...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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...framework called the Balanced Scorecard (BSC), by Robert Kaplan and David Norton, translates an R2i's mission and strategy into a comprehensive set of performance measures that provides the framework for a strategic measurement and management system. The BSC was developed to measure both current operating performance and the drivers of future performance. The objectives and measures on a Balanced Scorecard should be derived from the business unit's strategy. A scorecard should contain outcome measures and the performance drivers of those outcomes. The scorecard measures organizational performance across a set of leading and lagging performance indicators grouped into four linked perspectives: financial, customer, internal processes, and learning and growth. Processing complex, unstructured information can be difficult. The BSC enables R2i to track short-term financial results while simultaneously monitoring their progress in building the capabilities and acquiring the intangible assets that generate growth for future financial performance. The BSC enables managers to monitor and adjust the implementation of their strategy, and to make fundamental changes in the strategy itself. The BSC provides a representation of the organization's shared vision. The BSC communicates a holistic model that links individual efforts and accomplishments to business unit objectives. Thus, a shared vision and shared performance model, structured around the Balanced Scorecard, provides an essential...
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...1. Explain how the Voice of the Employee supports improved internal processes (Voice of the Business), and how the Voice of the Business supports customer satisfaction (Voice of the Customer). The Voice of the Employee supports improved internal processes because the Voice of the Employee focused on providing a safe and secure workplace in response to instances of violence and poor employee relations. Employees were given an opportunity to voice their opinions and make suggestions to create a happier and safer work environment without any consequence or retaliation regardless of the feedback given. This safe environment encourages employees to be honest and open up about what they really feel should be improved in the workplace. This ties into internal processes because when employees are happy and feel secure in their positions, they are more likely to align their personal goals with the goals of the company. Happy employees are more productive and also more focused on their productivity and are more likely to be better performers and work hard to abide by the quality initiatives. The Voice of the Employee supports the Voice of the Business because the employees are the first line of business, they are the actual people working the internal processes, therefore tackling the Voice of the Employee and growing into a better work environment would be the first step into tackling any issues with internal processes. The Voice of the Business supports customer satisfaction because...
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...BALANCE SCORECARD 1. Explain what is balanced scorecard? The balanced scorecard is a strategic planning and management system that is used extensively in business and industry, government, and nonprofit organizations worldwide to align business activities to the vision and strategy of the organization, improve internal and external communications, and monitor organization performance against strategic goals. The balanced scorecard is a 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 (Kaplan and Norton). The balanced scorecard has evolved from its early use as a simple performance measurement framework to a full strategic planning and management system. The “new” balanced scorecard transforms an organization’s strategic plan from an attractive but passive document into the "marching orders" for the organization on a daily basis. It provides a framework that not only provides performance measurements, but helps planners identify what should be done and measured. It enables executives to truly execute their strategies. Kaplan and Norton describe the innovation of the balanced scorecard as follows: "The balanced scorecard retains traditional financial measures. But financial measures tell the story of past events, an adequate story for industrial age companies for which investments in long-term capabilities and customer...
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...Measuring Business Excellence Performance measurement tools: the Balanced Scorecard and the EFQM Excellence Model S. WongrassameeJ.E.L. SimmonsP.D. Gardiner Article information: To cite this document: S. WongrassameeJ.E.L. SimmonsP.D. Gardiner, (2003),"Performance measurement tools: the Balanced Scorecard and the EFQM Excellence Model", Measuring Business Excellence, Vol. 7 Iss 1 pp. 14 - 29 Permanent link to this document: http://dx.doi.org/10.1108/13683040310466690 Downloaded on: 14 April 2015, At: 10:28 (PT) References: this document contains references to 27 other documents. To copy this document: permissions@emeraldinsight.com The fulltext of this document has been downloaded 13506 times since 2006* Users who downloaded this article also downloaded: Joaquín Gómez Gómez, Micaela Martínez Costa, Ángel R. Martínez Lorente, (2011),"A critical evaluation of the EFQM model", International Journal of Quality & Reliability Management, Vol. 28 Iss 5 pp. 484-502 http://dx.doi.org/10.1108/02656711111132544 Downloaded by MIDDLESEX UNIVERSITY At 10:28 14 April 2015 (PT) Michael Trevor Hides, John Davies, Sue Jackson, (2004),"Implementation of EFQM excellence model self-assessment in the UK higher education sector – lessons learned from other sectors", The TQM Magazine, Vol. 16 Iss 3 pp. 194-201 http:// dx.doi.org/10.1108/09544780410532936 Andy Neely, Mike Gregory, Ken Platts, (1995),"Performance measurement system design: A literature review and research agenda", International...
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...A critical analysis of Balanced Scorecard as a performance measurement tool: an overview of its usage and sustainability A iti al a alysis of Bala ed “ o e a d as a pe fo TABLE OF CONTENTS a e easu e e t tool: a o e ie of its usage a d sustai a ility TOPICS PAGE i ii iii iv-v LETTER OF TRANSMITTAL DECLARATOIN ACKNOWLEDGEMENT ABSTRACT CHAPTER ONE INTRODUCTION 1.1 Background of the study 1.2 Objective of the study 1.3 Scope of the study 1.4 Methodology 1.5 Limitations of the study BALANCED SCORECARD 2.1 Overview of the Balanced Scorecard (BSC) 2.2 Objective 2.3 Design 2.4 Original design method 2.5 Improved design method 2.6 Popularity 2.7 Variants and alternatives CRITICAL ANALYSIS ON THE CONCEPT & USING OF BALANCED SCORECARD WHETHER IT IS THE UNIVERSAL SOLUTION FOR THE BUSINESS MANAGEMENT? 3.1 Crucial investigation of the concept and using of Balanced Scorecard 3.2 A comprehensive new approach for the measurement and management 3.3 Is the Balanced Scorecard a universal key to the business management? 3.4 Balanced Scorecard: a question of conjecture and application CHAPTER FOUR: THE SUSTAINABILITY OF THE BALANCED SCORECARD 4.1 The Balanced Scorecard: an instrument for sustainability management 4.2 Different possible approaches of integrating environmental and social aspects 4.3 The process of formulating a sustainability Balances Scorecard 4-7 5 5 5 6 7 8-15 9-11 12 12-13 13 14 14 14-15 16-25 CHAPTER TWO CHAPTER THREE 17-21 21-22 22-23 23-25...
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...BALANCE SCORECARD INTRODUCTION: A Conceptual Framework for Managing Lodging Brands: A Balanced-Scorecard Approach Abstract: The issue of brand management remains a formidable challenge for lodging organizations and lodging brand managers. This challenge is partly due to the fact that effective brand management requires an all-inclusive and comprehensive organizational approach. This paper proposes a framework that uses the balance scorecard (BSC) as the basis for brand management. The framework proposes both a proactive and reactive approach to brand management through the use of performance measures or perspectives, which form the underlying components of the BSC. These are the financial perspective, the customer perspective, process perspective, and the learning perspective. The paper enhances and expands this BSC framework by including a brand maintenance and enhancement component. The concept of balance scorecard was introduced by Kaplan & Norton (1992, 1996, 2007) and they argued that that balance scorecard is a useful tool that tells managers how organization is performing in relation to strategic objectives of organization. Kaplan & Norton(1992) state the four perspectives which are financial perspective,customer perspective,internal business process perspective and learning and growth perspective.These four perspectives are used by managers in order to measure and analyze information. Kalpan and Norton explain these four perspectives which are effective...
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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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...WHAT IS A BALANCED SCORECARD? According to Robert Kaplan and David Norton, the founders of the Balanced Scorecard, "The balanced scorecard retains traditional financial measures. But financial measures tell the story of past events, an adequate story for industrial age companies for which investments in long-term capabilities and customer relationships were not critical for success. These financial measures are inadequate, however, for guiding and evaluating the journey that information age companies must make to create future value through investment in customers, suppliers, employees, processes, technology, and innovation. (4)" In essence, the Balanced Scorecard is a performance management system used in multitude of organizations throughout the world. It is used to develop an organization’s goals and mission that will enhance the success it has with its customers and employees. HISTORY Although first developed in the early 1990’s by Robert Kaplan and David Norton of the Harvard Business School and coined “Balanced Scorecard” in the early 1990’s, Kaplan and Norton’s method originally stemmed from the pioneering work of General Electric on performance measurement reporting in the 1950’s and the dashboard performance measures from French process engineers in the early 20th century (4) The idea behind this performance measurement tool developed from the fact that traditional performance measurement systems, mostly financial performance indicators, were insufficient in...
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...offer information about future performance. Using this traditional method did not give entities a complete and accurate picture of the business to help manager to manage future performance. Robert Norton & David Kaplan have seen the increasing attention to the importance of strategic measurement system that include both financial and non-financial measures (Kaplan, 2010, p.2). To answer the call, those professors have introduce in 1992 the balanced scorecard which is a multi-dimensional measurement system considering more than one source of information and including both financial and non-financial information. The balanced scorecard is a strategic planning and management system that is used extensively in business and industry, government, and non-profit organisations worldwide to align business activities to the vision and strategy of the organization, improve internal and external communications, and monitor organization performance against strategic goals (Balanced Scorecard Institute, 2013). The balance scorecard is a tool that aims to translate the mission, objectives and strategies of an organisation into performance measure. It allows firms to implement strategy and to monitor and manage performance within the organisation focused basically around four different perspectives. From results obtained, managers are able to undertake corrective action on area they should operate further. History: The balanced scorecard has been first introduced in a Harvard Business...
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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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...Executive Summary According to Bento, “the Balanced Scorecard (BSC) has been proposed as an integrated framework for the implementation of financial and nonfinancial performance measures that helps organizations align their initiatives with the organization’s strategy” (2013). The Balanced Scorecard offers management a system to use in plotting strategic objectives through four perspectives. The financial perspective is determined by the outcome of management’s implementation of the internal processes perspective, customer perspective, and learning and growth perspective. Aon Corporation is the “leading provider of risk management, insurance and reinsurance brokerage” (Aon, 2014). Using the Balanced Scorecard my operating segment, Benefit Marketing Solutions, can examine an implement each of the four perspectives by obtaining information on how we can achieve Aon standards in the operation of our business segment. Implementing the Balanced Scorecard, I will assess how our financials can improve by achieving the objectives of maximizing company profits, increasing our gross profit margin per client, and decreasing our accounts payable days. The first factor I will investigate is our customer perspective and how increasing customer loyalty, customer exposure, and customer education will improve upon our financials. The second factor I will investigate is the internal perspective and how effective company alliances, effective customer service, and effective payment of...
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...believe that using a single target, return on capital employed, linked current actions and efforts to longer term value creation. The corporate controller has recently learned about the Balanced Scorecard. He presented the concept to the president and chief operating officer who then issued a call to all Chadwick division managers to develop a scorecard for their divisions. The divisional controller at the Norwalk division was given the task of heading the effort to formulate scorecard measures for the division. Pedagogical Objectives A discussion of the Balanced Scorecard concept can focus on three objectives. First, the discussion should address questions about why financial measures are insufficient when they are used alone. Second, the discussion should question and review the concept of the Balanced Scorecard and its dimensions Third, students should practice exploring linkages between goals and measures on scorecard dimensions so that they can see how performance on one dimension supports or encourages achievement on others. [For part (a), see the “Suggestions for Classroom Use” section. Also see textbook questions 9-1, 9-2, 9-3, 9-4, 9-5, and 9-11, and exercises 9-31, 9-33, and 9-38.] [(b) and (c)] Opportunities for Student Analysis Although the case is short, it provides a remarkable amount of information about Chadwick, Inc. and the Norwalk Division. Using this information, students are able to relate objectives and needs to scorecard dimensions....
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...Balanced Scorecard Paper BSOP588 June 8, 2014 Professor Walter Mamak In this day and age of technology, strategically planning the performance of your organization, many companies have or will implement the new balance scorecard method as the new catalyst for implementing some kind of strategy improving or monitoring performance. “The balanced scorecard is a generic management term such as information technology “or” performance measurement.” It is not trademarked or copyrighted. (Norton, 1996) From the beginning there were simpler performance measurement frameworks which have evolved into full strategical planning and management systems. Although this performance management frame work was developed about 1990 by Drs. Robert Kaplan (Harvard Business School) and David Norton to incorporate customer, learning/growth, and business process metrics into traditional financial reporting measures, it is now being used worldwide for many governmental agencies, businesses, nonprofit, and industry organizations and the main goal for these entities is to see future performance that will help them all achieve a better balance, vision and strategy for each area or segment of their organization. Utilized in different ways and for different reasons, the balance score card may be used for something as a simple measurement of how well they perform in their jobs and duties daily and on the other hand for others it may be an extremely comprehensive planning and management system...
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...Today many hospitals are forming integrated health systems that consist of a main hospital, outpatient services, and nursing homes. This causes challenges for hospital executives to align the organizational strategies and main principles with performance measurement and management indicators within all areas of service. The balanced scorecard (BSC) is an option for hospitals to measure not only a company’s financial performance but how the company is satisfying its customers and employees. The BSC is designed to manage strategy not tactics (Kocakulah 2007). As of the year 2000, only about 70 of the country’s 6,000 hospitals were using the BSC method. Part of the reason for lag in adoption is hospitals have always used nonfinancial statistics and believed that they were using measures similar to a BSC already. Unfortunately, this is not the case in terms of effectiveness ( ). How to implement an effective BSC is the most important question. The single most critical condition in implementing a BSC is the involvement and ownership of the executive team. The approach is usually top-down. A top level BSC is created for the board of trustees, and then is cascaded down the organization to the department level. This is done with a team-based collaborative approach that consists of an “organizational change expert” as the leader (Kacakulah 2007). This “organizational change expert” should be the head of human resources. A HR manager is best suited for this role in many ways...
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