authors'summary of the findings of a one-year multicompany study, "Measuring performance in the organization of the future", documenting the feasibility and the benefits of a balanced measurement system organized around four distinct views: financial, customer, internal, and innovation and learning. The scorecard, a set of measurements that gives top managers a fast but comprehensive view of the organization, is balanced between short- and long-term objectives, between cost and non-cost measures, between lagging and leading indicators, and between external and internal performance perspectives. Managers can track measures as they work toward their objectives. As a result of this article, the authors were asked by a number of executives to help them implement the Balanced Scorecard in their organizations.
The rapid evolution of the Balanced Scorecard into a strategic managment system is reported on in this book. The Balanced Scorecard approach retains traditional financial measures which reflect past organizational acheivements, but adds three new measures of future performance found necessary in this information age with its focus on customer relationships and long-term capabilities: customer, internal business process, and learning and growth. With these four perspectives providing the framework for the Balanced Scorecard, organizations can now measure how they create value for customers, how they can enhance internal competencies, and how they must invest in people, systems and procedures to improve future performance.
According to the authors, the Balanced Scorecard has evolved from an improved measurement system to a core management system. For the first time there is a systematic process to implement and obtain feedback about strategy. This is an excellent introduction to new management styles.
The best Balanced Scorecards combine financial and non-financial measures that are derived from the organization's strategy. Performance drivers and outcome measures should be linked in cause-and-effect relationships.
The importance of choosing measures based on strategic success is emphasized in this article, which resulted from Balanced Scorecard experiences tying measures to an organization's strategic plan. Instead of improving the performance of existing processes, focus must be on those processes that must be performed exceptionally well for an organization's strategy to succeed.
The Balanced Scorecard (BSC) is a set of performance measures as a model for a strategic measurement and management system that is based on organizational mission and strategy. Performance is tracked along the lines of costs, customer service, internal process improvement, and learning and growth.
Using the Balanced Scorecard as the central organizing framework for important managerial processes, executives revealed that they were using the Balanced Scorecard not only to clarify and communicate strategy but also to manage strategy. Intangible assets were seen to be more important to organizations and the Balanced Scorecard approach was shown to be an important means of connecting long-term objectives to short-term actions.
This article traces the evolution of performance measures from exclusively financial performance measures toward the balanced set of performance measures that many forward-thinking organizations are now using. The Balanced Scorecard provides a vehicle to translate performance measures from four perspectives: financial, customer, internal-business-process, and corporate learning and growth.
This article examines the need for a Balanced Scorecard method of translating strategy into specific objectives and measures, as well as means of monitoring progress. The Balanced Scorecard should have an appropriate mix of outcome measures (lagging indicators) and performance drivers (leading indicators) to describe where a company has been and to point the way for future growth. Ultimately all measures should be tied to financial objectives but not be guided solely by them.
Lingle, John H. and William A. Schiemann. From balanced scorecard to strategic gauges: is measurement worth it? Management Review 85, no.3 (March 1996): 56-61.
Research indicates that measurement plays a critical role in translating business strategy into desired results. To design a good measurement system there should be an agreed-upon strategy, clear communication, focus and alignment efforts, and an accepted organizational culture. Barriers identified included fuzzy objectives, too much reliance on informal feedback systems, and inadequate measurement systems.
The Clinger-Cohen Act requires federal agencies to establish a process of selecting, managing and evaluating the results of their IT investments and report annually to Congress on progress made toward agency goals, noting links between IT performance measures and agency programs. This publication cites the following steps to develop and use IT performance measures effectively:
Performance management initiatives at this organization include the development of key performance indicators (KPIs), a performance management system, and process development and deployment, all of which are linked to customer satisfaction. Training of work teams is essential when implementing a shared services center.
The balanced scorecard is an evaluation tool which is being used more and more often to measure performance. The organization's strategie is evaluated by using financial, customer perspective, and operational measures. Guidelines for using the balanced scorecard are offered in this article.