The concept of the Balanced Scorecard was introduced in the early 1990s with considerable excitement and promised to change the way performance measurement was conducted and how companies were managed. This study is an investigation into the conception of the Balanced Scorecard…
Who and how it is being promoted today, how it is being used to link employee performance to organizational strategy, and how successful have the companies been who have adopted the Scorecard as a performance measurement and strategy implementation tool in the long-term. This study will answer these questions.
"What you measure is what you get" is an often-heard phrase, which emphasizes the importance of performance measurement to the success of an organization. Performance measurement can be defined as the quantification of either a process output or the activities that constitute that process. An effective set of performance measures should have the following characteristics: (a) communicate and summarize those critical activities necessary to meet customer requirements, (b) reflect outputs of processes and outcomes (how customers value the outputs), (c) be comprehensive, and (d) provide feedback to the organization (Atkinson, Waterhouse, & Wells, 1997). Selecting the proper performance measures is one of the key challenges facing management (Ittner & Larcker, 1998), yet it is perhaps the most misunderstood and difficult aspect of a management control systems (Atkinson, Waterhouse et al., 1997).
Performance measures can be financial or non-financial. Financial (or traditional) performance measures are dollar value measures produced by the organization's accounting system. Examples of financial measures would include return on investment, return on equity, operating margin, unit cost, or cost variances. Non-financial performance measures are typically derived from outside the accounting system. Examples of non-financial measures include customer satisfaction measures, manufacturing cycle time, new product introductions, R&D productivity, market growth, and market share.
Observers have noted that performance measurement has gained added significance, because organizations are faced with the twin challenges of adapting to new rules of competition and responding to the rapid changes often taking place in the marketplace (Stivers & Joyce, 2000). The factors driving this evolution are the opportunities and formidable challenges of escalating globalization, the increasing transparency of manager actions, the need to develop intangible assets to sustain competitive advantage, the escalating pace of technological change, an increase in competition among firms, and the rise of process change initiatives such as TQM (Malina & Selto, 2001).
The right measures correctly linked to the organization's strategy gives managers and employees the guidance they need to act appropriately (Kaplan & Norton, 1996). This conclusion is echoed by a survey of executives indicating that performance measurement is critical in translating a business strategy into results (Lingle & Schiemann, 1996). Performance measures designed outside of the strategic planning process creates potential for disconnect. The reason performance measurement systems fail to live up to expectations is commonly attributed to this disconnect (Atkinson, Waterhouse et al., 1997).
Traditional accounting-based performance measures, with their one-dimensional focus on financial results, have been criticized as not being up to the task faced by modern organizations. The sense is that financial performa ...
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(The Balanced Scorecard Essay Example | Topics and Well Written Essays - 2000 Words)
“The Balanced Scorecard Essay Example | Topics and Well Written Essays - 2000 Words”, n.d. https://studentshare.net/miscellaneous/277752-the-balanced-scorecard.
It describes different strategies Lloyds takes in order to accomplish the organisational objectives. The balanced scorecard provides a reasonable view of organisational performance. In Lloyds, BSC has assisted to disclose the major performance activities.
The purpose of this report is centered on the company’s plan to purchase an existing dry dock in another location, so that they could cater new customer requirements in terms of large-sized vessels. The plan would bring advantages to the company’s financial performance based on the monitoring of cash flows; however, the positive forecast is limited to the financial aspect.
In the very the next year County Rehabilitation center got incorporated and started providing various services and today it is a multi faceted organization, serving hundreds of disabled people at more than 35 sites throughout Cattaraugus and surrounding county in New York States.
A balanced scorecard is a strategic management and planning that is extensively applied in industries, government, non-profit organization and businesses (Kaplan & Norton, 2001). It is used to align business activities to their set out goals and objectives aimed at improving their overall performance in carrying out their mandated duties and responsibilities.
These strategies have been identified by the company’s strategic map, with the BSC pointing towards specific elements of the strategic perspectives. Each perspective has been subdivided into the key objectives, measures of the objectives and targets for these measures.
Management literature fulfils this need by provides various systematically designed strategic tools to be employed by the organization that facilitates in effective execution and implementation of the strategy. One of such tools is Balance Score Card (BSC) which a tool that directs the organization towards vision.
A number of management tools and techniques are used by the management to strategically manage and fulfil the organizational objectives. These are the performance prism, total quality management, value based management and the balanced score card method of which the balanced scorecard technique is the most popularly used management system used in order to improve the performance of the organization.
There have been several studies conducted on the subject of Balanced Scorecard to develop the concept adaptable to the changing circumstances and needs of the organizations. This paper presents some of the facets of balanced score card and an account of the approach in
According to the report to minimize information overload, the number of measures were limited in the beginning and the authors suggested that new measures could be added whenever a new suggestion was made. The BSC measures are supposed to drive performance as it gives a quick but comprehensive view of the business.
This paper discusses the role of Balanced Scorecard in terms of performance measurement and reviews its effects on organizations with respect to critical situations. The key features of Balanced Scorecard are discussed and from the analysis its approaches and trends are ascertained especially in critical situations.
10 Pages(2500 words)Essay
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