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Balanced Scorecard - Essay Example

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Balanced Scorecard

The Balanced Scorecard is one of the contemporary performance measure systems that the managers engage to gain operational performance insights from various departments of the organization. The Balance Scorecard embraces almost all the facets of an organization and renders more valuable information to managers concerning various critical organizational decisions. Dilanthi et al. propound that, "BSC is a management framework that measures the economic and operating performance of an organization [and] is intended to link short-term operational control to the long-term vision and strategy of the business" (183). Hence, the balanced scorecard basically provides a management tool to gauge the organizational performance by means of a unique approach.
The most eminent feature of balanced scorecard measure is that rather than focusing on a single aspect, it encompasses all the major elements that have a significant impact upon of the organization's performance. Bryant, Jones and Widener (2004, p108) illustrate this point as that, "firms implement a BSC by selecting both financial and non-financial measures across four hierarchical perspectives: learning and growth, internal business processes, customer, and financial". Hence, the BSC measure rests on evaluating the performance of a firm on four distinct perspectives. Although the performance is also gauged in terms of financial perspective but it is not done exclusively. It is combined with other significant angles viz., learning and growth, customer, and internal business process etc. Dilanthi et al. suggest that, "non-financial measures, such as customer retention, employee turnover, and number of new products developed these measures serve as predictors of future financial performance" (183). It implies that even the non-financial measures in BSC contribute to the future financial success of the company.

This consideration and emphasis on non-financial elements in performance measurement also happens to be one of the major criticisms of the traditional performance measures, which led to the development of BSC measure. Yeniyurt assets that, "one major criticism to traditional metrics is that they do not consider non financial performance measures such as customer satisfaction, process efficiency and rate of innovation" (135). The Business Scorecard measures guides the organization in critical decision-making concerning employee management through learning and growth, unveiling of new products and services through internal business processes, estimating performance targets for the enhancement of customer experience and finally the financial perspective encompassing the financial position of an organization i.e., profits, losses and various costs (Bryant, Jones and Widener).

Self identifies that in BSC, "we not only decide what measures are important; we also state unequivocally what constitutes success for each measurement. each year we can literally see how well we have done." (101-102). It means that in balanced scorecard measure, an organization defines its performance measures and sets goals on the performance level to be achieved on each particular measure. This makes a company analyze its performance at the end of the year against the targets established and targets achieved so that it can realize the elements that need to ...Show more

Summary

This paper provides a study of balanced scorecard measure and the significant of its measures in achieving the goals set by an organization. The most important of the company's activities lies in driving maximum level of customer satisfaction through enhanced performance on the part of the company and its people…
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