...The Balanced Scorecard (BSC) Framework, Implementation Methodology and Recommended Application - Executive Brief (April 2012) - Introduction Balanced Scorecard is an integrated, organization-wide management system that drives, in an aligned manner, the transformation, improvement and modernization efforts of all hierarchical levels towards the accomplishment of organization’s Strategy. For this reason, Balanced Scorecard is also known as a Strategy Execution system. More precisely, Balanced Scorecard represents a framework for aligned Strategic Planning and for the consistent management of the organizational and individual performance in the execution of the Strategic Plan. Furthermore, Balanced Scorecard is a communication tool that helps each employee better understand where the Strategy drives the organization, what the plan is for reaching that destination and what their departmental and individual measured contribution is to that convergent effort. With such understanding, the employees – whether directly involved in the planned Strategy Execution, or not – can also change and improve the way they perform their daily jobs through micro-decisions that are both convergent and complementary to the execution of organization’s Strategic Plan. BSC History Balanced Scorecard has been launched twenty years ago as a first set of principles for balanced strategic Objectives and Measures/KPIs setting and measurement. The “parents” of Balanced Scorecard are Dr. Robert S. Kaplan...
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...Improving Government Performance Using the Balanced Scorecard to Plan and Manage Strategically Howard Rohm President and CEO, the Balanced Scorecard Institute Are programs, services, and staff aligned around a shared vision of the future? Do government leaders have a clear strategy for delivering cost-effective services for citizens and other stakeholders, and is that strategy communicated with clarity, both internally and externally? Do you have a disciplined way of choosing priorities among competing programs and services, under tighter and more stringent budgets? How are you keeping score and communicating progress toward the vision? If you need to make hard choices among competing programs and services for tight budget dollars, if you are looking to increase program and service effectiveness and improve operational efficiency and performance, and if you need to become a more strategy focused organization then a balanced scorecard may be the best planning and management framework for your organization. This article describes how to build a strategy-based balanced scorecard system, and shares some lessons learned from developing strategy-based scorecard systems in dozens of government and nonprofit organizations in 22 countries and from training over 5000 people from 150 organizations. “Balanced scorecard” means different things to different people. Balanced scorecards have evolved over the past decade from dashboard systems that simply measure financial and non-financial...
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...Bringing the Balanced Scorecard to Life: The Microsoft Balanced Scorecard Framework White Paper By: Charles Bloomfield Insightformation, Inc. Published: May 2002 For the latest information, please see http://www.microsoft.com/business/bi/ Abstract This paper describes the Microsoft® approach to developing and implementing a Balanced Scorecard for enterprise performance management. It presents basic information on the Balanced Scorecard performance management methodology, and identifies key business issues that must be addressed in developing and deploying a balanced scorecard. The paper then presents the Microsoft Balanced Scorecard Framework (BSCF)—a comprehensive set of techniques, tools, and best practices to speed scorecard implementation using toolsets with which organizations are familiar. An extensive body of research and literature describing the Balanced Scorecard exists. That body of knowledge is constantly being expanded by The Balanced Scorecard Collaborative, Balanced Scorecard Institute, various consulting organizations, software companies, and client organizations. This paper cannot comprehensively cover such a complex topic or reflect accurately many of the nuances of scorecard development and implementation. Instead, it presents a basic conceptual overview of the Balanced Scorecard. Interested readers are encouraged to use the bibliography presented at the end of this paper as a guide to more detailed information. ...
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...The Balanced Scorecard: Historical Development and Context, As Developed by Robert Kaplan & David Norton Karl R. Knapp Anderson University – Anderson IN ABSTRACT This paper discusses the general theory of the Balanced Scorecard and traces its historical origins. The Balanced Scorecard is based on three main areas: Measurement, Human Relations, and Customer Value Disciplines. The basis in measurement draws on Management by Objectives. The human relations school of management and open-book management theories are influential. The customer value discipline links the scorecard to the strategy of the firm. The Balanced Scorecard The Balanced Scorecard is a theory and management approach first proposed in the Harvard Business Review by Robert S. Kaplan & David P. Norton (1995). A subsequent book, The Balanced Scorecard, was published following this article (1996). The most recent refinement of this theory and management approach appears in Kaplan & Norton’s book, The Strategy-Focused Organization (2001). This paper attempts to present a high-level overview of this management theory, along with a description of its historical foundation and development. As defined by Kaplan and Norton (1996), “The Balanced Scorecard translates an organization’s mission and strategy into a comprehensive set of performance measures that provides the framework for a strategic measurement and management system”. This strategic management system measures organizational performance in...
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...Bringing the Balanced Scorecard to Life: The Microsoft Balanced Scorecard Framework White Paper By: Charles Bloomfield Insightformation, Inc. Published: May 2002 For the latest information, please see http://www.microsoft.com/business/bi/ Abstract This paper describes the Microsoft® approach to developing and implementing a Balanced Scorecard for enterprise performance management. It presents basic information on the Balanced Scorecard performance management methodology, and identifies key business issues that must be addressed in developing and deploying a balanced scorecard. The paper then presents the Microsoft Balanced Scorecard Framework (BSCF)—a comprehensive set of techniques, tools, and best practices to speed scorecard implementation using toolsets with which organizations are familiar. An extensive body of research and literature describing the Balanced Scorecard exists. That body of knowledge is constantly being expanded by The Balanced Scorecard Collaborative, Balanced Scorecard Institute, various consulting organizations, software companies, and client organizations. This paper cannot comprehensively cover such a complex topic or reflect accurately many of the nuances of scorecard development and implementation. Instead, it presents a basic conceptual overview of the Balanced Scorecard. Interested readers are encouraged to use the bibliography presented at the end of this paper as a guide to more detailed information. ...
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...Balanced Scorecard Introduction How can a balanced scorecard be utilized for optimum organizational performance in my organization – Cleveland Clinic? Within today’s complex environments many organization have pinpointed that an accurate understanding of their particular goals and the methods that they implement in order to achieve these goals is vital, this is also true with healthcare organizations. Organizations have come to the conclusion that no simple one measure can provide a clear performance target or focus attention on the critical areas of the business. Managers, today, want a balanced presentation of both financial and operational measures. Therefore, while they still require the financial measures, associated with the traditional approach, in order to assess the overall health of the organization, they also require measures that will allow them to concentrate more directly on their strategic performance and long term vision. The concept of the balanced scorecard was developed in order to provide managers with such a tool. The balanced scorecard can be described as a comprehensive framework that translates an organization mission and strategy into a comprehensive set of performance measures that provides the structure for creating a strategic measurement and management system. As a result the objectives and measures of the balanced scorecard are more than a collection of financial and non financial performance measures; they are derived from a...
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...expansion plan of Santa division management focused on the anticipated plant replacement. This action is aimed at improvement of the Santa division manufacturing capacity which is required for meeting demands of a new customer offering an attractive five years contract. In spite of the considered plan of expansion is perceived as a low-risk venture, the report will review the impact of accepting the contract using the given information and basing on financial (Return on capital employed (ROCE), Residual Income (RI)) and non financial performance measurement techniques, specifically the balanced scorecard approach. The following data is available for Santa division: Net profit before tax (PBIT) £ 3 mln per annum Net capital employed £ 10 million Required rate of return 20 % before tax The Following data is available on the anticipated contract: Contract duration 5 years Sales provided £ 2 mln per annum Operating costs on the contract £ 1,35 mln per annum, excluding depreciation The following data is available on the plant required: Plant replacement = annual depreciation per year Required capital outlay £ 2 mln (£ 1,5 mln of new fixed assets + £ 0,5 mln) Plant life 5 years FINANCIAL PERFORMANCE MEASURES (ROCE, RI): ROCE (also referred to as return on investment (ROI) and return on assets (RONA), is the most commonly used measure of profitability, because it assesses the performance of the business from an operational perspective before financing costs...
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...OF RESEARCHING 3 METHODS FOR INVESTIGATION 3 II. PERFORMANCE MANAGEMENT 4 1. INTRODUCTION 4 2. STRATEGIC MANAGEMENT OF SEAPRODEX 5 III. ACTIVITIES AND ENVIRONMENT 7 1. THE MAIN ACTIVITIES 7 2. APPROPRIATE PERFORMANCE MANAGEMENT TOOLS 7 IV. MANAGING PERFORMANCE TO IMPROVE DECISION-MAKING 9 1. BUSINESS LEVEL STRATEGY OF SEAPRODEX 9 2. STRATEGY FOMULATION 9 3. PERFORMANCE OBJECTIVIES OF SEAPRODEX 10 4. BALANCED SCORECARD IMPLEMENTATION OF SEAPRODEX 10 5. TOOLS TO INFORM DECISION MARKING THROUGH PERFORMANCE 11 V. CONCLUSION AND RECOMENDATION 11 1. REVIEW AND RESULT FINDING 11 2. RECOMMENDATION FOR AREA IMPROVEMENT 12 VI. APPENDICES 15 INVESTIGATION RESULT SUMMARY 23 SEAPRODEX BACKGROUND 23 Performance Management at strategic level 24 Performance Objective 25 VII. REFERENCES 27 I. INTRODUCTION It is realized that the most of manufacturing company is to get competitive advantage in the industry, or to get high quality in products and services. To get these competitive edges and maintain the position in the market, company needs to have an excellent operation management system or strategic performance management within the organization, as supported by Fryer et al. (2009). It is no doubt about the benefits and advantage of the strategic performance management system because De Waal (2007, p. 19) offers his perception of strategic performance management (SPM): All activities and operations of an organization are processed...
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...www.hbrreprints.org BEST OF HBR Using the Balanced Scorecard as a Strategic Management System by Robert S. Kaplan and David P Norton . • Included with this full-text Harvard Business Review article: 1 Article Summary The Idea in Brief—the core idea The Idea in Practice—putting the idea to work 2 Using the Balanced Scorecard as a Strategic Management System 14 Further Reading A list of related materials, with annotations to guide further exploration of the article’s ideas and applications Reprint R0707M BEST OF HBR Using the Balanced Scorecard as a Strategic Management System The Idea in Brief The Idea in Practice Why do budgets often bear little direct relation to a company’s long-term strategic objectives? Because they don’t take enough into consideration. A balanced scorecard augments traditional financial measures with benchmarks for performance in three key nonfinancial areas: The balanced scorecard relies on four processes to bind short-term activities to long-term objectives: • a company’s relationship with its customers • its key internal processes • its learning and growth. COPYRIGHT © 2005 HARVARD BUSINESS SCHOOL PUBLISHING CORPORATION. ALL RIGHTS RESERVED. When performance measures for these areas are added to the financial metrics, the result is not only a broader perspective on the company’s health and activities, it’s also a powerful organizing framework. A sophisticated instrument panel for coordinating ...
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...Conceptual Foundations of the Balanced Scorecard Robert S. Kaplan Working Paper 10-074 Copyright © 2010 by Robert S. Kaplan Working papers are in draft form. This working paper is distributed for purposes of comment and discussion only. It may not be reproduced without permission of the copyright holder. Copies of working papers are available from the author. Conceptual Foundations of the Balanced Scorecard1 Robert S. Kaplan Harvard Business School, Harvard University 1 Paper originally prepared for C. Chapman, A. Hopwood, and M. Shields (eds.), Handbook of Management Accounting Research: Volume 3 (Elsevier, 2009). 1 Conceptual Foundations of the Balanced Scorecard Abstract David Norton and I introduced the Balanced Scorecard in a 1992 Harvard Business Review article (Kaplan & Norton, 1992). The article was based on a multi-company research project to study performance measurement in companies whose intangible assets played a central role in value creation (Nolan Norton Institute, 1991). Norton and I believed that if companies were to improve the management of their intangible assets, they had to integrate the measurement of intangible assets into their management systems. After publication of the 1992 HBR article, several companies quickly adopted the Balanced Scorecard giving us deeper and broader insights into its power and potential. During the next 15 years, as it was adopted by thousands of private, public, and nonprofit enterprises around the...
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...he Balanced Scorecard (BSC) is a strategy performance management tool - a semi-standard structured report, supported by proven design methods and automation tools, that can be used by managers to keep track of the execution of activities by the staff within their control and to monitor the consequences arising from these actions.[1] It is perhaps the best known of several such frameworks (it is the most widely adopted performance management framework reported in the annual survey of management tools undertaken by Bain & Company, and has been widely adopted in English-speaking western countries and Scandinavia in the early 1990s). Since 2000, use of the Balanced Scorecard, its derivatives (e.g., Performance Prism), and other similar tools (e.g., Results Based Management) has also become common in the Middle East, Asia and Spanish-speaking countries.[citation needed]..... The characteristic of the Balanced Scorecard and its derivatives is the presentation of a mixture of financial and non-financial measures each compared to a 'target' value within a single concise report. The report is not meant to be a replacement for traditional financial or operational reports but a succinct summary that captures the information most relevant to those reading it. It is the method by which this 'most relevant' information is determined (i.e., the design processes used to select the content) that most differentiates the various versions of the tool in circulation.(The Balanced Scorecard also...
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...Conceptual Foundations of the Balanced Scorecard Robert S. Kaplan Working Paper 10-074 Copyright © 2010 by Robert S. Kaplan Working papers are in draft form. This working paper is distributed for purposes of comment and discussion only. It may not be reproduced without permission of the copyright holder. Copies of working papers are available from the author. Conceptual Foundations of the Balanced Scorecard1 Robert S. Kaplan Harvard Business School, Harvard University 1 Paper originally prepared for C. Chapman, A. Hopwood, and M. Shields (eds.), Handbook of Management Accounting Research: Volume 3 (Elsevier, 2009). 1 Conceptual Foundations of the Balanced Scorecard Abstract David Norton and I introduced the Balanced Scorecard in a 1992 Harvard Business Review article (Kaplan & Norton, 1992). The article was based on a multi-company research project to study performance measurement in companies whose intangible assets played a central role in value creation (Nolan Norton Institute, 1991). Norton and I believed that if companies were to improve the management of their intangible assets, they had to integrate the measurement of intangible assets into their management systems. After publication of the 1992 HBR article, several companies quickly adopted the Balanced Scorecard giving us deeper and broader insights into its power and potential. During the next 15 years, as it was adopted by thousands of private, public, and nonprofit enterprises around the...
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...A Balanced Scorecard Brenda Rivers HTT 220 May 15, 2010 Simone Davis Made popular in 1996 by Kaplan and Norton, the balanced scorecard acts as an organizational report card that varies from business to business (Nyheim, McFadden & Connelly 2005). When assessing performance companies do not use single measurements, but rather a set of measurements which takes into the stakeholders, employees, guests, owners, supplier’s investors and franchisees. The goal of a comprehensive balanced scorecard allows management to monitor measurements such as financial ratios, net profit, revenues, and budget variances. Key indicators or critical success factors provide information across vast categories including; operational statistics, competitive activity, internal factors, employee measures, satisfaction ratings, cost savings, turnovers, guest perspectives and supplier relationships (Nyheim, McFadden & Connolly 2005). A balanced scorecard also provides strategic objectives to those in charge of the implementation and fulfillment of these duties. The scorecard provides a benchmark to measure and compare results against other results previously taken (Nyheim, McFadden & Connolly 2005). Other information represented on a balanced scorecard includes; environmental issues such as energy consumption and recycling programs, external factors including research and development, training and innovation...
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...Xiaoyun Jin (Summer) Final Exam: Suggestion for the Improvement for the Bearington Plant In Goldratt’s novel, the Bearington plant experiences numerous problems. Alex Rogo chooses to solve these problems using the Theory of Constraints (TOC) by the instructions of Jonah. Under the strong cohesions and efforts by Alex and his team, the Bearington Plant eventually turns out to be profitable. However, the Theory of Constraints only functions well for a short-term strategy and pays inattention to non-bottlenecks; in the long run, it will prevent the plant from ongoing improvement. Thus, I suggest applying the Balanced Scorecard to the management of Bearington Plant to help improve the overall business success. Balanced Scorecard is a strategic performance management tool that helps to align and monitor the business activities with the objectives. It has four perspectives: financial, customer, internal business process and learning and growth. Through the novel, I think the four perspectives are all necessary to implement and drive a sustainable development for Bearington. First, I would argue that the complete financial measure is indispensible. The plant makes profits by reducing the inventories and increasing the sales, but the cost of parts rises according to the financial report, which gives a red signal to Alex and his team. Through the novel, it is obvious that the current cost accounting system has some limitations and the allocation of costs has some distortions...
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...MANAGING FOR THE LONG TERM | BEST OF HBR | January–February 1996 Using the Balanced Scorecard as a Strategic Management System Editor’s Note: In 1992, Robert S. Kaplan and David P. Norton’s concept of the balanced scorecard revolutionized conventional thinking about performance metrics. By going beyond traditional measures of financial performance, the concept has given a generation of managers a better understanding of how their companies are really doing. These nonfinancial metrics are so valuable mainly because they predict future financial performance rather than simply report what’s already happened. This article, first published in 1996, describes how the balanced scorecard can help senior managers systematically link current actions with tomorrow’s goals, focusing on that place where, in the words of the authors, “the rubber meets the sky.” by Robert S. Kaplan and David P. Norton A | transform themselves for competition that is based on information, their ability to exploit intangible assets has become far more decisive than their ability to invest in and manage physical assets. Several years ago, in recognition of this change, we introduced a concept we called the balanced scorecard. The balanced scorecard supplemented traditional financial measures with criteria that measured performance from three additional perspectives – those of customers, internal business processes, and learning and growth. (See the exhibit “Translating Vision and Strategy:...
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